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Sky “outstanding” results in a year of transformation

Sky has published its results for the year ending June 30th 2015, the first to include the results of Sky Italia and Sky Deutschland following their acquisition in November, reporting a 5 per cent increase in group revenue to €15.941 billion.

Jeremy Darroch, Group Chief Executive, said the past 12 months had 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 per cent more than the prior year. Our operating momentum delivered a 5 per cent increase in revenues which combined with a relentless focus on costs to achieve an 18 per cent increase in operating profit. This was an excellent performance in a year of such change for the business,” he declared.

“The UK 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.”

“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,” he concluded.

In terms of headline figures, Sky claimed “excellent” financial performance, with a 5 per cent increase in group revenue to £11.283 billion (€15.941bn), with an 18 per cent increase in operating profit to £1.4 billion. It also witnessed what it described as growing customer demand and loyalty, with 973,000 new customer additions, 45 per cent more than the prior year, and 4.6 million new paid-for subscription products. Churn, at under 10 per cent in each market, was described as a “stand-out performance”.

According to Sky, the year saw strong performance across all five territories, with the highest organic customer growth for 11 years in UK and Ireland to pass the 12 million milestone, as well as the highest-ever customer growth in Germany and Austria. In Italy, the customer base held stable after three years of negative growth.

Paolo Pescatore, Director, Multiplay and Video at CCS Insight, noted that another strong set of results for Sky, despite increasing competition from rivals in all markets. “This is even more significant as key telcos have moved aggressively into its core business” he advised.

“Fundamentally, it underlines the importance of owning a strong portfolio of content across all screens and seeing good uptake across all platforms. Furthermore, it validates Sky’s strategy of broadening its business beyond satellite DTH. Sky is now well placed to grow the business in other markets, but Italy still remains a challenging market. However, this should be bolstered by standout performance in the UK and encouraging signs in Germany.”

“We still strongly believe that strategically Vodafone and Sky would make the perfect fit, as their assets would strongly complement each other. Scale will also be important and as we move quickly towards multiplay, content will allow telcos to differentiate their offerings beyond price alone,” he suggested.

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