Italian mafia series lifts Sky to record profit

SKY posted record annual profits of £1.56bn and added 808,000 new customers as it looked set to benefit from a trend of families staying in.

While other businesses worry about a slowdown in the economy, Sky is banking on performing well in a downturn as people spend more time at home and are more picky over their spare spending.

And its success is no longer limited to the UK. Sky has seen customer numbers in italy grow for the first time in five years, where programmes including The X Factor, Moto GP and crime series Gomorrah are thriving.

Pay-for TV doesn’t have much take-up in Germany, but Sky is hoping to change that. it starts with the november launch of the flagship Sky 1 channel in Germany where it will air popular cookery programme MasterChef for the first time. The channel will also feature worldwide favourites, including Desperate Housewives and Grey’s Anatomy.

Sky Ticket – the German version of streaming service now TV – will aim to tap into the so-called Pay Lite market, those households that don’t want to commit to a long-term contract or don’t want to spend much on television. it will offer day, week and month passes for Sky Sports where, in a bid to replicate its success with Premier League football in the UK, Sky has secured Bundesliga coverage until 2021.

Jeremy Darroch, chief executive at Sky, said: ‘our insight into the needs of customers, along with our investments in brilliant programmes and technology, strong relationships with our partners above all, our desire to embrace and, change means that we continue to better serve our customers and grow our business.’

In the UK, some 15m episodes have been viewed through the recently launched Sky Kids app, on which children have on- demand access to favourites including Peppa Pig. And about 6m adult viewers tuned in to each episode of the most recent series of Game of Thrones on Sky Atlantic, while the debut of new series Billions attracted a record 11m on-demand views.

Around 3m customers have used the Sky Store to buy movies and pro- grammes in the past month, and they will now be able to purchase and store complete box sets.

On average each Sky customer spends £400 a year with the company. That figure could rise as the firm moves into the mobile phone market this year.

Analysts at numis said with Sky’s existing relationship with households in providing broadband and home phones, offering mobiles could have significant potential for the brand.

While revenue for the year was up 7pc, at £11.96bn, so were its operating costs. investment in new products and regions meant operating expenses increased to £10.98bn from £9bn a year ago.

Sky said it saved money by not renewing its Champions League coverage in the UK and italy.

Analysts at Liberum are concerned about the increasing churn rate – the customers they lose compared with those joining – which stood at 11.2pc for the full year, up from 10.7pc three months ago.

The broker fears increasing competition from cheaper on-demand services such as netflix and Amazon Prime is driving customers away from the company.

But Sky says the numbers are skewed by its broadband figures, a market where customers are traditionally less loyal and more inclined to switch provider each year. The firm has 1m broadband-only customers.

BT reported a lift in profit and revenues following its £ 12.5bn acquisition of ee.

The telecoms giant reported profit of £1.8bn for the three months to the end of June, an increase of 25pc over the same period last year.

Revenues, excluding the impact of acquisitions, disposals and currency movements, were up 35pc year-on-year to £5.78bn.