Sky Full-Year Earnings, Subscribers Rise

Sky HQ H 2015
AP Images/Invision

The pan-European pay TV giant, in which Rupert Murdoch's 21st Century Fox owns a 39 percent stake, posts its first fiscal-year results since its creation late last year.

Pan-European pay TV giant Sky on Wednesday said it continued to add video subscribers in the latest quarter and year, reporting higher pre-tax and operating earnings for its full fiscal year.

The pan-European pay TV giant, in which Rupert Murdoch's 21st Century Fox owns a 39 percent stake, posted its first full fiscal-year results since its creation late last year when Britain's BSkyB acquired Fox's Sky Italia and its stake in Sky Deutschland.

Operating earnings for the year ending on June 30 rose 18 percent to $2.2 billion (£1.4 billion). Pre-tax earnings rose 6 percent and earnings before interest, taxes, depreciation and amortization rose 10 percent, but earnings per share declined 2 percent as the company issued new stock.

Sky, during the fiscal year, agreed to extend its rights to air live English Premier League soccer matches in a three-year deal that starts in 2016, with its cost rising 83 percent over the previous deal. Revenue increased 5 percent to $17.6 billion (£11.3 billion).

The company, led by CEO Jeremy Darroch, signed up 973,000 new customers in the latest year, 45 percent more than in the previous year. In the latest quarter, it added 158,000 new customers. The company has satellite TV operations in the U.K., Ireland, Italy, Germany and Austria.

Sky ended June with 25.18 million total customers, including 12 million U.K. and Ireland, 4.73 million Italian and 4.28 million Sky Deutschland retail customers, 4.03 million U.K. and Ireland wholesale customers.

Fourth-quarter organic customer growth of 124,000 in the U.K. and Ireland was the highest fourth-quarter performance in six years. Full-year U.K. customer growth of 506,000 was the highest annual organic customer growth in 11 years. The U.K. and Ireland business posted a 12 percent increase in operating profit to $2.1 billion (£1.35 billion).

In Germany and Austria, Sky added 467,000 new customers, its highest growth figure since its launch, including 55,000 in the fourth quarter. Sky Deutschland, which houses the businesses in both countries, saw its annual operating loss narrow to $17 million (£11 million) from £57 million.

In Italy, "We held our customer base stable at 4.7 million after three years of decline, a good result in a challenging market," Sky said. Sky Italia recorded a 56 percent improvement in operating profit to $95 million (£61 million) for the year.

"The outlook for growth is good," Darroch said on a conference call. "The prospects for growth for the business for next year and then thereafter, as we start to get even greater traction across the broader Skys, are very good."

Management said it was looking to share content across Sky U.K., Sky Deutschland and Sky Italia more widely and easily.

"Programming is a priority for investment," Darroch also said, highlighting the $7.8 billion (£5 billion) the company spends on content a year right now. "We would certainly anticipate that that would grow in line with our sales growth, and if it grows ahead we'd be happy with that," because subscribers want great content.

The CEO also touted the Sky Vision unit, "which we are building to be a much bigger distribution business." He said Sky's acquisitions of TV production firms give the unit more inventory to sell, highlighting that deals have mostly been smaller rather than large.

Twitter: @georgszalai