Sky posts increase in revenue but new Premier League TV deal dents profits

Sky remains on track to reach its annual goals, after a solid performance in the first six months of its financial year saw an increase in revenue, although the higher costs related to the Premier League TV rights led to lower profits.

The telecoms giant said on Thursday (26 January) that in the six months to 31 December, reported revenue rose 12% year-on-year to £6.4bn, while revenue on constant currency basis was 6% higher than in the corresponding period last year.

Meanwhile, operating profits declined 9% year-on-year, due to a £3m hit from adverse currency movement and to the impact of the new Premier League TV deal, which cost Sky £314m more than last year.

This season marked the start of the new three-year deal for domestic broadcasting rights, which saw Sky and BT Sport fork out a record £5.14bn for live Premier League rights for three seasons.

Sky reported solid growth in all of its three markets, with revenue in the UK and Ireland rising 5% year-on-year, while revenue in Italy and the German and Austrian businesses climbed 9% and 10% respectively on a constant currency basis.

"In a year in which we are absorbing significantly higher programming costs, as a result of the step up in Premier League costs, our financial performance has been good," said group chief executive Jeremy Darroch.

"This has been supported by the efficiency of our operating model and the achievement of our £200m synergy target six months early."

Sky said it added over 500,000 new customers in the period and sold two million products in the period, meaning that in the since unifying the Sky brands three years ago the company has added 2.5 million customers.

Last month, the broadcasting giant, which has 22 million customers across five countries, accepted a takeover from Rupert Murdoch's 21st Century Fox, which would see the latter become the most powerful media group in Britain.

The Australian mogul's company tabled a formal £11.7bn bid for the 61% stake in the FTSE 100-listed telecoms group it does not already own.

On Thursday, Darroch did not reference the proposed takeover directly, although it said Sky would continue to expand its offer and remained confident it would complete its strategic plans.

"Whilst we expect the backdrop in our territories to remain uncertain, we are on track as we enter the second half of the financial year and we remain focused on delivering our clear strategy for growth."