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European Pay-TV Giant Sky Sees Revenue Rise 7% to $15.8 Billion

Crime drama 'Gomorrah' attracted an average audience of more than 2 million in Italy

Revenue at European pay-TV giant Sky for the year ending June 30 grew 7% to £11.96 billion ($15.8 billion), while operating profit was up 12% to £1.56 billion ($2.05 billion).

In Britain and Ireland, the company passed £8 billion ($10.6 billion) in revenue for the first time. Revenue rose 7% to £8.37 billion ($11 billion), and operating profit was up 11% to £1.5 billion ($1.99 billion). Sky also operates in Germany, Austria and Italy.

Jeremy Darroch, Sky’s group chief executive, said in a statement Thursday that the company was benefiting from economies of scale and “investing in a broad range of world-class entertainment in every market, distributed across an unrivaled choice of market-leading platforms, and supported by excellent service, because these are the things that really matter to customers.”

Darroch said that if Britain entered a new recession following its decision to leave the European Union, this may not have a negative effect on Sky. “As we have seen in the past, when that happens, people tend to regress to the home,” he said. “We have done very well in that environment because we offer a great service for families to entertain themselves at home.”

In Germany and Austria, the company delivered a full-year operating profit for the first time in Sky Deutschland’s history. Operating profit came in at £4 million ($5.29 million), compared with a loss of £11 million ($14.5 million) last year. Revenue in Germany and Austria rose 12% to £1.5 billion ($2 billion). Darroch told Variety that Germany and Austria represent “probably the single biggest opportunity in the world in pay-TV, so the rewards if you get it right are going to be pretty high.”

Sky announced Thursday that it would further broaden its offering in Germany and Austria with the launch in November of entertainment channel Sky 1. This will feature a brand new local-language version of the cookery show “MasterChef,” and popular family entertainment shows such as “Desperate Housewives,” “The Tunnel: Sabotage” and “Grey’s Anatomy.” It will join premium drama channel Sky Atlantic and Sky Arts, both of which went live earlier in July.

There was also good news in Italy where Sky’s customer base returned to growth for the first time in five years, with total customers up 17,000 over the year. Sky described this as “an outstanding achievement in a year of economic headwinds in the market.” Revenue in Italy rose 2% to reach £2.08 billion ($2.75 billion), but operating profit was down 14% to £50 million ($66 million). The second season of crime drama “Gomorrah” attracted an average audience of more than 2 million, becoming Sky’s most-viewed season in the territory ever.

Analyst Paul Richards at Numis Securities commented: “We retain our view that pay-TV is resilient in more challenging economic conditions and that Sky has strong momentum for new product development to drive revenue growth.”

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