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Sky Deutschland steams ahead

October 22, 2013

The German stock market seems to be enjoying a strong love affair with Rupert Murdoch’s Sky Deutschland pay-TV company.  21st Century Fox owns 54.5 per cent of Sky Deutschland, and the past few weeks have seen a remarkable rise in the broadcaster’s share price. Back on June 24 the price stood at €4.63. By October 23, it had reached €7.46, but if you go back one year to October 21st 2012 the price was a bargain-basement €3.24.

And the rise cannot be attributed to any single news event. There have been steady positive stories, of course, not least its success in winning exclusive coverage of all-important German football TV rights, and selling access to those games to most of Germany’s cable operators.

But the upward trend is all the more remarkable for a company that at one stage was an object lesson in how NOT to run a pay-TV business. It launched as Premiere in 1991, and which morphed into DF1 in 1996, Premiere World in 1999, went bankrupt in 2002 and was bailed out by a private equity firm.

The rebirth happened with the launch in July 2009 of Sky Deutschland, and the appointment of former Sky UK staffer Brian Sullivan to run the business. Sullivan, speaking in June at a trade show, said he and his team had spent four years rebuilding the business and that the broadcaster was set to turn a positive EBITDA this trading year. “In 2014,” he said, “that growth will increase rapidly.”

That prediction seems to be taking shape. In August it emerged that Sullivan is targeting first 4 million subscribers (it currently has about 3.45m) and then a speedy expansion to 5 million, and thereby “achieve critical mass”.

And while Sullivan’s former employer BSkyB has to continually fight with assorted regulators, Sky Deutschland is free from such constraints.  Moreover, it has an increasingly happy relationship with German cable, is already the nation’s biggest OTT provider, and is working in a market where only 18 per cent of the 42 million TV homes take a pay-TV service (other than cable). By any measure this represents a huge opportunity.

Categories: Blogs, Inside Satellite, Pay TV