Sky revealed a solid set of full-year results as earnings jumped by 9% and like-for-like (LFL) revenue rose by 5%.
Average revenue per user held steady at £45. The company had a strong finish to the year as it added 20,000 new customers in the UK and Ireland. In the final three months, customer growth and product growth jumped by 39% and 81% respectively.
The company confirmed the UK division had an ‘excellent’ year as demand for Sky Mobile, Sky Fibre and Sky Q was strong. It is encouraging to see high demand for the add-on services offered by the company. Original productions by Sky have proved popular with customers and the company confirmed that the investment in its own content is ‘paying off’. The group is planning to expand its German and Italian operations. It has been a ‘ground-breaking’ year in Italy for the company, and continued investment is planned for Germany and Austria.
The battle for Sky continues as Disney, Fox and Comcast are all keen on the company. The UK regulator has expressed concerns about the prospect of the Murdoch family, who control Fox, owning too much of the UK media. Given Disney’s enormous back catalogue of content, Sky would stand to benefit from such a move. Comcast recently dropped its pursuit of Fox in order to focus on their Sky bid, and this underlines how serious they are. Comcast don’t have the best reputation when it comes to customer service, and Sky will need to take that into account before potentially getting into bed with them.
Sky had a solid first-half as the company posted a 10% jump in earnings and it added 365,000 new customers. LFL sales jumped by 5% despite the challenging environment. The churn rate is a key indicator as it measures the number of customers who unsubscribe from the service. In the first six months of the year, the UK churn rate dipped from 11.6% to 11.2%, while the German division saw the churn rate jump to 14.2% from 10.6%. The capital returns were positive as the firm paid an interim dividend of 13.06p, as well as the special dividend of 10p.
Sky saw an increase in its direct-to-consumer services, and revenue from content is growing quickly. At the back end of last year, Sky and BT agreed a channel sharing deal, which will allow the firms to sell their channels on each other’s platforms. The tie-up is seen as preparation for when Amazon start showing Premier League games from the beginning of the 2019 season. Content has become king, and Sky are all too aware too this.
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