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Sky gives viewers the chance to ditch the dish in bid to keep customers

Pay-TV giant Sky will make all its television channels available without the need for a satellite dish for the first time as it looks to stop customers quitting the group.

The group announced it would launch a broadband service in the UK next year to give millions of customers who cannot or do not want to install a satellite dish access to its full TV service.

It comes as Sky revealed surging numbers of UK customers leaving amid competition from rivals such as BT, while half-year results showed a 9% fall in earnings after spiralling football rights costs.

The group - which recently accepted an £11.7 billion takeover offer from Rupert Murdoch's 21st Century Fox - reported underlying operating profits of £679 million for the six months to December 31, following a £314 million rise in Premier League costs.

Operating profits fell 18% in the UK and Ireland to £620 million.

Its broadband TV service will offer a version of its Sky Q service delivered entirely over the internet.

It will launch initially in the UK, but Sky said it plans to expand the service elsewhere in Europe "over time".

The group said it signed up 205,000 new customers in the UK and Ireland in its first half, b ut its so-called rate of churn - customers quitting the group - surged to 11.6% from 10.2% a year earlier.

Sky blamed this on a rising number of broadband customers, who it said tend to switch around more, as well as tough promotional competition from rivals.

It has come under pressure amid competition from the likes of BT and Netflix.

Sky also plans to launch a loyalty programme in the UK this year to help retain customers, following the success of a similar scheme in Italy.

Jeremy Darroch, group chief executive of Sky, said: "In a year in which we are absorbing significantly higher programming costs, as a result of the step up in Premier League costs, our financial performance has been good."

Sky accepted an offer from 21st Century Fox, which already owns 39% of the company, for the remaining 61% of the business late last year.

Fox needs shareholder approval and the green light from regulators in both the UK and Europe for the offer, which comes five years after the media tycoon's last tilt at taking full control of the business through News Corporation.

Sky's half-year f igures showed revenues in the UK and Ireland lifted 4.8%, with overall revenues 6.2% higher.

On a bottom-line basis, pre-tax profits fell to £377 million from £414 million a year earlier.

The results come a day after the group announced it would be hiking the cost of its line rental in March, up from £17.40 to £18.99 a month - a 9% rise.

Roddy Davidson, analyst at Shore Capital, said Sky's half-year results are "satisfactory rather than particularly inspiring".

He added Fox's offer was "undoubtedly opportunistic".

He said: "We were disappointed by the failure of the directors charged with looking after shareholder interests not to secure an improved price for what is after all a unique asset in a consolidating market place."

The results also come after Sky became embroiled in a row on Wednesday night over fees with Discovery, which has threatened to pull all its programming from the satellite TV provider from the end of the month.

Discovery, which has 12 channels including Eurosport and Animal Planet, made the extraordinary move over claims that Sky is refusing to pay a "fair price".

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