Sky hits 11-year subs growth high

European satcaster Sky has revealed a rise in operating profits and its strongest customer growth in the UK and Ireland in 11 years in its first annual results since taking over sibling operations in Germany and Italy.

Sky now has more than 12 million customers in the UK and Ireland for the first time after organic customer growth of 506,000. The proportion of Sky customers cancelling subscriptions fell to 9.8%, its lowest figure in 11 years.

The satcaster’s CEO Jeremy Darroch described the previous 12 months as an “outstanding period” and said UK operations were the “engine of growth,” highlighting dramas including Fortitude and 1992.

He added that original comedy and scripted programming remained priorities for Sky, which is spending around £5bn (US$7.8bn) on content across its European markets.

Shows on its slate include 10 pan-European “priority projects” including The Last Panthers and The Young Pope, which is set to air next year and is being coproduced with US cablenet HBO and France’s Canal+.

The results are the first to come from the enlarged group after BSkyB completed a takeover of Sky Italia and Sky Deutschland last year, creating a broadcaster with more than 20 million subscribers. However, Sky is facing considerable competition from UK rival BT, which has won a share of football rights and is competing on the satcaster’s broadband operations.

Paolo Pescatore, director of multiplay and media at analysts CCS Insight, said the figures were “another strong set of results for Sky.”

“Fundamentally, it underlines the importance of owning a strong portfolio of content across all screens and seeing good uptake across all platforms,” he said. “Furthermore, it validates Sky’s strategy of broadening its business beyond satellite DTH.”

Pescatore added that a tie-up with telecoms giant Vodafone would make “the perfect fit” for Sky “as their assets would strongly complement each other. Scale will also be important and as we move quickly towards multiplay, content will allow telcos to differentiate their offerings beyond price alone.”

Sky Italia profits were up £61m, while losses in Germany fell to just £11m, with the market recording its best year of customer growth, according to Darroch.

Annual revenues were up 5% on last year to £11.28bn, with pre-tax profit up 6% to £1.2bn to June. Shares in the company rose 2.5% in early trading.