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Sky profits up 8% on TV, broadband and landline growth

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Sky has reported a boost in second-half 2011 profits due to strong sales across its TV, broadband and landline packages.

The company, which was the subject of an aborted takeover bid by Rupert Murdoch's News Corporation last year, generated pre-tax profit of £601m in the six months to December 31, 2011, up 16% on the same period in 2010.

Sky sold 772,000 products over the period, although only 100,000 were taken by new subscribers.

Average revenue per user (ARPU), a key metric for analysts, was £544, up by £8 on the same period in 2010, but the rate of customers leaving Sky was 9.6%.

Sky recognised that customers were feeling the pinch of the touch economic conditions.

"It has been a strong first half with progress on all fronts. While these are tough times for many consumers, our customers are staying loyal and more households continue to join us," said Sky chief executive Jeremy Darroch.

"From broadband to high definition, people are choosing Sky for a wider range of products than ever, underlining the transformation of our business over the last few years."

Adjusted revenue at Sky was £3.36bn in the final six months of 2011, up 6% on the same period the previous year, while net profit rose to £441m, up 8.4%.

Shares in the company increased 3.8% on the London markets after the results were announced.

Sky said that it now has 10.471 million customers, including more than 3m who take the 'triple play' service of TV, broadband and telephony, up 26% year-on-year.

The company also said that its Sky Go multi-platform TV service, which allows subscribers to access live TV on connected devices, now has 2.5m users.

To bolster its growth, Sky has announced a number of service improvements for 2012, including the addition of BBC iPlayer and ITV Player to its Anytime+ TV video on-demand platform.

The firm will launch a new TV channel dedicated to Formula One in March, and soon introduce a new internet-based TV service that will target pay-TV abstainers and also take on the likes of Netflix and YouView.

"Our approach to growth is working well. We're adding more value to the Sky subscription by investing where it matters most to customers, with more great entertainment and ground-breaking innovation like Sky Go," said Darroch.

However, he added: "We expect the environment to remain tough in calendar 2012. No consumer business can be immune to these conditions and we will manage any short-term headwinds as they emerge.

"Staying focused on the long-term opportunity, we've got a strong set of plans to keep delivering for customers and shareholders.

"This will be an outstanding year on screen, including more original British productions and a new channel dedicated to Formula One, and we have exciting products in the pipeline that will create more ways to access our content and more reasons to join and stay with us."

Meanwhile, Sky has confirmed plans to create 1,300 jobs in the UK and Ireland as it brings customer service and installation operations in-house, including the establishment of a new service centre in Dublin.

> Sky to challenge BT, Virgin Media with fibre broadband

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