Sky’s “strong year” and 8% revenue growth

UK pay-TV giant Sky has reported a “strong year” and a 10 per cent increase in this year’s revenues, to £12.9 billion (€14.44bn), with Q4 operating profit up 8 per cent to £455 million.

Sky says that it has won 686,000 new customers (including Germany and Italy) and takes its subscriber total to 22.5 million, with 77,000 new subs in Q4. While just outside the 12-month results, Sky says it passed the 5 million threshold in Germany in July.

In the UK there are now more than 1 million homes with its latest Sky Q set-top box. Its Sky+Pro offering for Germany and Austria is reaching 460,000 homes.

ARPU for the UK is flat (£47 vs £47 last year) although ARPU for Germany/Austria fell from €35 to €34. Italy was flat at €42.

Churn is up, however. UK churn is 11.5 per cent (11.2 per cent last year), while Germany/Austria is up significantly at 12.6 per cent (9.9 per cent last year) although Italy has improved at 9.1 per cent (11.1 per cent last year).

Jeremy Darroch, group CEO, stated: “Sky’s growth and development has continued to be strong in 2017.  We have driven a 10 per cent increase in revenue on a comparable 52 week basis to £12.9 billion despite market headwinds. Operating profit is excellent, down £97 million despite additional Premier League costs and investment in new businesses, with particularly strong results in Germany & Austria and Italy where operating profit increased by £115 million. As we exit a year of investment, we returned to profit growth in the fourth quarter with operating profit up 8 per cent and EPS up 19 per cent.”

“Looking ahead we have a strong set of growth plans for the year. We will be increasing investment in Sky originals by 25 per cent as we build on our track record for producing world-class entertainment. We will make the customer experience ever better as we roll out Sky Q to Italy, Germany and Austria while also launching Sky Q without the need for a satellite dish. We are creating 300 new technology roles to further enhance our capability to deploy in and out-of-home streaming platforms. Sky Mobile will continue to scale up as we take advantage of the headroom in our customer base and offer our customers more Sky products. Loyalty will be recognised and rewarded through a new tenure-based loyalty programme in the UK, building on the outstanding success of a similar programme in Italy. We will continue to identify opportunities to reach new customers through the recently launched new portfolio of channels and pricing to drive growth in Sky Sports UK and we intend to launch a simple and affordable OTT service in Spain.  We will do all this while continuing to execute against our operating efficiency plans.”

Darroch’s statement added: “We enter 17/18 in a strong position with significant growth potential. Despite the broader consumer environment remaining uncertain, we are confident of delivering on the plans we’ve laid out as we continue to give our customers the best content, great products and industry leading service.”

“We have significant plans to further develop and improve the customer viewing experience in each of our territories. Today, we have announced that Sky Soundbox, our brand new all-in-one sound system for use with Sky Q, Sky+ and standalone TVs, will launch later this year to transform the TV sound experience for customers. We will introduce Sky Q into Italy and Germany & Austria later this year and will continue to enhance Sky Q features and functionality. We have a strong pipeline including voice control and greater personalisation, building Sky Q’s position as one of the world’s leading TV platforms.  We will also launch our Sky TV service without the need for a satellite dish, opening up new headroom for growth by giving people who can’t or won’t have a dish on their property the Sky Q experience.”

 

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