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Sky profits up as it gets new sports deals to fight off BT

Chief executive denies BT offer the greatest competition yet to Sky’s sports coverage

Sky was today facing fresh questions about the strength of its traditional satellite TV business — despite unveiling another strong rise in profits and a raft of new sport rights, as it ups the ante with rival BT. 

Chief executive Jeremy Darroch said BSkyB added 30,000 new TV customers in the first quarter but refused to reveal the split between the numbers signing up for satellite and the cut-price online service, Now TV.

That was a change from three months ago when Darroch gave the breakdown. He was adamant that satellite TV customers grew, dismissing City speculation that Sky had seen a fall, and used growth in Now TV to flatter the overall number of 10.4 million TV subscribers.

Churn, the rate at which subscribers quit, rose to 10.8 per cent which he blamed on consumers feeling the squeeze. There is also growing competition from cheaper online TV rivals Netflix and LoveFilm.

Darroch said there was a surge in Sky customers using internet-connected set-top boxes and mobile to watch on-demand content. Downloads were up fivefold on a year ago and that is encouraging loyalty, he said.

Sky has diversified, with more than 4 million customers now taking broadband and home phone, but in a sign of how the core pay-TV business matters Darroch announced three new sports deals. He has extended tennis rights with the US Open and the ATP World Tour and signed up the RaboDirect PRO12 Rugby Union tournament for the first time.

Darroch admitted he has an eye on BT’s new sport TV arm, which launches in August. “We take all competition seriously,” he said.

But he was dismissive when he was asked if BT would offer the greatest competition yet to Sky’s sports coverage. “I wouldn’t say so,” he declared, noting Disney’s ESPN had been a smart operator. He said Sky was “broadly-based”, with the average customer now taking 2.8 products, not just TV.

Operating profits jumped 9 per cent to £994 million in the nine months to March, with sales up 6 per cent to £5.38 billion.