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Satellite TV News Costs and churn affect UK but Sky posts strong first half year as it preps OTT SkyQ l

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Costs and churn affect UK but Sky posts strong first half year as it preps OTT SkyQ l


European pay-TV giant Sky is claiming that in its first half of its 2016/17 fiscal year it has shown sector-leading revenue growth across all markets, with a 12% increase in revenue to £6.4 billion, driving an operating profit of £679 million.

Steady growth was achieved across all three of Sky’s European territories. In the UK and Ireland it reported half yearly revenue of £4.267 billion, up 5% compared with the same period of 2015, while Italy brought in £1.236 billion, up 30%in terms of reported growth but 9% at constant currency. Germany and Austria contributed £907 million, a yearly reported growth of 30% and 10% at contest currency.

Yet the first half operating profit was down £65 million year-on-year; the prior year results were achieved after absorbing a £314 million increase in costs for its crown jewels, the rights to show English Premier League football. The company also conceded that churn in the UK remained higher than planned. The company said that it had a ‘full set’ of actions to address this issue, including replicating the loyalty programme in Italian which had resulted in reduced customer turnover.

Across the territories Sky added adding over 500,000 new customers, faster growth than for the first half of 2015, while selling two million products. The company said that the first half contained a number of highlights including entering its largest adjacent sector through the launch of Sky Mobile in the UK, while making the Sky Q box standard for all customers in the country. Indeed, the platform figures highly in Sky’s future plans and will be used to launch Sky TV on an over-the-top (OTT) basis without the need for a satellite dish for the very first time in the UK. The move will see millions of homes, currently unable to install a satellite dish able to receive Sky TV delivered through a box over broadband. The new service is expected to launch in the UK in 2018. There are currently more than a million Sky Q boxes in around 600,000 homes in the UK.

Analysing the first half year and looking forward to the next six months, Sky CEO Jeremy Darroch said that whilst he expected the backdrop in its territories to remain ‘uncertain’, the company was on track as it entered the second half of the financial year and that it remained focused on delivering a clear strategy for growth. “In the past three years and since [we] have come together, we’ve now added 2.5 million customers and total products are up almost 25%. This has resulted in sector leading revenue growth of 6% which we've achieved despite some pressure on discretionary consumer spending across Europe and a decline in the UK advertising market,” he remarked. “In a year in which we are absorbing significantly higher programming costs, as a result of the step up in Premier League costs, our financial performance has been good.”
 

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