European pay-TV giant Sky, which last month accepted a buy-out offer from shareholder Rupert Murdoch, has reported a 9% dip in operating profit to £679M ($859M) for the six months ending in December.
The group said on Thursday that the lower half-year earnings were weighed down from absorbing significantly higher programming costs of British Premier League soccer broadcasting rights.
First-half revenue for the group rose 6% on a constant currency basis to £6.4B while earnings per share dropped 10%, or 5% after adjustments.
“We have delivered a strong first half performance across the group, continue to make significant progress against our strategy and remain on track for the full year,” said Sky Group Chief Exec Jeremy Darroch in a statement. “Across the half we have continued to drive customer and product growth in all our markets, adding over 500,000 new customers – faster growth than last year – and selling two million products. That means, in the past three years and since the Skys have come together, we’ve now added 2.5 million customers and total products are up almost 25%.”
He added: “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. To put this into perspective, our first half operating profit of £679M ($858M) is down £65M ($82M) on the prior year despite absorbing an additional £314M ($396M) of Premier League costs, highlighting the strength of our underlying financial performance. This has been supported by the efficiency of our operating model and the achievement of our £200M ($252M) synergy target six months early.”
In the UK, the company added 205,000 new customers in the half, driven by a strong Christmas trading period, and reported a 12-month rolling basis churn of 11.6%.
In Germany and Austria, it added 231,000 new customers – up 8% – and reported a 10.6% hike in churn due to more customers coming to an end of their 24-month contracts compared to last year.
In Italy, churn was up 9.5% while it saw total customer growth of 67,000.
The company said that 2017 would be Sky’s “biggest ever year on screen” thanks to deals with Showtime and HBO which would bring customers content such as Billions, Twin Peaks, Ray Donovan and Game of Thrones. In March, it will air HBO’s new drama Big Little Lies, starring Reese Witherspoon and Nicole Kidman. Anticipated German crime drama Babylon Berlin, the third series of Italian drama Gommorah and Brit political drama Guerrilla, starring Idris Elba, are all in the pipeline.
Last month, Murdoch’s 21st Century Fox offered to buyout Sky for $14.6B. Fox currently owns a 39.1% stake in the company.
