BSkyB posts strong first quarter earnings LONDON (Reuters) - Pay-TV group BSkyB reported first quarter earnings up 16 percent on Thursday as price rises and the sale of additional products to subscribers helped mask an otherwise steady performance in signing up new customers. BSkyB, which sells pay-TV, broadband and telephony, has launched an online offering and promoted new products to existing customers in the last year as it struggles to sign up new subscribers in the tough economic conditions. In the first three months of the year, BSkyB signed up 48,000 new households, in line with forecasts, which was made up of 20,000 additions to the core pay-TV offering. Following a drive to cross sell products to existing customers, BSkyB said one in three customers now took all three products of TV, broadband and telephony services, helping to lift the average amount each customer spent with the group. Customer loyalty also remained strong, with 10.9 percent of the base leaving on an annual basis. "Despite market fears over new competition, TV adds continued to grow with 20,000 net adds," Morgan Stanley said in a note to clients after the results were announced. This puts into perspective recent concerns that Sky might suffer a fall in net adds. The solid operating performance, a price rise introduced in September after a two year freeze and a share buyback program helped lift earnings per share 16 percent to 13.4 pence. Revenue was up 4 percent to 1.7 billion pounds and adjusted operating profit was up 5 percent to 310 million pounds, either in line with forecasts or slightly above. "We have made a strong start to the year, delivering another good quarterly performance and continuing to position the business for the long term," Chief Executive Jeremy Darroch said. Looking forward, whilst we continue to see a challenging consumer environment in the UK and Ireland, we are well positioned to execute our plans for the year. Analysts had expected only a steady number of new customer additions due to the tough economy, the distraction of the Olympic Games in London and the fact that the business is becoming more mature after years of rapid growth. They had also been keen however to see how the business was operating after Virgin Media reported upbeat trading earlier this month and following the arrival in the market of the U.S. online DVD rental company Netflix in Britain. The group will hold its annual general meeting later in London on Thursday, which will see the return of James Murdoch to the public spotlight in Britain for the first time since he stood down as chairman of the group over a phone hacking scandal at his newspaper arm. Reporting by Kate Holton; editing by Rhys Jones and Guy Faulconbridge