Sky is taking on its rivals Netflix and Amazon with the launch a low-cost plug-in stick for its Now TV streaming service and a download service as it announced a jump in first-half revenue and profits.
Pre-tax profits in the six months to the end of December increased by 28 per cent to £483 million on revenue that rose by 5 per cent to £6.7 billion.
Original hit shows such Riviera and Tin Star in the UK, Babylon Berlin, its first original drama in Germany, and the third series of Gomorrah in Italy helped to boost customer numbers by 350,000, taking the total to 22.9 million.
Sky is the subject of a £11.7 billion takeover bid by 21st Century Fox for the 61 per cent of the business that it does not own. Rupert Murdoch, chairman of News Corp, owner of The Times, is also co-chairman of 21st Century Fox. The proposed takeover edged closer this week after the UK competition regulator said that the deal raised concerns about media plurality but outlined remedies that could help it through. These included spinning-off Sky News. Complicating matters for the regulator is Mr Murdoch’s deal last month to sell most of Fox to Disney, including its stake in Sky, for $66.1 billion (£49.3 billion).
Jeremy Darroch, the chief executive of Sky, said: “We have delivered excellent results. This performance reflects the investment choices we have made in recent years, allowing us to more than offset the pressure on consumer spending across Europe, as more customers continue to choose Sky.”
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Churn was down in the UK to 11.2 per cent on a 12-month rolling basis from 11.6 per cent a year ago. The company said that improvements at Sky Q, its premium service which is in 2 million homes, had also resulted in a lower churn rate.
George Salmon, analyst at Hargreaves Lansdown, said: “While we’re still seeing higher than normal customer attrition, the improvement in UK customer churn is a big positive.”
Mr Darroch said that the focus would continue to be on the customer in a challenging and competitive environment. The company recently launched Sky Q in Italy and will extend the service to Germany and Austria in the next six months. It also plans to introduce Sky over fibre in Italy and its first internet service in Austria, which would allow customers to view programmes without the need for a satellite dish.
Today’s launch of the £14.99 Now TV stick provides access to the company’s films, television shows and live sport, which the download service gives customers the ability to watch shows on holiday or on the move with no wifi or internet connection.
Sky also announced an extension to its relationship with Warner Brothers, which will give viewers the chance to see films such as Wonder Woman premiere on Sky Cinema plus films from the studio’s library.
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Looking ahead, UK and Ireland viewers will be able to see exclusive live coverage of England football matches in the new UEFA Nations League as part of a contract including qualifiers for Euro 2020 and FIFA World Cup 2022. It will also have exclusive live coverage of Formula 1 in Italy for the first time. From early next year Sky will make the full Now TV service available to BT customers through the BT TV set-top-box.
Mr Darroch said that Sky would continue to focus on original shows, such as its £37 million Roman-era drama Britannia, which started last week. He said that such shows were cost efficient because about two thirds of gross productions costs could be offset through sales to other markets.
An interim dividend of 13.06p per share, up 4 per cent from 2016, will be paid on April 23. This is in addition to a previously announced special dividend of 10p that will be paid on February 9 because the Fox offer did not become effective on December 31.
Shares in Sky were up from the start of the day and by late afternoon trading in London were 1.2 per cent higher at £10.36.