Sky revenues boom but rising Premier League costs take toll on profits

Rising sales across all of its European markets led Sky to report revenues up 12% to £6.4bn in the second half of 2016 - but the higher price of its football rights meant profits were down.

Sky: revenue in the UK and Ireland up 5% to £4.3bn
Sky: revenue in the UK and Ireland up 5% to £4.3bn

Revenue in the UK and Ireland was up a healthy 5% to £4.3bn, but the business’s other two regions – Germany/Austria and Italy – each accounted for a larger share of the total growth.

Revenues in Germany/Austria were up 31% to £907m, while Italy grew 30% to £1.2bn. Both figures were helped by the fall in the value of the pound against the Euro – at constant exchange rates, Germany/Austria grew 10% and Italy 9%.

However, Sky also absorbed a £314m bump in the cost of its Premier League rights. The broadcaster is paying £4.2bn over three years for the rights to 126 games per season – an 80% increase on its previous deal. As a result, profits for the half fell 9% to £679m.

In the UK, Sky added 205,000 new customers, with 124,000 buying TV products – taking the TV customer base to 11.4 million. It also increased broadband customers by 140,000, taking the total to six million.

But the company emphasised the launch of Sky Mobile, which first became available in December, as evidence of its ability to create future revenue streams with new products.

Jeremy Darroch, group chief executive, said: "Across the half we have continued to drive customer and product growth in all our markets, adding over 500,000 new customers – faster growth than last year – and selling two million products.

"That means, in the past three years and since the Skys have come together, we've now added 2.5 million customers and total products are up almost 25%.

"This has resulted in sector leading revenue growth of 6% which we've achieved despite some pressure on discretionary consumer spending across Europe and a decline in the UK advertising market."

Channel 5 is first public service broadcaster to join Sky AdSmart

Sky's TV advertising platform, Sky AdSmart, has added its first public service broadcast channel to its targeting portfolio: Channel 5. 

It is the latest Viacom-owned network to join AdSmart, following Comedy Central and MTV, and brings the number of channels in the network to just under 100.

Since its acquisition by Viacom in 2014, the Channel 5 family of channels has increased its share of overall TV viewing on the back of consecutive double digit annual increases in content spend.

Graeme Hutcheson, director of Sky AdSmart and digital, said: "Sky AdSmart changes the way that people look at TV advertising. The platform is continually evolving and we are really excited to announce one of the UK’s largest channels going live this month."

Mark Swift, senior vice president, UK ad sales for Viacom UK, said: "We chose Sky Media as a single point of sale for all Viacom’s UK channels in large part because of their track record of innovation to improve the targeting and effectiveness of TV advertising.

"We’ve already experienced encouraging results for MTV and Comedy Central with Sky AdSmart and we look forward to creating more value for both our commercial partners and Viacom with the addition of Channel 5."