Comcast’s Q1 results reveal Sky is suffering through the postponement and cancellation of live sports with the loss of 65,000 subscribers against 112,000 additions in the same period last year.
Sky CEO Jeremy Darroch said that “some sort of reset” would be required in negotiating sports rights in future cycles. He said that Sky had an advantage in that sports rights negotiations were typically on shorter cycles than in the US of three to four years, which gave the company the “opportunity” to “take a different view in terms of value” from sports.
Sky finished the quarter with 23.9 million subscribers and revenues were down 5.8 per cent to $4.5 billion, while earnings dropped 17 per cent to $551 million. Comcast said the results reflected lower subs revenue, advertising and content revenue.
Comcast CFO Mike Cavanagh said: “Given the significant revenue associated with Sky Sports and the fact that sports packages are sold separately, the complete shutdown of sports presents a unique risk of customer attrition, if unaddressed.” He said Sky had mitigated the risk by allowing customers to pause their subscriptions and that Comcast anticipated that “most major sports will return to complete their current seasons, although at different times for different sports across the Sky markets”.
Cavanagh said he anticipated that Sky’s EBITDA would decline by about 60 per cent in Q2 and Q3. He said that the slowdown could “cause some delays” in the acceleration of Sky’s investment in its Sky Q platform.