Sky Earnings Beat Forecasts -- Update
October 21 2015 - 3:50AM
Dow Jones News
(Adds detail.)
By Simon Zekaria
LONDON--Sky PLC (SKY.LN) on Wednesday sounded an upbeat note as
it reported a forecast-beating rise in first-quarter earnings on
higher revenue boosted by its operations in the U.K. and Germany,
and cost-cutting.
The pay-television giant, Europe's biggest pay-TV operator by
customer numbers, said operating profit before exceptional items on
a constant currency basis--a closely watched measurement of Sky's
main business performance--rose 10% year-over-year in the three
months ended Sept. 30 to 375 million pounds ($579 million), higher
than a consensus market forecast of GBP366 million. It didn't
disclose net profit.
Revenue rose 6% to GBP2.7first-9 billion, in line with a
forecast of GBP2.78 billion.
By region, U.K. and Ireland revenue rose 7%, while revenue in
Germany and Austria increased 11%. Revenue in Italy fell 4%. On an
operating profit growth level, U.K. and Ireland posted a jump of
20%, but for Germany and Austria there was no change as soccer
rights costs for the Bundesliga and Champions League competitions
ate into earnings.
Sky battles media rivals like BT Group PLC (BT.A.LN) in the U.K.
for a share of soccer TV viewers, which is seen as key to attract
consumers to its channels. BT has spent billions of dollars to
secure the rights to live European soccer in a bid to take on Sky's
longstanding dominance of soccer broadcasting in the U.K. In Italy,
Sky faces off with Mediaset SpA (MS.MI), which has secured
television rights to the Champions League.
The number of products Sky's customers use, including broadband
services and high-definition TV, jumped 937,000, taking its
products total to over 54 million. It also added 134,000 customers
in the quarter.
In the U.K. and Ireland, it added 77,000 customers, up over 50%
year-over-year and the highest rate of first-quarter customer
growth for four years, it said. It added 759,000 paid-for products,
including 43,000 TV additions and 133,000 broadband additions.
In Germany and Austria, Sky added 94,000 new customers.
"We have made a strong start to the year," said Chief Executive
Jeremy Darroch.
Last year, Sky bought its sister companies in Germany and Italy
from 21st Century Fox Inc. (FOXA) in a deal worth about $9 billion,
creating a pan-European pay-TV giant with over 20 million customers
across Germany, Italy, Austria, the U.K. and Ireland.
Sky is 39%-owned by 21st Century Fox, which until June 2013 was
part of the same company as The Wall Street Journal parent, News
Corp. (NWS.AU).
At 0741 GMT, shares rose 2.3% to 1,094 pence, valuing the
company at GBP18.4 billion. "Sky's numbers make impressive
viewing," says Richard Hunter, analyst at broker Hargreaves
Lansdown.
-Write to Simon Zekaria at simon.zekaria@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
October 21, 2015 04:35 ET (08:35 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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