Sky Earnings, Subscribers Rise in First Report Since Euro Pay TV Deals

Courtesy of BSkyB
Sky CEO Jeremy Darroch

The European pay TV giant reports its first financials since the former BSkyB took over Sky Italia and a majority stake in Sky Deutschland.

Pan-European pay TV giant Sky on Wednesday reported improved results for the first half of its fiscal year and subscriber trends for the fiscal second quarter ending in December.

Sky, led by CEO Jeremy Darroch, reported higher first-half earnings of $1.65 billion (1.09 billion pounds), up from 411 million pounds in the year-ago period. Adjusted operating profit rose 16 percent to $1.03 billion (675 million pounds), with revenue rising 5 percent.

Sky, in which Rupert Murdoch's 21st Century Fox owns a 39 percent stake, signed more net new TV, broadband and other subscribers in the latest quarter in the U.K. and Ireland, with its overall subscriber gains there marking their highest since 2005.

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Sky in November closed deals with Fox to acquire its pay TV platforms Sky Italia in Italy and Sky Deutschland in Germany. The company said it paid $10.87 billion in the deals with Fox and Sky Deutschland minority shareholders.

The company's management team on an earnings call said it made a small profit at Sky Italia, offset by a slight loss in Germany in the latest period. But Sky Deutschland posted a profit in terms of earnings before interest, taxes, depreciation and amortization.

“We have delivered an excellent operational and financial performance in our first set of results as the new Sky," Darroch said. "Alongside our continued strength in the U.K. and Ireland, the acquisition of Sky Italia and Sky Deutschland gives us an expanded opportunity for growth."

Darroch on an earnings call cited strong demand for the company's products across its markets, led by the U.K. and Ireland. Sky added 493,000 customers in the second quarter to end 2014 with 24.8 million total subscribers, including 15.8 million in the U.K. and Ireland. Sky said in the U.K. and Ireland, it added 204,000 pay TV subscribers, its biggest growth rate in nine years.

Darroch said OTT service Now TV continues to seem to be a complementary offer to traditional pay TV services as it attracts consumers who have previously not considered getting Sky TV services.

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Sky Deutschland added a record 214,000 subscribers in its fiscal second quarter, its biggest gain ever. The company said Germany was currently the fastest-growing European pay TV market. Sky Deutschland ended 2014 with 4.123 million direct customers, crossing the 4 million mark for the first time.

At Sky Italia, customer growth of 30,000 in the quarter was the highest since the first quarter of 2012.

Asked about the English Premier League soccer league rights auction expected to kick into high gear in the coming days, Darroch said these are important rights, "but the business is so much more than that."

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