‘Tepid’ growth at Sky
January 25, 2018
By Chris Forrester
Sky’s half-year results saw solid operating momentum with overall 5 per cent organic revenue growth (4 per cent organic growth in the UK). Other highlights include steady growth in Sky’s UK advertising revenue (up 5 per cent) which prompted praise from investment bank Exane/BNPP, particularly whilst the general TV-based advertising income in the UK is down about 2 per cent.
However, Sky’s UK ARPU is down across the board in all of Sky’s markets for the first time in many years reflecting, what the bank’s analysts suggest is down to a “spin-down to Now TV”. Churn is back under control in the UK at 11.2 per cent (vs 11.6 per cent a year ago) but rose in Germany/Austria by a worrying 1.6 per cent. Italian churn rose marginally by 0.5 per cent.
“Customer growth in Q2 tepid but reflects pull forward of Game of Thrones demand,” says Exane/BNPP.
Paolo Pescatore, VP Multiplay and Media, CCS Insight, described the results as overall, a good set, showing growth in most areas. “Sky seems to have had a good end to the calendar year in terms of subscriber uptake. It is making good progress with mobile and the roll out of Sky Q seems to be going well. In light of Virgin Media’s latest announcement, we expect Sky to ramp up the roll out of Sky Q by enticing existing subscribers to upgrade from their existing Sky boxes,” he advised.
“Increasing investment in its own Sky original productions is sensible in light of its recent successes, and its efforts to reduce churn in the UK are resonating with users in part due to Sky VIP which has attracted 1.4 million users.”
“All eyes are now firmly on the Premier League rights auction. Sky cannot afford to lose its prized assets. Therefore, it must ensure to at least secure the similar packages it has today. However, the channel sharing agreement with BT helps both parties somewhat in the distribution of sports channels to their customers.”
“For sure the company is extremely vulnerable due to escalating content costs, but a wealth of opportunities lies ahead. And should Disney’s acquisition of 21st Century Fox go, then it has the resources to be an even more formidable player in the rapidly-changing media landscape,” he concluded.