Chairman's statement

The last year has again presented a challenging environment for consumer businesses, as families are squeezed by higher prices and lower disposable income. Against that backdrop, Sky has continued to perform well, with a strong operational and financial performance across the board. Furthermore, our business is well placed to continue to grow in the future, as we take advantage of the significant potential in the entertainment and communications marketplace.

The relationships we have with our customers are the foundation on which our business has been built. That is why reaching our long-term target of 10 million customers this year was an important milestone in the Company's progress, as well as an endorsement of the quality, value and choice that we offer to our customers.

But more important than any single target is the way that the Company continues to transform itself. Since setting the goal of 10 million customers in 2004, we have moved from being largely a single-product company to become a leader in a much broader field of opportunity, with a diverse set of entertainment and communications products. In parallel, we have further developed our high-quality content offering, set the pace of innovation across the industry and grown our capabilities as an organisation by developing a strong culture of continuous improvement. Those achievements are the consequence of a clear, consistent plan and excellent execution over several years by a highly focused management team.

Today, more families are choosing Sky for a greater variety of products than ever. As we look to deepen our relationships with those customers, we recognise also the importance of making a positive contribution to the community in which we operate. Over the last year, we have continued to develop our work in three key areas of focus: helping to protect the environment; improving lives through sport; and opening up the arts to more people.

On 13 July 2011, News Corporation – where I am an Executive Director – withdrew its proposal to acquire the shares in Sky that it does not already own. In doing so, News Corporation stated that it remains a committed, long-term shareholder in Sky, proud of the success that the Company has achieved over many years, and of News Corporation's contribution to it.

As well as reiterating that commitment and support, I would like to take this opportunity to thank the excellent team at Sky and the entire Board for the focus that they have shown throughout the last year. It is because of their talent and dedication that the Company continues to deliver for customers and to achieve such strong progress for shareholders.

In reflection of the Company's continued strong performance, and our confidence in the opportunity ahead, the Board proposes a 20% increase in the full year dividend to 23.28 pence per share and intends to return £750 million to shareholders through a share buy-back programme over the next 12 months. On behalf of the Board, I would like to thank all shareholders for their continued support.

James Murdoch Signature-James-Murdoch

James Murdoch