Sky results for the three months ended 30 September 2017
This is a discussion on Sky results for the three months ended 30 September 2017 within the Sky news and announcements forums, part of the SkyUser Announcements category; Strong growth in revenue and profits 5% increase in like-for-like revenue to £3.3 billion 11% increase in EBITDA to £582 ...
- 12-10-17, 07:59 AM #1
Sky results for the three months ended 30 September 2017
Strong growth in revenue and profits
- 5% increase in like-for-like revenue to £3.3 billion
- 11% increase in EBITDA to £582 million
- 15% increase in Established Business EBITDA to £606 million, excluding investment in new business
Good customer demand for our products and services
- 160,000 new customers joined in Q1, up 51%
- Over 800,000 subscription products added, passing the 60 million mark
- 9.6 million pay-as-you-go sports and entertainment buys, up 12%
Excellent quarter on screen
Customer viewing to Sky pay channels up 10%
Further strong progress on efficiency with operating costs held flat
Opened up new markets to provide further opportunity in the future
- Launched Sky in Spain
- Sky Sport streaming service launched in Switzerland
More for customers to look forward to
- New loyalty programmes in the UK & Ireland, Germany & Austria
- Sky Q to launch this financial year in Italy, Germany & Austria
- 25% more investment in Sky Originals programming
Jeremy Darroch, Group Chief Executive, commented:
We’ve had a strong start to our new financial year with good revenue growth and excellent profit growth as investments we’ve made come through.
Against the backdrop of pressure on consumer spending and lower spend on UK television advertising, we were particularly pleased with our own EBITDA growth of 15% in our Established Business. We continue to see good demand for our products and services with 51% more new customers joining Sky than a year ago; we surpassed the milestone of 60 million subscription products; and pay-as-you-go sports and entertainment buys grew by 12% to 9.6 million.
Our investment on-screen to broaden our offering is delivering with viewing to Sky channels up 10% year on year. Within this the first series of our home-grown drama Riviera achieved 20 million downloads, becoming our highest ever rated Original commission and Game of Thrones has become the most watched series ever on Sky. In its eleventh season in Italy, X Factor has launched to record audiences and we’re pleased with the continued progress of Sky 1 in Germany & Austria where the first episode of Masterchef series two achieved an audience of more than double last year.
Customers have lots to look forward to as we continue to enhance our products and services in all territories. We are increasing investment in Sky Originals by 25% this year, which means we’ll be showing four major dramas every single quarter, including the eagerly awaited premiere of our first German production, Babylon Berlin, on 13 October. We will launch our loyalty programme in Germany & Austria in the second half of the financial year, building on the success of our well-established scheme in Italy and the good start to Sky VIP in the UK. As part of a big year of innovation, we have two important launches coming up this quarter – in the UK, we are launching Sky Soundbox, our all-in-one sound system, to transform the TV sound experience, and we are rolling out our next generation TV service, Sky Q, to Italy. We will follow this with the launch of Sky Q in Germany & Austria in the first half of 2018, taking a major step forward in the customer experience.
Alongside developing our existing products and services, we continue to invest for the future. In the UK, customers are responding well to our entry into the mobile market whilst this quarter we have successfully entered two new territories with the launch of direct to consumer streaming services in Spain and Switzerland, further demonstrating our credentials as the leading provider of streaming services in Europe.
Looking ahead, despite the uncertainty in the broader consumer environment, we remain on track with our plans and enter the busy Q2 trading period focused on delivering our clear strategy for growth.
We achieved strong profit growth in the UK & Ireland, continuing the momentum from the fourth quarter of the last financial year. We grew revenues by 4% and EBITDA was up 11% to £452 million. Established Business EBITDA was up 15% to £476 million, reflecting strong customer and product growth, a change in retail prices in fixed line telephony and broadband, strong growth in our pay-as-you-go revenues and a good performance from our advertising business against the backdrop of a difficult market which we estimate was down around 2%. This quarter we focused on accelerating Sky Mobile customer additions with growth of 108,000, which is 46% faster than in Q4. We took a major step forward on customer loyalty with the launch of our VIP programme which already has over 1 million customers enjoying a range of benefits and we equalised pricing for new and existing customers.
Other key highlights from the quarter include:
- Expanded Sky Sports service launched giving customers a better experience and attracting the 4 million sports fans in our UK customer base that don’t currently take Sky Sports
- Record Entertainment audiences: Riviera concluded as our most successful original drama with 20 million downloads; Game of Thrones was our highest rating show ever with 4.7 million viewers
- New five year deal agreed with the English Football League out to 2024 with 81% more matches
- My Sky, the next step in our digital service, has achieved 3 million downloads and ranks as the number 1 free utility app in the app store
- Led OFCOM service league table for sixth consecutive quarter across each of Pay-TV, Broadband and Phone
Results in pdf format;
Last edited by lettice; 12-10-17 at 08:15 AM.
- 12-10-17, 08:12 AM #2
Re: Sky results for the three months ended 30 September 2017
We have continued to make good progress on our plans: to grow revenues and profits whilst investing to expand into new markets, opening up new customer segments and developing our products and services, together delivering sustained long-term shareholder value.
This approach is working well and is reflected in our strong operating and financial performance this quarter placing us on track for our full year expectations.
Group like-for-like revenues increased by 5% to £3,296 million in the first three months of the year (“the period”), with good growth across all territories despite headwinds from a decline in the UK advertising market and pressure on consumer spending across Europe. Combined with an excellent performance on operating efficiency, where we held operating costs flat year on year, we achieved strong growth in EBITDA, up 11% to £582 million and up 15% when excluding the cost of investing in two new lines of business - Sky Mobile and Sky Espana.
This was a strong quarter for customer growth. We added 160,000 new customers, up 51% on the prior year helped by strong campaigns in all markets around Game of Thrones 7. We grew well in Germany & Austria adding 90,000 new customers, up 84% and added 70,000, up 100%, in the UK & Ireland. In Italy, our customer base remained flat versus Q4.
Our existing customers continue to take more from us. We achieved good subscription product sales, which exceeded 800,000, taking our base to over 60 million, and 9.6 million pay-as-you-go sports and entertainment buys, up strongly versus last year.
We have continued to improve the products and services we offer customers. We have a well established loyalty programme in Italy, with over 2 million members to date, and this is helping us to achieve one of the lowest rates of churn in Pay-TV. In August, we launched a similar programme in the UK & Ireland, rewarding customers with a range of benefits based on their tenure, which get better over time. In just a few weeks, we have signed up over 1 million customers and plan to launch a similar scheme in Germany & Austria during calendar year 2018.
Sky Q continues to grow strongly 18 months since launch in the UK with 1.6 million customers taking the service, up 23% since Q4, driving strong customer loyalty and advocacy. Sky Q launches in Italy before Christmas and then Germany & Austria in the second half of our financial year, where Sky Q represents a particularly significant step-change versus existing legacy boxes in terms of an improved user interface, simpler wire free multiroom experience, greater connectivity and enhanced opportunity to present services like On Demand and Sky Store to our customers.
Our European production business is a key priority for growth. This year we are investing 25% more in Sky Originals programming across our territories to continue to broaden our offering alongside showcasing the best of the US. These investments are delivering another strong performance with record viewing for both local and international productions and driving average customer viewing to Sky pay channels up by 10%. There’s more to come in Q2 including the third series of Gomorrah, Sky Italia’s highest rated show; Babylon Berlin, our first major production in Germany & Austria; and the conclusion of Tin Star, which is tracking at similar record levels of viewing as Riviera.
Finally, in addition to growing our Established Business, we have launched direct-to-consumer services in two new markets this quarter: a simple and affordable TV streaming service in Spain and a sports streaming service in Switzerland, leveraging our capability as the leading provider of streaming services in Europe.
The continued strong performance of our associate Sky Bet since we sold an 80% stake of the business to CVC Capital Partners, and subsequent re-capitalisation during the quarter, has enabled a significant cash distribution to Sky Bet Shareholders amounting to £113 million paid to Sky in September of this year. As previously stated we plan to reinvest the proceeds to create future value through a number of initiatives, including expanding the territorial footprint of our OTT services and increasing our investment in Original content.
On 15 December 2016, the Board of 21st Century Fox and the Independent Committee of the Board of Sky announced that they had reached agreement on the terms of a recommended pre-conditional cash offer by 21st Century Fox for the fully diluted share capital of Sky which 21st Century Fox and its affiliates do not already own (the "Offer"). The Offer, which is intended to be effected by a scheme of arrangement is subject to the satisfaction or waiver of certain pre-conditions, principally being regulatory clearances.
The Offer is currently being reviewed on public interest grounds by the Competition and Markets Authority (“CMA”), which has a statutory deadline of 6 March 2018 to send its report to the UK Secretary of State for Digital, Culture, Media and Sport, following her decision to refer the Offer for in depth review on 20 September 2017. Regulatory clearances from all other relevant authorities have now been received.
In accordance with its terms, if the Offer is not effective by 31 December 2017, a special dividend of 10 pence per Sky share is payable without a reduction in the offer price of £10.75 per Sky share. We can now confirm that the ex-dividend date will be 11 January 2018 and the dividend will be paid on 9 February 2018 to shareholders on the register at close of business on 12 January 2018 should the Offer not have completed by 31 December 2017.