Sky Subscribers Grow, Earnings Fall in First Half
The European giant, in which 21st Century Fox owns a 39 percent stake, which it is looking to boost to full ownership, also says it will next year make its full pay TV service available in an OTT version.
European pay TV giant Sky on Thursday reported lower earnings for the first half of its fiscal year amid higher soccer costs in Britain, but signed up more customers than in the year-ago period.
It also said it would make its full pay TV service available in a streaming, or OTT, version for the first time, eliminating the need for a satellite dish next year. Sky CEO Jeremy Darroch said that would allow the company to target around 6 million households across its markets that it can't currently reach. "It is a big moment for the business," he said.
Sky's Now TV streaming service already allows consumers to watch a selection of networks or content, but not the whole pay TV service.
The company added 22,317 retail customers in the six-month period, compared with 21,477 in the year-ago period, with wholesale customers up 26,211, compared with 25,685.
Adjusted operating profit for the company's first half of the fiscal year dropped 9 percent to $859 million (679 million pounds), compared with 744 million pounds in the year-ago period. Earnings per share fell 10 percent, or 5 percent after adjustments. Adjusted revenue rose 6 percent.
Due to higher costs for English Premier League soccer rights in Britain, the company was widely expected to record lower operating profit. "Our first half operating profit of £679 million is down £65 million on the prior year despite absorbing an additional £314 million of Premier League costs, highlighting the strength of our underlying financial performance," said Darroch. "This has been supported by the efficiency of our operating model and the achievement of our £200 million synergy target six months early."
In terms of retail subscribers, the company added 205,000 in the U.K. and Ireland in the first half, including 124,000 TV subscriber additions. In Germany and Austria, Sky added 4,857 customers, compared with 4,494 in the year-ago period. In Italy, it added 4,809, compared with 4,700.
21st Century Fox in December offered to buy full control of Sky in a £10.75-per-share deal that valued it at roughly $23.2 billion. Fox currently owns a 39.1 percent stake in the pay TV company. Asked how disruptive the Fox offer and the regulatory review of the deal would be, Darroch said: "As you can see see from our results today that as a business we are pretty good at just staying focused on the day job, and that's what we'll continue to do."
He also said Fox's offer won't change how Sky approaches soccer rights negotiations. Asked about weaker Premier League viewership earlier in the current season, Darroch cited the loss of some bigger clubs to lower leagues and fallout from this year's Summer Olympics. He said viewing in January is up 6 percent and added that there would hopefully be a strong end to the season.
About the appeal of the Premier League to viewers and Sky, he said: "It remains a very, very robust offering."