Profits up as Sky claims to reach 40 million households

Entertainment group Sky attracted 177,000 new customers in its third quarter, including 46,000 broadband additions in Britain and Ireland, helping revenue rise 5 per cent for the first nine months.

The pay-TV provider attributed the surge to its decision to limit discounts and focus on its new high-end Sky Q service.

The company, which also operates in Germany, Austria and Italy, said it was pleased with the response to the launch of its new television product Sky Q in Britain in the quarter.

The company’s total retail customers across all its services now stands at 21.7 million.

Churn was steady in Germany at 9.8%, but jumped 1.1 percentage points in Italy to 11%, partly due to the loss of Champions League rights.

Sky notes operating profits rose 12 per cent in the nine months to March to £1.1 billion as revenues rose five per cent to £8.7 billion. The company’s stock has fallen by 9pc so far this year. “Our strategy to broaden our business, expanding into new markets and customer segments, has delivered further excellent financial results with revenue up 5 per cent and a double digit growth in profit”. It benefited from losing costs related to the Champions League, although this was partly offset by higher costs related to Bundesliga football in Germany.

“Our main concern is with Sky’s long term profitability, we believe it will never reach the heights to justify there valuation as we believe there will be continuing pressures from programming cost inflation”, Whittaker said.

But they warned that Sky, which has 22m customers across Europe, faces heavy competition from broadcast rivals in its European markets, particularly French media group Vivendi, which agreed to buy Mediaset assets earlier this month. In the United Kingdom alone, customers are now taking a “milestone” 40 million products, the firm said. It added 73,000 customers in this market in the quarter and 199,000 new products, which counts multiple services taken by each customer.

Advertisement

Shares fell 2.2%, or 24p, to £10.05 in early trading in London.