Sky looking to broaden its horizons across the EU

As the Premier League season gets under way next weekend, Sky TV will once again assert its dominance across the sporting realm. Brushing aside the post-Brexit concerns dogging many other UK companies, Sky shares posted a 7% rise —their strongest increase in three years — on the back of significant revenue growth.

Sky looking to broaden its horizons across the EU

Having acquired Sky Deutschland and Sky Italia from 21st Century Fox in 2014, the telecoms and media group added over 800,000 new customers across its five EU markets.

Targeting Germany as one of the most under-exploited EU markets for expansion, Sky continues to invest in content as rivals like Netflix and Amazon compete for market share.

With revenues having increased 7% to £12bn in the 12 months to the end of June, adjusted operating profit, excluding the £791m Sky netted from selling its holdings in ITV and National Geographic, was £1.6bn, up 12% on the previous year.

The company added a total of 808,000 customers in the five markets in which it operates — Italy, Germany, Austria, the UK and Ireland — in the 12-month period.

More than half of the new customers — 445,000 — were in the UK and Ireland, Sky’s biggest market with a combined 12.5 million customers.

In 2014, BSkyB completed a takeover deal costing almost £7bn for Sky Deutschland and Sky Italia, making it a leader in five European pay-television markets.

Dropping the ‘British’ and ‘Broadcasting’ to underline its status as a pan-European enterprise, Sky has continued to increase its focus on telecoms and internet-related services.

The deal increases the company’s potential customer base from 30 million to over than 97m, with a programming spend of £4.6bn, and employing 31,000 across Europe.

Acquiring the German operation allows it exploit the relatively low penetration of pay-TV in the country, and signalled its intention to focus on the 60m households across Sky’s five markets which had yet to take any pay-TV service.

“The last 12 months on and off screen have been the most exciting in the history of Sky in Germany and Austria,” said Carsten Schmidt, chief executive of Sky Deutschland.

“Demand for Sky is growing every day, we now have a record 4.6m customers with more than eight million products.”

As the competition for viewers becomes more intense, every company seeks to exploit social media and the opportunities offered by the digital age.

“Over the last 10 years, the video industry has changed beyond all recognition,” said Lucien Bowater, Sky’s Digital Director.

“As broadband has become more widely available, and the number of connected devices has exploded, the landscape has changed. At Sky, our goal has remained the same: to be at the forefront of innovation, finding new ways to deliver content to customers.”

He cites the company’s work with Facebook as an example of this synergy: “We’ve partnered with them on ‘instant articles’ enabling us to host articles from news and sports teams on Facebook, as they’d appear on the web. By working this way, we’ve seen more views, more shares, and more interaction.”

In the coming months, across news and sports, Sky plans on live broadcasting a significant amount of content on Facebook Live, providing behind-the-scenes looks at some major sporting events, and breaking news stories.

Rupert Murdoch was forced to float the company in 1994 to reduce its crippling debts, making him a minority shareholder.

As Sky became a major success into the subsequent decade, he attempted to regain control in 2010. The deal fell apart completely one year later after the political storm unleashed by the phone-hacking scandal.

Forced to relinquish his chairmanship in 2012, James Murdoch’s return to that position in January this year has again prompted rumours of a renewed bid for family control.

“Not having complete control is not an end state that is natural for us,” he said.

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