Sky notches up earnings hike as Fox and Comcast bidding war continues
Worldwide success of hit shows such as Patrick Melrose helped annual operating profits rise 7% to £1.03 billion.
Pay TV giant Sky has reported a 7% rebound in annual earnings and cheered its global appeal as it remains at the centre of a takeover battle between suitors 21st Century Fox and Comcast.
The group thanked the global success of hit shows such as Patrick Melrose, starring Benedict Cumberbatch, for helping operating profits of £1.03 billion for the year to June 30, up from £964 million the previous year.
Pre-tax profits rose 7.6% to £864 million on like-for-like revenues 5% higher at £13.6 billion.
We’ve grown every year since we launched in 1989 and we’re not slowing down. Today Sky is bigger and doing more for customers than ever before – and we’re proud that is being recognised globally Jeremy Darroch, Sky chief executive
It said it saw customer growth of 39% in the final three months, taking its total reach to more than 23 million households across Europe.
In the UK and Ireland, Sky grew underlying earnings by 9% to £2 billion, with revenues 4% higher at £8.9 billion.
It added 270,000 new customers in the UK and Ireland over the year, including 20,000 in the fourth quarter.
Advertising revenues in the UK rose 6% while its rate of “churn” – customers quitting the group – fell to its lowest for a decade at 10.3% after it invested in original content.
It added that this focus on content saw viewing of the group’s original dramas jump 50% in the UK last year.
Jeremy Darroch, group chief executive of Sky, said: “We’ve grown every year since we launched in 1989 and we’re not slowing down.
“Today Sky is bigger and doing more for customers than ever before – and we’re proud that is being recognised globally.”
Sky pledged to ramp up its investment on original shows and dramas, with aims to increase spending globally on this by another 25% thanks to a £200 million boost in revenues from selling its content worldwide.
It said half of its shows will be returning popular series, such as Riviera, while major dramas from the likes of HBO and Showtime will also return, including Big Little Lies, Billions and the final series of Game Of Thrones
The bounceback in full-year earnings comes after it took a hit in 2016-17 from £629 million in costs linked to its deal to show top-tier English football.
Its results come as the takeover tussle for Sky rages on, which could see it come under the full ownership of Rupert Murdoch’s 21st Century Fox or US cable giant Comcast, which have both put forward multibillion-pound offers.
Comcast recently increased its bid for Sky to £26 billion, hours after Fox hiked its offer to £24.5 billion.
All eyes are now on Fox to see if it will increase its bid for the 61% of Sky that it does not already own.
Comcast – which owns NBC Universal and is the largest cable operator in the US – has also dropped separate plans to bid for some of Fox’s entertainment assets to “focus” on its recommended offer for Sky.
The takeover war has seen Comcast go head-to-head with Walt Disney, which has bid for Fox assets, including its 39% stake in Sky.
Fox was recently given the the UK Government’s all-clear to take over Sky, by pledging to offload Sky News to Disney, and provide a Disney-owned Sky News channel with funding of at least £100 million a year for 15 years.
The Government has already separately cleared Comcast’s bid for Sky.