Sky reports strong results despite increase in churn

Sky CEO Jeremy Darroch

Sky reported increased profit and revenue in its latest quarterly results, despite increased churn across all of its markets.

Announcing figures for the nine months ended March 31, the European pay TV operator said that churn for the quarter – or the proportion of customers leaving Sky – in the UK and Ireland was 10.7%, compared to 10.1% a year earlier.

Sky said this reflected its “decision to limit discounts” as it focused instead on establishing its recently-launched, premium Sky Q product.

In Italy churn for the quarter was 11.0% compared to 9.7% a year earlier, which Sky described as a “resilient performance” after the loss of UEFA Champions League rights. In Germany and Austria, churn was stable quarter-on-quarter at 9.8% but up compared to 8.5% a year earlier.

Despite this, a total of 177,000 new customers joined Sky in its fiscal Q3 taking its total customer base to 21.7 million. In the UK alone, customers are now taking a ‘milestone’ 40 million products, the firm said.

Group revenues for the nine-month period increased by 5% to £8.715 billion, leading to a 12% increase in operating profit to £1.143 billion.

“It’s been another strong quarter for Sky. Our strategy to broaden our business, expanding into new markets and customer segments, has delivered further excellent financial results with revenue up 5% and a double digit growth in profit,” said Sky CEO Jeremy Darroch.

“Our approach to the connected home continues to engage customers; almost 11 million Sky households have now connected to enjoy our on-demand services including Sky Box Sets, which recently launched in both Germany and Italy.”

Sky said that subscription revenue, its largest category, delivered growth of 4% across the group. Transactional revenue was Sky’s fastest growing segment, up 21% to £141 million.

Sky attributed the latter to continued strong performance of Sky Store in the UK, growing demand for Now TV Sports passes and three major pay-per-view boxing events so far this year.

Separately Sky said that the Sky Kids App that it recently launched in the UK will roll out to Germany and Italy “later this year”.