Tuesday, 22 August, 2017

Sky strikes new HBO deal as profits drop -11%

Sky profits fall amid rising Premier League costs and weaker advertising market Hike in Premier League football costs continues to hurt Sky's bottom line
Spencer Simpson | 21 April, 2017, 00:25

Sky saw its operating profit fall by 11% to £1.013 billion (US$1.3 billion) in the first nine months of its current financial year as the increased cost of Premier League football rights took its toll. In the United Kingdom and Ireland, revenues were £6.41 billion up 4% on both measures while Italy grew 25%/7% to £1.849 billion and German and Austrian business was up 28%/10% to £1.382 billion.

Total costs grew 8%, Sky said, due to higher programming costs as a result of the GBP494 million step-up in Premier League costs in the year to date.

Media tycoon Rupert Murdoch's Fox announced in December a deal to buy the 61-percent stake in Sky it did not already own for 11.7 billion pounds.

"HBO and Sky have for many years shared a common creative culture and a common vision for the development of high quality drama", noted Jeremy Darroch, Group CEO of Sky.

Sky also singled out the growing popularity of Sky Q as a highlight of 2017 thus far, as it is now in one million customers' homes, along with the launch of Sky Mobile. On a constant currency basis, revenues were up 5%.

Sky also announced a 250m USA dollar partnership with American production company HBO.

Sky has added 769,000 new customers in the last nine months, with 100,000 new customers in the third quarter. HBO's Game of Thrones is broadcast on Sky Atlantic in the United Kingdom, and Sky's biggest shareholder Rupert Murdoch made a bid in 2014 for all of Time Warner.

Richard Plepler, chairman and CEO of HBO, said the deal "allows even deeper collaboration between our two great companies, which have a long tradition in creating superior content for our customers".

It also announced a virtual reality project with Sir David Attenborough and the Natural History Museum. "Despite the broader consumer environment remaining uncertain, we continue to deliver on our strategy and are on track for the full year", Darroch said.

Sky is now in the throes of a deal that would see it entirely part of 21st Century Fox, which in 2014 made an opportunistic attempt to buy HBO parent Time Warner in a deal worth more than US$80 billion.

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