July 26, 2018
There’s a good reason why 21st Century Fox and Comcast want to acquire controlling stakes in British satellite TV operator Sky: the company is firing on all cylinders.
The company added 270,000 subscribers in the United Kingdom and Ireland in the fiscal year (ended June 30), to up its customer base to 12.9 million. Sky also has 5.1 million and 4.8 million subscribers in Germany/Austria and Italy, respectively.
The satellite TV operator is planning service launches in Switzerland and Spain. Sky Mobile, the company’s nascent telecommunications unit, ended the year with 500,000 subscribers.
Revenue in U.K./Ireland (£8.9 billion), Germany/Austria (£2.2 billion) and Italy (£2.9 billion) increased 4% (£331 million), 6% (£107 million), and 6% (£150 million), respectively. Total revenue increased by £588 million, or 5% to £13.6 billion.
Sky Germany added 1.4 million new customers, 2.7 million paid-for-products, and €626 million in revenue in the fiscal year. Sky Italia added 57,000 subscribers and 133,000 paid-for-products.
The satellite TV operators remains one of the largest distributors of U.S. studio movies and TV shows, in addition to original content. It also operates the Sky Store, which includes a DVD with every digital movie purchase.
Sky said direct-to-consumer revenue, its largest revenue category, grew 3% (£396 million) to £11.8 billion, driven by a number of factors, including: the increased size of its subscriber base; greater product penetration such as Sky Q, Sky Fibre and Sky Mobile; a higher number of pay-as-you-go transactions; the full-year benefits from price hikes in the U.K. and Italy.
Content revenue strongly increased 15% (£110 million) to £838 million as Sky monetized its growing investment in original programming. Advertising revenue grew 10% (£82 million) to £917 million, with each territory outperforming its market.
“It’s been an exceptional year,” said CEO Jeremy Darroch.
The current fiscal year could get even better as Comcast is offering £14.25 per share for all of Sky, compared to £14 per share from Fox, which already owns 39% of the company. Disney’s bid for Fox includes its Sky stake.
Disney’s apparent $71.3 billion acquisition of 20th Century Fox Film, includes Fox’s stake in Sky. It is believed Disney might swap Fox’s stake for Comcast’s 30% ownership of Hulu.
“This could [alleviate] the governance issues that could arise with split ownership of these assets,” Moody’s Investor Service wrote in a note last month.