Sky Praises Diversification Strategy Following Broadband, NOW TV Gains

Sky says moves to diversify its portfolio are paying off, with broadband growth and connected services contributing to revenue and profit growth in the UK over the past 12 months.

The company has expanded beyond its traditional area of strength in satellite broadcasting to broadband, landline and over-the-top (OTT) services, investments it says are now paying dividends.

In the UK and Ireland, Sky added 506,000 customers during the financial year, its highest organic growth rate and pushing it above the 12 million milestone. Just under 125,000 of those were secured in the fourth quarter, its best performance during that period for six years.

UK revenues were up six percent to £7.8bn for the year, while profit increased 12 percent to £1.35bn. Across Europe, Sky generated £11.3bn in revenue, a five percent rise, and recorded operating profits of £1.4 billion – indicative of the UK’s importance to the Sky Group.

Sky growth

“It’s clear that the steps we have taken to broaden out our business are paying off,” said Jeremy Darroch, Sky Group CEO. “By distributing our content over multiple platforms and launching new products and services, we are now able to offer something for every household.”

The company secured 3.6 million new individual UK subscriptions during the year, taking the total to 38 million, 721,000 of which were added during Q4, during which TV subscriptions rose by 49 percent to 113,000 and broadband subscriptions jumped by 92 percent to 96,000.

Sky says seven million of its TV subscribers have connected their set-top box to the Internet, fuelling demand for services like Sky Store, while more than six million users have signed up for Sky Go, while Sky Go Extra is the company’s “fastest-ever growing” product. NOW TV, Sky’s streaming service is also growing, with 1.5 million transactions – monthly, weekly or daily passes – taking place last year.

The hope is that Sky’s existing delivery capacity will allow it to provide more services to customer in the future as part of ‘quad-play’ packages comprising television, broadband, landline and mobile services.

Sky is due to launch a mobile virtual network operator (MVNO) next year using O2’s infrastructure and is involved in a joint-venture with TalkTalk that will deliver ultrafast broadband to York – a model which could be replicated elsewhere in the country.

Tech future

Earlier this week, Sky announced it was opening a new tech hub in Leeds to develop digital services. The company hopes to take advantage of its operations across the UK, Ireland, Germany, Austria and Italy to develop common technology and branding in the future.

“This is another strong set of results for Sky, despite increasing competition from rivals in all markets,” commented Paolo Pescatore, Director, Multiplay and Video at CCS Insight. “This is even more significant as key telcos have moved aggressively into its core business.

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

“Sky is now well placed to grow the business in other markets, but Italy still remains a challenging market. However, this should be bolstered by standout performance in the UK and encouraging signs in Germany.

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