Sky outperforms on profits as it prepares to force Disney to up bid

SKY has beaten sales and profit forecasts in its final year as a listed business as it prepares to appeal to City authorities to force Disney to bid more in its battle with Comcast for control of the company.

Revenues were up 5pc to £13.6bn in the year to June on strong take-up of services such as its latest Sky Q set-top box, streaming service Now TV and Sky Mobile. Pre-tax profit of £864m was up 8pc as customer loyalty in its core UK market improved to its best level in a decade. Its German and Italian businesses also increased revenues.

Sky is due to appeal to the Takeover Panel at a hearing today to increase the minimum bid Disney must make as a result of its takeover of 21st Century Fox. The regulator has said that under the “chain principle” Disney must offer £14 per share for Sky as a result of Fox’s 39pc shareholding. However, Comcast has offered £14.75 per share, equivalent to almost £26bn, and Sky and some of its other shareholders aim to trigger a further bidding war by setting a higher minimum bid from Disney.

Jeremy Darroch, Sky’s chief executive, said the appeal would challenge the panel’s earlier ruling on principle and process. The company is poised for further financial improvements as price rises, lower Premier League rights costs, wholesale deals with BT Sport and Netflix, and higher adoption of Sky Q kick in.

Mr Darroch, who has now led Sky for more than a decade, attacked moves by Ofcom to boost the prominence of the BBC and other public service broadcasters in Sky channel menus. Mr Darroch said: “I don’t think further intervention in the broadcast sector is relevant. This is something that should be done by commercial negotiation.”

It is understood the regulator will also recommend that the Government examines the regime for on-demand services, where the BBC and Channel 4 have complained that they face a loss of prominence. Recommendation algorithms and voice search are viewed as a threat by public service broadcasters who have previously traded prominence for investment in news.

Sky shares, which are trading above the Comcast offer at more than £15, were unmoved by the update, ending up 0.5pc at £15.15.

The company said that regardless of the takeover it would increase its spending on home-grown programming by 25pc this year