BSkyB CEO Discusses HBO Relationship, Netflix

Courtesy of BSkyB

Jeremy Darroch also addresses the upcoming English Premier League soccer rights auction

BSkyB CEO Jeremy Darroch on Thursday discussed the U.K. pay TV giant's relationship with HBO and competition from Netflix.

A day after HBO announced it would launch a stand-alone online service, an analyst on the company's earnings conference call asked about the relationship between the firms, which have collaborated on showcasing HBO content on the Sky Atlantic network in Britain.

"We extended our relationship with HBO just this year, by the way also including things like a co-production," Darroch said before addressing how Sky Italy and Sky Deutschland, which BSkyB is set to acquire next month, are set up. "My understanding is that it is pretty similar for Germany and Italy. It gives us exclusivity across the territory."

Read more BSkyB Grows TV Subscribers, Earnings in Latest Quarter

Darroch added that his view was that collaboration helps both companies. "Our view, and I think it's HBO view as well, is very much that by working together we are going to create a bigger business for the benefit of both of us," he said.

Rupert Murdoch's 21st Century Fox owns a 39 percent stake in BSkyB, which has agreed to acquire Fox's Sky Italia and majority stake in Sky Deutschland.

Asked about Netflix's latest quarterly earnings and weaker-than-expected subscriber growth in the U.S. and internationally, Darroch said: "When you get through the first million or two customers, it gets harder." He agreed with the suggestion that Netflix was looking at more traditional advertising after the initial launch buzz in new markets.

Meanwhile, CFO Andrew Griffith said BSkyB was pleased with acceptances for the firm's offer to Sky Deutschland minority shareholders so far and expects to end up getting a high level of acceptances. The proposed deal was accepted by majority shareholder 21st Century Fox for a small premium to Sky Deutschland's stock price, with BSkyB saying it would also simply be happy to take over Fox's 57 percent stake.

"We think we can do all the things we need to do in the business with that, and we'll see how many trade in," Darroch said on Thursday.  Sky Deutschland advised minority shareholders to keep their shares, saying the buyout offer was low, but Darroch said on Thursday that investors may rethink things amid recent stock market weakness and volatility. "I wouldn't be surprised if we get a lot more take-up," he said.

He didn't share BSkyB's plans for next year's auction for the English Premier League soccer TV rights, which is expected to once again see telecom giant BT bid against BSkyB.

Read more 21st Century Fox, BSkyB Make Further Investments in Roku

Darroch said the soccer league has "a very important set of rights,” but also emphasized that BSkyB’s subscriber base has been “broadening out with less than half now taking sports."

Discussing the online-only Now TV service, the BSkyB CEO said on Thursday it was not hurting the firm's traditional pay TV business. "We are just not seeing any sort of significant cannibalization of the subscription base," he said.

Twitter: @georgszalai