Announcing its first half-yearly results across the new Sky business following the acquisition of Sky Deutschland and Sky Italia, the pay-TV operator is claiming an “excellent” first half with good momentum across the expanded business.
Jeremy Darroch, Group Chief Executive, Sky, said the broadcaster had delivered an excellent operational and financial performance in its first set of results as the new Sky. “We closed the first six months of the year with revenues up 5 per cent and operating profit up 16 per cent, reflecting strong customer demand in all five of our markets,” he advised.
“The strength of our performance in the UK 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,” he reported.
“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,” he stated.
“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,” he noted.
“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,” he concluded.
Growing customer demand and increasing loyalty across the group reflects the strength of the combined business and leaves the company well positioned to benefit from the expanded market opportunity.
Sky grew its revenues by 5 per cent to £5.604 billion for the six-month period. This translated into a 16 per cent increase in operating profit to £675 million while adjusted basic earnings per share were 27.1 pence. Reflecting this strong financial performance, the Board has declared an interim dividend of 12.30 pence per share.
In total, Sky added 1.5 million paid-for subscription products in the second quarter, a 25 per cent increase year on year. At the heart of this performance was the highest paid-for product growth in 16 quarters in the UK and Ireland, a strong performance in Germany – more than double the prior year – and solid growth in Italy.
In addition, retail customer numbers grew strongly across the group with 448,000 net new retail customer additions in Q2 – 82 per cent more than the prior year and taking the total retail customer base at the end of December to 20.6 million.
Investment bank Exane BNP-Parisbas, in its ‘flash note’ on Sky, said it was clearly “driving the beat”. “As expected loads of adjustments and restatements to harmonise accounting policies, adjust for boundary effects and strip out inter-company trading (e.g. programming costs in Germany, promotions in Italy, treatment of SKY Bet as discontinued in UK). “To be frank there are an awful lot of moving parts here and its going to take a little time to digest properly (the fact that SKY only defined its changes in accounting yesterday was not particularly helpful. Our main concern going forward is the degree to which product growth is being driven by discounts and promotions – the jury is still out in this respect – although short term profit progression is reassuring.”