Over a million new Sky paid-for products in Q3 as group revs hit 8.453BN

DetailsJoseph O'Halloran | 21 April 2015

The recently enlarged Sky operation has begun to flex its muscles with what the company calls 'excellent' Q3 2015 performance across the group.

For the quarter ended 31 March 2015, the pay-TV giant added 242,000 new customers, almost 70% more than prior year, with over a million new paid-for subscription products. The growth was seen across the three territories with the highest Q3 growth in 11 years in the UK and Ireland, a record growth rate in Germany and Austria, plus the best Q3 performance in Italy for three years.

At the end of the quarter, Sky reported a 5% year-on-year increase in group revenue to 8.453 billion driving a 20% increase in operating profit to 1.025 billion. The total Sky customer base has grown to 20.8 million, with total product sales for the year to date standing at 3.8 million.

Q3 UK and Ireland customer growth was 41% up on the prior year to 127,000; Sky in Germany and Austria contributed 103,000 new retail customer additions, 61% more than the same period last year, taking the rolling 12-month growth rate to 494,000; and Italy saw 12,000 new customer additions, reversing a net loss of customers in the previous year.

SkylogoPaid-for product growth of 760,000 in the UK and Ireland took Sky over the 37 million mark, bolstered by 27% year-on-year growth in TV, with 94,000 additions, and 43% growth in broadband, with 100,000 additions. In Germany, paid-for products increased by 212,000 with good growth in Sky Premium HD with Sky now in half of homes. In Italy, paid-for subscription product growth was 30,000 with a new marketing campaign helping deliver strong growth in HD of 19,000.

In all three territories another striking feature was a marked reduction in churn. What the company calls increased customer satisfaction resulting from the growth of connected TV services delivered a 90 basis-point reduction in 12-month rolling churn to 10.1% in the UK and Ireland, its best performance in 11 years, and a 40 basis-point reduction quarter-on-quarter.

Looking at contributing factors to this customer retention, original content was a key factor. Fortitude and the Italian political drama 1992, became Sky's first two dramas to premiere simultaneously across all five territories in the quarter, while Fortitude was Sky Atlantic's most successful original drama to date in the UK and became the most successful show for Sky Vision, its distribution business, with sales to 100 territories internationally. The fifth series of HBO hit Game of Thrones launched exclusively to Sky customers across all markets within 24 hours of its launch in the US on 12 April with the premiere achieving an overnight audience of over 1.5 million in the UK and Ireland, up almost 30% on the prior series.

In the UK and Ireland, Sky connected more than a million boxes in the year to date, taking the connected base to almost seven million homes. On Demand downloads passed the 300 million mark during Q3, up 63% year-on-year, with Sky Box Sets delivering a new quarterly record of almost 100 million viewing events across Sky+ and Sky Go with hits such as The Walking Dead, Grey's Anatomy and Game of Thrones. UK and Ireland Sky Store revenues increased 75% with a growing contribution from the Buy & Keep service. To date, more than half a million customers have purchased one or more films from Sky since the service launched. Sky recently extended Buy & Keep to multiple devices laptops, iOS and Android devices, and NOW TV, Roku and YouView boxes. The aforementioned NOW TV over the top (OTT) service showed subscriber growth up 30% on the same period last year. Sports transactions have trebled with over one million year to date and included a record 36,000 on the day of the Liverpool versus Manchester United clash in March 2015.

Commenting on the results, Jeremy Darroch, group chief executive, said: "We have delivered an excellent third quarter as customers across the enlarged Sky group respond to the quality and breadth of what we offer ... We took share in broadband and grew strongly in TV as our dual-brand strategy with NOW TV and Sky continues to deliver. At the same time, Germany enjoyed another record quarter of growth and Italy posted its best Q3 customer growth in three years. We've also delivered significantly increased customer loyalty in each of our businesses. We are particularly excited by our progress in original drama. Fortitude debuted as the most successful drama ever on Sky Atlantic in the UK, 1992 opened as our most successful original scripted series in Italy, while Germany took its first steps in international co-production with 100 Code. As these results demonstrate, our teams are working well together right across the new Sky. Five months in, our integration plans are progressing well and we are well positioned for the expanded growth opportunity ahead."