Sky Q3: ‘Delivering’ as football costs drag

Jeremy Darroch, Group Chief Executive, has described Q3 as another strong quarter for Sky, despite it being the broadcaster’s seasonally quietest period. “We continue to perform well, attracting another 106,000 customers across the Group in the quarter, taking growth to 769,000 over the last 12 months.  We have delivered strong revenue growth of 11 per cent and are on track financially with operating profit for the nine months exceeding £1 billion [€1.19bn],” he advised. The period operating profit, though, was down 11 per cent Y-on-Y with increased Premier League costs weighing in.

“We’ve made good progress on the growth plans that we laid out. We launched Sky Mobile to create a substantial new source of revenue and profits. We have continued to improve the customer experience with further enhancements to our Sky Q and Sky+ platforms as well as the launch of our digital customer service via the My Sky app. We have concluded a number of long term rights renewals and are announcing today a major new multi-year co-production deal with HBO, as well as a ground breaking virtual reality experience in partnership with Sir David Attenborough and the Natural History Museum.”

“Looking forward, we enter the final quarter of our fiscal year in good shape. Despite the broader consumer environment remaining uncertain, we continue to deliver on our strategy and are on track for the full year,” he stated.

Group revenues increased 11 per cent to £9.641 billion in the first nine months of the year whilst, even on a constant currency basis, revenues were up 5 per cent in line with its guidance and showing good growth across all territories.

Across the last year, Sky continued to attract new customers in all its markets, adding 769,000 new customers, including growth of 106,000 this quarter, and taking the total customer base to 22.4 million households.

In the UK and Ireland, Sky said it had a solid quarter, growing customers, products and revenues, despite the more challenging environment facing most consumer businesses during the first quarter of the new calendar year.

UK revenues increased by 4 per cent to £6.410 billion driven by customer growth of 338,000 over the last year, the benefit of its June 2016 TV price change and growth in transactional and programme and channel sales revenues.

As at 31 March, Sky had 12.7 million customers, adding 40,000 new customers this quarter. Churn was stable on the prior quarter despite communicating a 2017 Broadband and Telephony price change to customers.

“It has been a strong quarter in Germany and Austria, as the benefit of strategies put in place since the acquisition materialised,” reported Sky. “We added customers, increased our viewing by 7 per cent, grew total revenues by 10 per cent, and achieved our first ever operating profit at the nine-month stage. In the first full quarter since its launch, we are very pleased with the performance of Sky 1, already our most popular German entertainment channel by reach.”

Revenues increased by 10 per cent to £1,382 million driven by strong growth in customers and Sky’s highest ever level of advertising revenues. Despite investment in programming and marketing, EBITDA increased to £78 million (up 117 per cent), and operating profit increased by £43 million to £4 million.

Sky closed the quarter with 4.9 million customers, up 363,000 on the prior year and with growth of 73,000 new customers in the quarter.

As part of a strong nine months, Sky recorded its fastest rate of revenue growth in Italy for eight years with operating profit of £91 million; over three times higher than prior year.

Revenues increased by 7 per cent to £1.849 billion reflecting our larger customer base and good growth in advertising revenues as well as the sale of programming to third parties, which included the re-sale of the Rio Olympic television rights. EBITDA increased to £202 million (up 44 per cent and operating profit increased to £91 million (up 237 per cent).

As at March 31st, Sky had 4.8 million customers, up 68,000 on the prior year. However new customer demand was relatively subdued in Q3 reflecting both a decline in Telecom Italia customers as a result of its contractual dispute and the impact on new sales from the ongoing uncertain economic environment in the country. This resulted in a decline in customers of 7,000 in the third quarter.

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