Investments in tech and content paying off for Sky

The FTSE 100 subscription broadcaster and telecoms retailer reported an 11% increase in ‘established business’ EBITDA to £2.5bn, and a 9% increase in EBITDA itself..

Operating costs were down 70 basis points as a percentage of revenue, while Sky’s earnings per share rose 10% to 67.3p.

On a statutory basis, operating profit rose 7% to £1.03bn, and earnings per share were 17% higher at 47.5p.

The company’s recent-generation ‘Sky Q’ technology was now in 3.6 million homes, up 2.3 million year-on-year, while its fourth quarter customer growth was up 39%, with more than 23 million European households reportedly consuming Sky products.

Fourth quarter product growth was 81%, with 63 million products now in Sky homes.

On the content front, Sky said it put in place “major” new partnerships during the year with Netflix, BT Sport, Mediaset Premium and Spotify, and secured “significant” exclusive rights to Serie A, Premier League, Austrian Bundesliga and Formula 1.

It said its investment in homegrown content was paying off, with a continued increase in the commercial success of Sky original productions.

The board also said it was delivering “greater value” to its customers across the group, reporting an “excellent year” for UK business, with “strong” customer demand for Sky Q, Sky Fibre and Sky Mobile.

It said its “comprehensively upgraded” service in Germany was kick-starting next leg of growth in this market, while it was transforming Italy into a diversified multi platform business, where it launched Sky over DTT and over fibre, with plans for triple-play products in 2019.

“It's been an exceptional year,” said group chief executive Jeremy Darroch.

“We've delivered another set of strong results with like-for-like revenues up 5%, established business EBITDA up 11% and EPS up 10%.

“Over half a million new customers joined Sky this year and we now have 63 million products in customer's homes as they continue to choose Sky over other providers.”

As a result, Darroch said the company had extended its leadership position as Europe's largest direct-to-consumer media and entertainment business.

"Our strong performance reflects the execution of our strategy over an extended period of time, driving sustained growth in revenue, profits and shareholder returns.

“We do this by providing our customers more of the best content, world class innovation in products and services, combined with industry leading front-line service.

“Together with an increasingly agile and efficient organisation, we are able to deliver for shareholders whilst ensuring the customer experience is better than anywhere else.”

Darroch said that importantly, that strategy was now widely implemented across the group.

“In the UK and Ireland, our largest market, we've delivered an excellent operational and financial performance whilst scaling our new initiatives.

“In Germany and Austria, we have comprehensively upgraded all our services as part of our plans for sustained long-term growth in what is Europe's largest TV market.

“In Italy, we've had a ground-breaking year, opening up significant new growth opportunities for our business by offering new services over DTT and fibre, allowing us to reach new segments of the market.”

Alongside that, Darroch noted that the company had put in place “further building blocks” for future growth, having secured more exclusive coverage of major sporting events, with its investment in Sky original productions reportedly being widely recognised by customers and critics.

“We've rolled out Sky Q to all our major territories meaning a growing number of customers can enjoy the benefits of Europe's best home entertainment service, and our agreements with Netflix, Mediaset, BT and Spotify will further enhance and extend our customer offer.

“We therefore enter the year ahead with good momentum.”

Darroch explained that the board had an “excellent” set of plans, and was focused on executing them well.

“We are proud that Sky is recognised globally as an outstanding business and are confident we have the right assets and capabilities to continue creating long term growth opportunities and to capitalise on the strong position we've built.”