Sky plans to introduce a loyalty scheme to stem a rise in customer defections that, together with a jump in the cost of soccer broadcasting rights, cast a shadow over first-half results yesterday.
The company, which has accepted a buyout offer from Rupert Murdoch’s Twenty-First Century Fox, reported a 9% drop in first-half operating profit and said that the customer churn rate in its biggest market, Britain, rose to 11.6% from 10.2% a year earlier.
Chief executive Jeremy Darroch said that Sky needs to do “a better job across the board” to hold on to customers, adding that British customers who had taken its services for a number of years would be offered package upgrades and other benefits, replicating a loyalty programme it has in Italy.
On the soccer front, Sky is paying 70% more to broadcast matches from Britain’s Premier League this season, having beaten BT Group to the biggest packages of matches with a £4.2bn three-year deal.
The two rivals are set to go head to head again in March over rights for the UEFA Champions League, currently held by BT, which was rocked this week by an Italian accounting scandal that wiped 20% of the value of its shares and has raised doubts over its ability to spend more to keep the matches.
Mr Darroch said that BT’s woes did not change his strategy towards the forthcoming auction.
“We go into all the rights renewals this year in a good place, he told reporters. “We have good optionality around where we spend our money. We’ll spend where we see value; we are good at assessing that.”
Mr Darroch also said that the company will offer its full Sky TV service in Britain over the internet this year without the need for a satellite dish, targeting customers who don’t want or can’t install a dish.
Sky already offers sport, movies and entertainment on its Now TV internet service, which competes with providers such as Netflix and Amazon.com.
The broadcaster, which will screen a new season of Game of Thrones this year, reported operating profit of £679m, slightly below analysts’ forecasts, having absorbed additional Premier League costs of £314m.
Revenue rose 6%, on a constant currency basis, to £6.4bn as it added more than 500,000 new customers across operations in Britain, Ireland, Italy and Germany.
Fox agreed a $14.6bn deal in December to buy the 61% of Sky it does not already own. The deal requires regulatory approval in Europe and Britain as well as the backing of Sky shareholders before Fox fulfils its long-held ambition to control the business.
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