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Any doubt that pay-TV broadcaster Sky is under pressure evaporated with its full-year results showing a 7 per cent increase in revenues to £11.965 billion (€14.223bn), operating profit up 12 per cent (to £1.558 billion) and 808,000 new customers and 3.3 million new products sold during the year to June 30th. The only worry on the horizon is Churn, which at 11.2 per cent (annualised) is higher and blamed on recent price rises and fewer discounts offered to renewing customers.
Market analysts were impressed by the numbers. Laurie Davison, equity analyst at Deutsche Bank, maintained his ‘BUY’ recommendation to investors and with a target price of £14.25 (currently about £8.87).
Sky’s Group CEO Jeremy Darroch reported that Sky’s German/Austrian operation had moved into its first-ever full year profit. He added that current synergy savings of some £200 million were on target for 2017, and would reach £400 million by 2020.
“Each of our markets is making very strong progress,” Darroch said. “In the UK and Ireland we passed £8 billion in revenue for the first time by giving consumers more and more reasons to choose Sky including our new premium service, Sky Q. In Germany and Austria, we have broadened our TV offering to attract more customers. Today we are announcing the launch of Sky 1 which combines with our new Sky Arts channel, Sky Atlantic and increased on demand content to create a compelling entertainment portfolio. We have also ensured that Sky remains the undisputed home of the Bundesliga until 2021. Our business in Italy is outperforming a competitive market, delivering programmes which capture the public’s imagination such as Gomorrah, X Factor and Moto GP across a growing choice of platforms. This approach is working, with the Italian customer base returning to growth for the first time in five years.”