Sky News is no longer a “critical” part of the wider Sky business, its chief executive Jeremy Darroch said yesterday, amid speculation about the channel’s future.
The long-term plan for Sky News is under scrutiny after the competition watchdog said that spinning off or selling the rolling news channel would help to assuage media plurality concerns about the proposed £11.7 billion takeover of Sky by 21st Century Fox.
Fox wants to buy the 61 per cent of Sky that it does not own. In its provisional ruling on the deal on Tuesday the Competition and Markets Authority said that Sky News must be insulated from the influence of the Murdoch Family Trust, which controls both Fox and News Corp, publisher of The Times, The Sun and The Sunday Times. Speaking as Sky reported an increase in earnings and revenues yesterday, Mr Darroch told analysts that Sky News was not as important as it was when Sky launched as a broadcaster in 1989.
“I wouldn’t describe Sky News as critical to the business today; indeed I wouldn’t really pick any part of our business and say it is critical,” he said. “If for any reason we didn’t have Sky News I don’t think that would be material . . . in terms of the direction of the business.”
Sky also announced that it was taking on its rivals Netflix and Amazon with the launch a low-cost plug-in stick for its Now TV streaming service, as well as a download service.
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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. Sky shares closed up 1.22 per cent, 12½p higher at £10.36. Original hit shows such as 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 also took a step towards ditching the satellite dish after confirming the rollout of a fibre-optic broadband service for customers to watch its full TV service. The service will launch in Italy and Austria before coming to the UK.
Mr Darroch 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.”
Customer churn was down in the UK to 11.2 per cent from 11.6 per cent a year ago. 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.”
The launch of the £14.99 Now TV stick gives access to the company’s films, TV shows and live sport, while the download service allows viewers to watch shows on holiday or on the move with no wifi or internet.
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Sky announced an extension to its relationship with Warner Brothers that will give viewers the chance to see films such as the Wonder Woman premiere on SkyCinema plus films from the studio’s library. Mr Darroch said that Sky would continue to focus on original shows, such as its £37 million Roman-era drama Britannia. He said that such shows were cost efficient because about two thirds of production 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.