Earnings: Sky Spending Big To Acquire Broadband, HD Customers
Sky is managing to extract a record £464 a year from each of its customers - but it’s spending big on customer acquisition and growth is coming from good ‘ol pay TV, while broadband growth peters out. “We continue to respond to our customers’ willingness to pay for valued content”, the satcaster says…
—Broadband: Sign-ups nearly halved to 118,000 in this quarter from 200,000 last year (total 2.2 million). That’s still half of all UK sign-ups, making Sky still the fastest growing. If you thought broadband adoption was plateauing, Sky is describing it as an “opportunity”, saying “there is still considerable headroom for growth ... with still 7.9 million of our customers yet to choose Sky Broadband and Talk”. But the roll-out investment is still proving costly - broadband and telephony turned in a £129 million loss, £33 million better than last year. Easynet lost £26 million.
—Sky+HD: Sky+ customers up to 5.5 million (58 percent), HD customers doubled to 1.3 million. Customers taking both TV, broadband and phone up from 11 percent last year to 16 percent this year. But Sky spent £130 million acquiring and upgrading customers to Sky+HD, with 22 percent higher marketing costs, £15 million of which was in creating new engineer jobs. It says the outlay will be recouped in 18 months.
—Wholesale: Returning Sky’s channels to Virgin Media (NSDQ: VMED) bumped revenue up £25 million to £206 million. Ad sales on its channels were down six percent to £308 million, which Sky reckons is seven percent better than the TV market ad crash overall. It’s still fighting Ofcom’s intention to force it to offer channels to rivals at fair prices: “No evidence or argument offered so far alters our belief that there is no proper justification for intervention to require Sky to wholesale its premium channels and to regulate the wholesale price of those channels. We will continue to make the case that risk-taking and investment by companies in any sector of the economy should receive a fair reward.” Sky is taking a £191 million impairment hit against the enforced disposal of its ITV (LSE: ITV) shares, following last year’s £616 million charge.
Sky still isn’t giving giving any numbers on Sky Player, its online VOD and live TV subscription service. Overall annual operating profit grew 12 percent to £813 million on eight percent better revenue of £5.35 billion.
Posted In: Money, Earnings, Companies, News Corp., BSkyB

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