* Q3 core loss less than expected
* Average revenue per user at highest level
* Keeps outlook
* Share up 1 pct vs 0.7 pct drop in German mid-cap shares
(Adds CEO comment, share price)
FRANKFURT, Nov 11 (Reuters) - Loss-making German pay-TV broadcaster Sky Deutschland narrowed its core loss in the third quarter amid an increase in sales, as new products and packages slowly begin to stabilise its customer base.
Chief Executive Brian Sullivan, who took the helm in April making him the third CEO in four years, said the company planned to expand its offers ahead of the important holiday shopping season in a bid to accelerate the subscriber growth that is key to becoming profitable.
"We have more planned in the run-up to the key Christmas trading season and expect net subscriber additions well ahead of the third quarter 2010," Sullivan said, declining to say how many new additions Sky Deutschland was hoping to win.
The Munich-based company has said it needs around 3 million customers to break even.
Sky Deutschland, formerly known as Premiere, in which News Corp holds a 49.9 percent stake, said third-quarter net additions rose by 45,000 to 2.52 million subscribers overall.
Average revenue per user (ARPU) rose to 29,45 euros, an increase of 3.68 euro compared with the third quarter of 2009 -- the highest ARPU level ever.
Shares were up 1 percent at 1.14 euros by 0925 GMT, outperforming a 0.7 percent drop in the German mid-cap index.
Sky Deutschland's loss before interest, taxes, depreciation and amortisation narrowed to 54.9 million euros ($75.7 million), beating an average analyst estimate of 61.1 million euros.
Quarterly sales were 243.2 million euros, above the average poll forecast of 237 million euros.
Sky Deutschland reiterated it expects to post a core loss of 260 million euros to 280 million this year and said while next year would improve it would not break even in 2011 either.
In August, Sky Deutschland scrapped its goal to become profitable by 2011.
Its main draw is the right to show German premier league soccer live and it also shows movies, documentaries, drama series such as "Lost" and pornography. (Reporting by Nicola Leske) ($1=.7253 Euro)