Sky 12 month resuls - ended 30 June 2014

[Scubbie]

Results for the 12 months ended 30 June 2014

Sky have posted their financial results for the year ending 30th June 2014.
http://corporate.sky.com/documents/p...ss_release.pdf

These results will be of interest to many people in the UK and in other countries too, with their acquisition of Sky Italia and Sky Sky Deutschland. So what do they look like?



Revenue is up, but the overall profit is down. I had to look up what 'EBITDA' meant. This figure too is down on last year's results.

Sky continues to grow their product base, but the question is "is this to existing customers or new customers"? With the purchase last year of the O2 and Be broadband customers from Telefonicá, many were tempted to stay with Sky with deal for TV subscriptions.

Core businesses growing well

• Added 3.1 million new paid-for products, 23% more than prior year2
• 342,000 new customers, highest customer growth in 3 years2
• TV growth of 264,000, double rate of prior year
• Sky Sports share of viewing at highest level in seven years
• New Sky+ homepage rolled out to 8.3 million homes

Sky's on-line services continue to grow. Now more than 50% of the STBs that can be connected to the Internet are so connected. Of course there are still plenty of the older SD STBs which can't be connected and many people live in areas where the broadband speeds are just not very nice. Sky Go has seen a 19% increase in customers and one in five Now TV subscribers also have the Movies pass.

The new AdSmart business has shown some promising growth. 180 advertisers have used it since it was launched. 68% of these are new to Sky. Sky has run 600 separate campaigns already and there will be more to come.

Today's announcement of the purchase of Sky Italia (100%) and Sky Deutschland (57.4%) from 21st Century Fox will expand the BSkyB portfolio. What benefits they will bring to the shareholders and customers is not too clear at this time. The developmental side is one that would most likely benefit. Programming may be an issue in some areas, but I'm sure that this will be handled suitably.

Jeremy Darroch, Chief Executive, commented:
“We have delivered an excellent year of growth as customers responded in record numbers to the combination of high-quality TV and innovative new services. This has resulted in the addition of 23% more products than last year and the highest rate of customer growth for three years.

“Strong demand across the board has translated to a 7% increase in revenues. Combined with a continued focus on operating efficiency, this means we have matched last year’s record level of earnings per share. This is an excellent result in a year in which we have had a one-off step up in Premier League costs and invested to accelerate take-up and usage of connected TV services. As we anticipated, we are starting to see the returns from our investment come through, leading us to increase the dividend for the tenth consecutive year.

“We saw a particularly good performance in TV, adding twice as many new customers as last year. This growth was underpinned by the increasing quality and range of content that we offer for the whole family, making Sky the number one destination for customers who want the best choice of TV. Our entertainment channels - Sky 1, Sky Atlantic and Sky Living - now account for three of the top four slots in customers’ ranking of must-have pay TV channels while Sky Sports enjoyed its highest share of viewing in seven years.

“Our investment to increase take-up and usage of new connected TV services is delivering excellent results. After connecting 3 million boxes this year, more than half of TV customers now have access to our market-leading On Demand services and the benefits are coming through in increased viewing, satisfaction and loyalty. Our expanded Box Sets offering has been a particular hit among customers with Game of Thrones, 24 and Grey’s Anatomy each achieving over 10 million downloads over the course of the year.

“We are also making good progress in developing new revenue streams. More than one million customers now take our premium mobile TV service, Sky Go Extra, and we’ve opened up the movie purchase market with our Buy & Keep service in Sky Store. In addition, Sky Bet grew strongly and we attracted new advertisers to Sky with our targeted advertising service AdSmart.

“Looking ahead, we see a broader opportunity for growth than ever before as we bring our core products to more customers, and open up new revenue opportunities. After a successful year of investment, we are well placed to exploit these opportunities and continue to deliver growth and returns for shareholders.”

As you can see from the above figures more people are now subscribing to the HD pack. This may be down to the link up with making the Box Sets available to those with the Family Pack or a sign the HD TV sales continue to grow. Sky now has over 10.6 million TV subscribers.

The Broadband customer base continues to grow. This is on top of the Be/O2 figures which were included in last year's annual results. There are still some 360,000 customers who have Sky Broadband and not their line rental. This has always been an issue when it comes to support as the line provider will often claim it is the ISP's responsibility to fix a broken telephone line as soon as broadband is mentioned. It also seems silly to me as it would be cheaper to switch everything to Sky in most cases. Many of those who were with Be/O2 had separate call providers and Sky honoured this arrangement. Of course this figure will continue to drop as new customers can only sign up for both Sky Talk and Sky Broadband and anyone upgrading to Sky Fibre must take the line rental too.

Sky have been promoting the on-line content available through the Sky+ HD STB, along with the new on-line search feature introduced last summer. The number of STBs connected over the past year has more than doubled from 2,709K to 5,662K.

A figure which the marketing department will be looking at is 'Churn'. With the recent announcement of a price increase in September for the Sky TV services, the churn figure are more or less the same as the previous year (2013 = 10.9%, 2014 = 10.7%). Based upon the feedback from many long-standing members on this forum I suspect that if the Marketing department doesn't kick in soon, the churn figures will rise for next year's results.

Sky also like the 'triple play' figures as it shows customer loyalty. This figure is up from 35% to 37% meaning that even more people have Sky TV, Sky Talk and Sky Broadband.

Sky's TV channels continue to be popular.

We have had another successful 12 months on screen. Sky’s pay channels outperformed the market in share of viewing and now account for all of the top 5 ‘must-have’ pay channels among customers, with Sky 1 rated top.

Our investment in original British production, and particularly drama, has continued to deliver good results. The stand-out success in Q4 was the critically-acclaimed Victorian thriller, Penny Dreadful. A co-production with Showtime, this has become the biggest-ever commissioned series on Sky Atlantic and will return for a second series to premiere in 2015. Meanwhile, in acquired content, the fourth series of HBO’s epic Game of Thrones set new records to become the highest-rating show ever for Sky Atlantic with average viewing up 60% on series 3, supported by the availability of Box Sets of series 1-3 On Demand.

Some of the productions have also received awards. A League of Their Own, David Attenborough’s Natural History Museum Alive in 3D and Sky Sports’ coverage of last year’s Ashes each won BAFTA TV awards.

Sky Sports saw their largest audiences in the last year, despite losing some of the Premiership matches to BT Sports. It will be interesting to see what happens next year. The battle for the Premiership title at the end of the season, the Heineken Cup Final and the Monaco Grand Prix all added to high viewing figures for the last weekend of May.

With the new EPG design and more people connecting their STBs to the Internet Sky has seen an improvement in revenue from the Sky Store.

Of course Sky's TV is also available through other providers. Recently Sky signed a new long-term distribution agreement with Virgin Media for our premium and basic channels. This week, they also announced a new deal with TalkTalk for distribution of Sky Sports and Sky Movies to its YouView customers.

Sky have also made further improvement in their service departments. This has resulted in them extending their lead in the quality of service delivery whilst also increasing the efficiency of their operations.

The current Sky+ HD and SkyHD STBs continue to perform better than previous models. Overall they are now in 83% of Sky's customer's homes, compare to 75% last year.

On-line help has increased a huge amount over the past year. No there are over 1 million visits per week to the various resources available.

Overall this is all good news for the shareholders, especially with their respective share dividends but, unlike previous years, there is little comment about new TV content to be commissioned by Sky. There is also little mention of new products in the pipeline, such as 4K UHDTV or a Sky Mobile service.

Of course there have been announcements regarding the development of a joint venture with City Fibre and TalkTalk to supply FTTP, as well as Sky's own venture. Nothing has been mentioned regarding further expansion of Sky's LLU kit in the BTO telephone exchanges.

Overall BSkyB appears to be a stable company which continues to improve upon what it has, as well as staying a UK Market Leader in the industry. Existing marketing seems to be paying off with increases in their desired target markets.

Whilst the overall profits are down, BSkyB continues to invest in the future.

I guess the next year will be an interesting one once more for BSkyB.



Note: The comments in this post are my own and do not necessarily reflect any policies or opinions of SkyUser or its owners. Much of the content has been taken from Sky's annual report, but also based upon various announcements over the past year.

[Scubbie]

Articles elsewhere on this year's results:

Sky Broadband UK Growth Slows to Reach 5.247m Customers - ISPreview UK

Financial review - Sky Annual Report 2013

http://www.hl.co.uk/shares/shares-se...ts-and-reports

BSkyB annual results: Now TV 'day pass' sales hit 50,000 | Media | theguardian.com

BBC News - BSkyB in £5bn deal to create Sky Europe

[lettice]

The results were better or much as expected by the financial industry.

An interesting video of Jeremy talking on sky news.
BSkyB Unveils Plan For European Pay-TV Giant
He mentions the results at 4:50 and the costs to customer at 1:39. Did he say 'good news for customer and no price rises'.

[Isitme]

Sky seem to have a very large 'churn' figure compared to TalkTalk who reported only a bit over 1%. Maybe they calculate it differently.

[seawright]

Sky seem to have a very large 'churn' figure compared to TalkTalk who reported only a bit over 1%. Maybe they calculate it differently.

Perhaps that is because TalkTalk is still a minor player in the pay TV market. It compares favourably with Virgin Media (their main competitor) who reported 13.9% in Q1 2014 on an annualized basis.

http://www.libertyglobal.com/pdf/pre...ease-FINAL.pdf

[Saturday]

Sky seem to have a very large 'churn' figure compared to TalkTalk who reported only a bit over 1%. Maybe they calculate it differently.

In my experience, churn figures are manipulated to give the numbers the bean counters want. It should be a straightforward calculation that looks at the number of customers at the beginning and end of a period but companies tend to "adjust" the definition of a customer e.g. in contract and out of contract, by product or service type, minimum tenure, month, quarterly and annual moving averages, acquisitions and so on.

It really is impossible to compare two companies churn figures unless you have all the customer data and adjust for differences. If TalkTalk is claiming 1% then that sounds heavily massaged to me. I even doubt Sky's figure is that clean e.g. I bet you customers who drop a service or a package aren't in the churn figures

[bubblegun]

Sky's biggest competitor in terms of customers cancelling is still Sky itself.

Lots of people cancel for a few months then rejoin as "new" customers.

The daft thing is most of them rejoin at a higher price than they left at.
I see it all the time..."did you know that if you'd done that upgrade on the old account it would have been £x cheaper?" Maybe I'm evil for tormenting them.

[Scubbie]

People do need to do their maths first. They need to take into account what they actually watch and perhaps even not watch the Sky channels for a couple of weeks before cancelling everything.

Amazon normally offers a free 30 day subscription, Netflix may have various deals going too (sorry I haven't looked).

Gamers will be unable/unwilling to share their broadband connection though as the video streaming will seriously mes up their pings.

Couples often benefit from the 'New Customer' deals by swapping the names on the account each year (i.e. one cancels, the new one signs up to as a new customer). Of course this has other implications and could become an issue if the one who is named is out/busy when there is a problem.