Sky takes Q1 hit from Covid-19 amid warnings of more to come
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Joseph O'Halloran
| 01 May 2020

Streaming may be the big winner as population masses spend more time at home due to global lockdowns but evidence of the blow to the pay-TV industry in the US and UK due to the coronavirus, has arrived with the publication of first quarter results from Comcast, owner of Sky and NBCUniversal.

For the three months ended 31 March 2020, Comcast reported total revenue of $26.609 billion, inching back 0.9% compared with the first quarter of 20199, yet net income tumbled by nearly 40% on an annual basis to $2.147 billion. Adjusted EBITDA fell 4.9% year-on-year to $8.130 billion.

Among the highlights revealed by the company for the first quarter were that total customer relationships across the company’s cable communications business and Sky increased 2.6% year-over-year to 55.8 million. Cable communications total customer relationships increased by 371,000 in the quarter, the best first quarter result on record said Comcast. Total high-speed broadband customer net additions totalled 477,000, not including 32,000 free internet essentials customers, the best quarterly result in 12 years.

Yet if broadband installations and subsequent online video usage increased substantially during the quarter, the same could not be said for pay-TV business. The company conceded that results for its NBCUniversal and Sky lines were negatively impacted by Covid-19 in Q1 and also will be to a greater extent in the second quarter of 2020. As a result, Comcast expects the impacts of Covid-19 to increase in significance in the second quarter 2020 and to have a material adverse impact on consolidated results of operations over the near-to-medium term.

Sky’s total customer relationships decreased by 65,000 to 23.9 million in the first quarter of 2020, reflecting the postponement of sports events and the suspension of certain sales channels due to Covid-19. Q1 overall revenue slipped 5.8% on an annual basis to $4.517 billion. Direct-to-consumer revenues fell 4% compared with Q1 2019 to $3.679 billion, and content revenues were down 12.3% year-on-year to $325 million. advertising revenues slumped by 13.5% to $513 million.

The first quarter results showed primary reason for these falls was clear: Covid-19. Comcast noted that the decrease in average revenue per customer relationship was hugely impacted by lower sports subscription revenues as sports competitions, in particular English Premier League football, were cancelled.

Advertising revenue decreases were attributed primarily due to overall market weakness, which was worsened by Covid-19, as well as what Sky called the ‘unfavourable impact’ from a change in legislation related to gambling advertisements in the UK and Italy. Content revenue falls were said to reflect mainly the deferral of wholesale revenue from sports programming as a result of the postponement of sports events due to Covid-19.