Sky Posts 18-Percent Increase in Annual Profit

July 29, 2015 World Screen Top Stories
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LONDON: Sky has reported an 18-percent increase in annual operating profit to £1.4 billion ($2.2 billion), and added nearly 1 million customers during the 12 months that ended June 30.

Group revenues for the year increased by 5 percent to £11.3 billion ($17.7 billion). Across the U.K., Ireland, Germany, Austria and Italy, Sky added 973,000 new customers in the period, a gain of 45 percent on the prior year. Paid-for subscription products increased by 4.6 million for the year.

In the U.K. and Ireland, the group delivered revenues up 6 percent to £7.8 billion ($12.2 billion) and operating profit up 12 percent to £1.35 billion ($2.1 billion). Paid-for product growth in the U.K. and Ireland for the year was 3.3 million. Quarterly TV growth increased by 49 percent to 113,000, while broadband additions were up 92 percent year on year.

Sky in Germany and Austria also had a strong year, with a 9-percent increase in revenues to £1.4 billion ($2.2 billion) and an 81-percent improvement in operating profit to record a loss of £11 million ($17 million). With 467,000 new additions, the German and Austrian segment saw its highest customer growth since launch.

In Italy, Sky's revenues were £2.1 billion ($3.3 billion), down principally due to the absence this year of wholesale revenue from Champions League rights. There was a 56-percent improvement in operating profit to £61 million ($95 million). The customer base held steady at 4.7 million, after three years of decline.

In terms of content, Sky has a clear set of plans for continuing the momentum of its original production for 2016. In drama, there are plans to have 35 projects in development, on air or in production in the next three years. At least ten of these will launch as priority projects across Europe.

Jeremy Darroch, Sky's group chief executive, commented: “The past 12 months have been an outstanding period of growth for Sky. We’ve successfully completed a deal that has transformed the size and scale of opportunity for the business whilst delivering an excellent financial and operational performance as more customers chose Sky and took more of our products.

“It’s clear that the steps we have taken to broaden out our business are paying off. By distributing our content over multiple platforms and launching new products and services, we are now able to offer something for every household.

“The strength of the customer response is evident in our results: across the group, we added almost one million new customers over the year, 45-percent more than the prior year. Our operating momentum delivered a 5-percent increase in revenues which combined with a relentless focus on costs to achieve an 18-percent increase in operating profit. This was an excellent performance in a year of such change for the business.

“The U.K. and Ireland, where our strategy is most progressed, put in a particularly strong performance. We passed the 12-million customer milestone with the highest growth in 11 years; we surpassed 38 million paid-for subscription products; and we delivered the lowest churn in 11 years. This is the direct result of the investments we’ve made in connected services and quality content with more than 7 million customers now connected.

“Germany and Italy also posted strong performances. Germany delivered its highest-ever customer growth, while Italy maintained its subscriber base in a tough market. Both businesses also achieved significantly increased customer loyalty, thanks to continued investment in the customer experience.

“This has been a big year on screen. Across the portfolio, we’ve secured a series of big rights deals and made exciting progress in our push into original content. Crime drama Fortitude and Italian political drama 1992 became the first of our home-grown dramas to launch simultaneously across all five territories and there’s much to look forward to. We’re taking another step up in 2016 with a string of new commissioned dramas, including crime drama, The Last Panthers, coming this autumn, and The Young Pope, a major new co-production with HBO and CANAL+. Both show the scale of our ambition as we build a new European powerhouse for TV content.

“Looking ahead, we see an expanded opportunity for growth by serving the market broadly with multiple products and services. The investments we have made have given us a strong platform on which to build and we have a clear set of plans to deliver long-term growth and returns for our shareholders.”