Sky profits soar amid HD demand
Thursday, July 29 2010, 09:35 BST
By Andrew Laughlin,
The World Cup and a spate of high definition channel launches helped Sky add more than 400,000 HD subscribers in the second quarter, as its total customer base closed on 10m.
In the three months to June 30, the satellite broadcaster reported that revenue grew 11% to £5.9 billion, with operating profit up 10% year-on-year to £855m.
Sky, which has confirmed plans to expand its Sky 3D channel to residential subscribers on October 1, attracted 429,000 customers to its Sky+ HD service over the quarter, up 47% year-on-year. The firm said that 30% of its 9.86m customer base now takes Sky+ HD.
The operator's high definition channel commitment has now reached 43 channels, with plans to grow the HD lineup to 50 by Christmas.
In total, Sky has attracted 90,000 net new customers to ensure it remains on track to reach the target of 10m subscribers by the end of 2010.
The firm added 119,000 broadband customers in the second quarter to bring its total base to 2.6m. The service also reached profitability for the first time since it launched in 2006.
Sky said that 20% of its customers now opt for a "triple play" package of TV, broadband and landline, up 36% year-on-year. Average revenue per user was up 9% year-on-year at £508, with customer churn standing at 10.5%, down from 9.9% in the same period last year.
"We've had another good quarter to bring our financial year to a strong close. Customers are choosing Sky in ever greater numbers, not just for TV but across our entire product range," said Sky chief executive Jeremy Darroch.
"High definition goes from strength to strength, with more than twice as many customers as a year ago. At the same time, customers are choosing broader bundles of services, with one in five now taking all three of TV, broadband and telephony. Overall, customers are taking 45% more additional subscription products than a year ago.
"Strong customer demand is increasingly reflected in our financial results, with double-digit growth in each of revenue, operating profit and cash flow. Earnings per share are up 20% to a record 31.1p and we are proposing a further 10% increase in the full year dividend, which has now doubled over the last five years."
Also today, Sky has agreed an exclusive deal for rights to all new programming from US network HBO, as well as making a commitment to support UK-produced comedy.
"We're looking forward to a new slate of original UK comedy on Sky1 HD and the launch of 3D TV to residential customers on October 1. The recent acquisition of the Living TV Group will help us to broaden our entertainment offering still further in the future," said Darroch.
"It has been a good year for Sky but we stay focused on the challenge ahead. The economic outlook remains uncertain and, against that backdrop, we'll pursue the consistent set of priorities that have served us well so far. Executing on these plans will build a larger, more profitable business for the long term."