Slow but Steady Growth at Sky Deutschland

Rupert Murdoch’s German pay TV operation trims its losses but continues to bleed red ink.

COLOGNE, Germany – The British and Italian management running Sky Deutschland have taught the German pay TV group something about organization and efficiency. Since Rupert Murdoch’s NewsCorp. took operational control of Sky back in 2009 and recruited a new management team from BSkyB and Sky Italia, the sputtering German operation has, slowly, started to tune up. While third quarter figures, released Thursday, show Sky Deutschland is still far from break-even, that goal no longer seems the pipe dream it did two years ago.

Sky earned $390 million (€284.5 million) in Q3, a 17 percent year-on-year jump while the company cut its quarterly losses nearly in half to $64.3 million (€46.9 million). For the year to date, Sky’s revenues topped $1.1 billion (€831 million), up 16 percent, and losses were down 30 percent to a still hefty $257 million (€187 million).

But all of Sky’s fundamentals are pointing in the right direction. Subscriber numbers are up 13.3 percent to 2.857 million, average monthly revenue per user is 5 percent up at $42.45 (€30.94) and, perhaps most importantly, churn, the percentage of subscribers that cancel their subscriptions every month, is down to 11 percent, from 19 percent this time last year.

Progress, however, has been slow. Brian Sullivan, Sky Deutschland’s British CEO, has made a point of not forecasting when the company will start making a profit. In its 20 year-history – first as Premiere and, since 2009, as Sky Deutschland – Germany’s number one pay TV network has never made money. Sullivan and his team have shown clear progress but the numbers suggest black ink for Sky is still a long way off.