Sky Half-Year Profit Spikes

February 4, 2015 World Screen Top Stories
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LONDON: In its first results that include the Italian and German businesses, Sky posted a 5 percent gain in revenue and a 16 percent surge in operating profit, supported by strong performances in the U.K. and Ireland as well as Germany.

Revenue reached £5.6 billion ($8.5 billion) for the six-month period, translating into an operating profit of £675 million ($1.03 billion).

Sky in the U.K. and Ireland had a strong Q2 with the investments in content and connected services delivering operating growth across all areas of the business. Strong customer demand drove the highest product growth in four years at more than 1 million, 17 percent higher than the same period last year. TV growth more than doubled to 202,000 and there were 106,000 broadband additions. The addition of 204,000 new retail customers in the quarter was the highest rate of customer growth in nine years, reflecting a healthy performance across both Sky and NOW TV products.

The Italian business was weakened by the challenging economic environment. Customer growth of 30,000 in the quarter was the highest since Q1 2012, while total paid-for products increased by 47,000. HD accounted for a good deal of the growth, with net additions of 35,000 in the quarter, taking HD penetration to 66 percent of the base.

In Germany, Sky delivered record retail customer additions of 214,000 in Q2, 55 percent higher than the prior year and bringing the total retail customer base past the 4 million mark. Paid-for products increased by 421,000, which is more than double the growth for the same period last year. HD continued to perform strongly, with growth of 148,000 in the quarter.

Jeremy Darroch, the group chief executive at Sky, commented: “We have delivered an excellent operational and financial performance in our first set of results as the new Sky. We closed the first six months of the year with revenues up 5 percent and operating profit up 16 percent, reflecting strong customer demand in all five of our markets.

“The strength of our performance in the U.K. and Ireland shows that our approach to segmenting the market with the complementary Sky and NOW TV brands is working. Across the board, customers are responding to our investment in more high-quality TV and innovative new services. This has resulted in the highest customer growth in nine years, the highest total product growth in four years and the lowest churn in a decade.

“Alongside our continued strength in the UK and Ireland, the acquisition of Sky Italia and Sky Deutschland gives us an expanded opportunity for growth. Both businesses had a strong quarter, Germany posting its highest ever customer growth and Italy showing resilience with good customer growth in a challenging economic environment. Integration is progressing well and we are excited about the potential for the three businesses to be even stronger together.

“The simultaneous launch of Fortitude, our ambitious new original drama, to 20 million customers across all five markets, shows the potential we now have to operate at greater scale. This is just the first of many opportunities we have to launch new products and services for customers in the months ahead.

“Six months into the year, we’ve seen a good performance right across the new Sky. We have world-class capability within the expanded business and a strong set of plans that mean we are well placed to deliver growth and returns for shareholders.”