James Murdoch takes chairman role as Sky posts strong growth

James Murdoch

James Murdoch is to return to Sky as chairman in a move that many believe could presage a renewed attempt by 21st Century Fox to consolidate the pay TV giant by acquiring the 60.4% of the organisation that it does not already own.

Current chairman Nicholas Ferguson will step down at the end of April after 12 years on the Sky board.

Martin Gilbert has been appointed as Deputy Chairman, with Andrew Sukawaty taking over his former role as Sky’s Senior Independent Director.

Murdoch remained a non-executive director of Sky after stepping down as chairman in 2012 in the wake of the phone hacking scandal that scuppered what was then News Corp’s attempt to consolidate the operator.

Last October, Murdoch stimulated speculation about Fox’s future intentions when he said that the group’s lack of full control of Sky was not a natural end state.

“It’s difficult to find the right time to step down from chairing a great company and working with an outstanding Board and management team. I joined the Board 12 years ago, in 2004, meaning that I have been with Sky for nearly half its life. When I became Chairman in 2012, I wrote in the Annual Report that I would stay on long enough to ensure continuity,” said Ferguson.

“The then virtually new Board is now seasoned and bedded in. We have completed major international acquisitions in Germany and Italy; they are running to plan and we have first-class management in place. Sky continues to grow impressively, to innovate with wonderful products and to serve its customers to the highest standard. So now is the right time for me to step back. I am sure that the company will continue to prosper under the leadership of Jeremy supported by James and the Board.”

Murdoch’s taking the reins as chairman comes after strong first half operating and financial results for Sky, with 337,000 new customers and 1.1 million new product sales in the second quarter of its fiscal year. Sky had 21.477 million retail customers across all its five European territories at the end of December, 870,000 year-on-year, taking 55.866 million products, up 3.914 million.

Sky in the UK and Ireland reported its strongest Q2 operating results n a decade, adding 205,000 customers and 778,000 paid for products. This included 146,000 new TV customers and 144,000 broadband customers.

Sky added 120,000 in Germany and Austria with paid for product growth of 345,000. In Italy, where the company said it was hit by discounting from competitors and the loss of its Champions League rights to Mediaset, the company added 12,000 customers and 23,000 paid for products.

The company saw churn fall from 10.5% to 10.2% year-on-year in the UK and Ireland and from 10% to 9.9% in Italy, but it rose in Germany from 8.3% to 9.8%.

Sky posted revenues of £5.718 billion for the first half, up from £5.437 million (€7.123 billion)year-on-year at constant currency. The company posted an operating profit of £747 million, up from £667 million at constant currency, with strong growth in the UK, Ireland, Germany and Austria. Only in Italy did it see a sharp revenue fall, with revenues dropping from £978 million to £953 million at constant currency – which included a positive currency impact of £101 million – and operating profit dropping from £31 million to £25 million, again at constant currency.

Sky also highlighted a series of content initiatives including a deal with Showtime that will enable it to offer drama series including forthcoming Billions exclusively to its subscribers, along with new seasons of Twin Peaks, Ray Donovan and The Affair.

Sky said it also had over 100 dramas in production or development, including nine returning series.