Sky makes solid start to financial year as revenue, earnings grow

Subscription broadcaster, fixed line telephony and broadband, and mobile provider Sky issued an update on its first quarter trading on Thursday, reporting “strong growth” in revenue and profits with a 5% increase in like-for-like revenue to £3.3bn.

The FTSE 100 company said EBITDA was up 11% at £582m, alongside a 15% increase in established business EBITDA to £606m, excluding investment in new business.

Sky said there continued to be “good” customer demand for its products and services, with 160,000 new customers joining in the quarter, up 51%, and more than 800,000 subscription products added, passing the 60 million mark.

There were also 9.6 million pay-as-you-go sports and entertainment buys, which was up 12%.

The company said it had an “excellent” quarter on screen, with customer viewing to Sky pay channels up 10%, adding that it also made “further strong progress” on efficiency with operating costs held flat.

It opened new markets in bid provide further opportunity in the future, launching Sky in Spain and the Sky Sport streaming service in Switzerland.

Looking ahead, Sky said there was “more for customers to look forward to”, with new loyalty programmes in the UK and Ireland, Germany and Austria.

Sky Q - the firm’s newest time-shifted viewing and streaming tech - was to launch in the current financial year in Italy, Germany & Austria

The company was also looking to make 25% more investment in Sky Originals programming.

“We've had a strong start to our new financial year with good revenue growth and excellent profit growth as investments we've made come through,” said Sky chief executive Jeremy Darroch.

“Against the backdrop of pressure on consumer spending and lower spend on UK television advertising, we were particularly pleased with our own EBITDA growth of 15% in our established business.

“We continue to see good demand for our products and services with 51% more new customers joining Sky than a year ago; we surpassed the milestone of 60 million subscription products; and pay-as-you-go sports and entertainment buys grew by 12% to 9.6 million.”

Darroch said the company’s investment on-screen to broaden its offering was delivering, with viewing to Sky channels up 10% year-on-year.

“Within this the first series of our home-grown drama Riviera achieved 20 million downloads, becoming our highest ever rated original commission, and Game of Thrones has become the most watched series ever on Sky.

“In its eleventh season in Italy, X Factor has launched to record audiences and we're pleased with the continued progress of Sky 1 in Germany and Austria where the first episode of Masterchef series two achieved an audience of more than double last year.”

Customers had “lots to look forward to”, Darroch claimed, as the company continued to enhance its products and services in all territories.

“We are increasing investment in Sky Originals by 25% this year, which means we'll be showing four major dramas every single quarter, including the eagerly awaited premiere of our first German production, Babylon Berlin, on 13 October.

“We will launch our loyalty programme in Germany & Austria in the second half of the financial year, building on the success of our well-established scheme in Italy and the good start to Sky VIP in the UK.

“As part of a big year of innovation, we have two important launches coming up this quarter - in the UK, we are launching Sky Soundbox, our all-in-one sound system, to transform the TV sound experience, and we are rolling out our next generation TV service, Sky Q, to Italy.”

Darroch said the company would follow that with the launch of Sky Q in Germany and Austria in the first half of 2018, taking what he called a “major step forward” in the customer experience.

“Alongside developing our existing products and services, we continue to invest for the future,” Darroch added.

“In the UK, customers are responding well to our entry into the mobile market whilst this quarter we have successfully entered two new territories with the launch of direct to consumer streaming services in Spain and Switzerland, further demonstrating our credentials as the leading provider of streaming services in Europe.

“Looking ahead, despite the uncertainty in the broader consumer environment, we remain on track with our plans and enter the busy second quarter trading period focused on delivering our clear strategy for growth.”