Record streaming subscribers for Sky but ad sales slump 5.6%

Pay-TV giant blames "challenging macro environment in Europe" for ad decline.

Game of Thrones: helped drive NOW TV
Game of Thrones: helped drive NOW TV

Sky had a "record" number of new streaming subscribers sign up across Europe in the past three months but revenue growth was hit by a 5.6% slump in ad sales.

US parent company Comcast said the strength of Sky’s streaming service, NOW TV, was "evident" in its net new customer figures for the quarter but it did not disclose a figure.

Sky added 304,000 customers across all of its European business, which includes pay-TV, broadband, mobile and online streaming.

"Customer growth mostly came from streaming subscribers, primarily driven by Game of Thrones and from the debut of the Sky original breakout hit, Chernobyl," Comcast said, adding that it had seen "a record addition of streaming subscribers".

Sky launched NOW TV as a cheaper paid alternative to Sky’s premium pay-TV service and a rival to Netflix in 2012.

Industry observers have said for some time that NOW TV's growth has helped to offset what Enders Analysis expects is "a slow decline" in satellite TV subscriptions, although those close to Sky maintain pay-TV remains robust.

The lower cost of NOW TV means Sky’s average revenue per user fell.

Sky’s advertising revenues were weak, sliding 5.6% to $563m (£454m) in the last quarter in a "challenging macro environment in Europe" – a significant drop from a 0.7% increase in the first three months of 2019.

There was no breakdown for the three key ad markets, UK, Germany and Italy.

ITV reported a 5% drop in UK ad sales for the first half of 2019 earlier this week.

Sky’s total revenues, including from subscriptions, rose 2.4% in the quarter to $4.8bn.

The amount of time that Sky customers spent watching content on Sky channels was up more than 20% on a year earlier thanks to "investment in sports and entertainment programming".

Viewing of Sky’s "original" content doubled on a year ago, and Sky plans to double its investment in "local content" from its in-house programme-making arm, Sky Studios.

Jeremy Darroch, the chief executive of Sky, said there was an opportunity for Sky "to develop European stories at a scale that we've never really seen before", noting Game of Thrones had predominantly European actors and was shot in Europe, and Chernobyl was also about Europe.

Brand safety

Separately, NBCUniversal, Comcast’s US TV operation, reported a 10% increase in ad sales from its upfront trading season, which brought in close to $7bn.

Brian Roberts, the chief executive of Comcast, credited "the popularity and scale" of NBCUniversal’s "premium content" and "advertisers’ need for trusted brand safe environments".

NBCUniversal has moved to what it called an "all video" approach as it has sought to break down "barriers" between traditional, linear broadcast and video on demand. Digital video sales rose more than 50%.

Stephen Burke, the chief executive of NBCUniversal, said the biggest category of advertisers that spent at the upfront were "digital-native" companies including the FAANGs – a reference to Facebook, Amazon, Apple, Netflix and Google.

NBCUniversal is also using NOW TV’s technology to help launch a planned streaming service in America.

Streaming is a boom area on both sides of the Atlantic. Disney+, Apple TV Plus and BritBox, a joint venture between ITV and the BBC, are all due to launch later this year.

Comcast beat Disney to buy Sky in October 2018 for £30bn. In a significant move, Andrew Griffith, Sky’s long-serving chief operating officer and chief financial officer, quit earlier this week to become the top business adviser to new UK prime minister Boris Johnson in Downing Street.