For the fiscal year ending June 30, Sky said it registered a 5% increase in revenues of £12.9 billion ($16.9 billion) but a 3% slip in EBITA profit of £2.1 billion, as the increased costs of Premier League soccer rights and other investments kicked in. Operating profit, at £1.5 billion, was down 6% year on year for the U.K.-listed company.
Sky also said it will boost its investment in Sky Originals by 25% to give it an edge over Amazon and Netflix. “Local dramas such as ‘Babylon Berlin’ in Germany, ‘Britannia’ in the U.K., and the return of the third season of Italian crime drama ‘Gomorrah’ illustrate our strength in local programming that other SVOD providers cannot match,” the company said.
Sky has also entered its first co-production with HBO, a project about the scientists who scrambled to contain the Chernobyl nuclear disaster. It is set to air in 2019.
HBO launched its own streaming service in Spain, HBO España, last November. Sky now plans to follow suit by the end of this year. The move into Spain had been rumored. Darroch told analysts that the new service will target free-TV homes in Spain and that the investment required to launch it is “modest,” with a “small, agile” team overseeing the project.
“During the first half of our fiscal year, we intend to launch a simple and affordable OTT service in Spain, the Eurozone’s fourth largest economy and the market which has the largest free-to-air (FTA) headroom in Europe outside of our existing footprint,” Sky said.
“We will leverage our technology assets and brand, and over time, and it will take time, our strong position in content, whether that’s from third parties or content we have created ourselves,” CFO Andrew Griffith told analysts. “We don’t sit here with a big land bank of content [for Spain]. Today is a statement of intent and we will come back with more detail.”
Sky has 22.5 million subscribers across its European operations in the U.K., Ireland, Italy, Germany, and Austria, up 686,000. The OTT launch will mark its entry into the Spanish market.
Darroch said the company’s financial results were “excellent” in light of the challenges Sky and others face in the TV market.
“We have driven a 10% increase in revenue on a comparable 52-week basis to £12.9 billion despite market headwinds,” he said. “Operating profit is excellent, down £97 million despite additional Premier League costs and investment in new businesses, with particularly strong results in Germany & Austria and Italy where operating profit increased by £115 million.”
21st Century Fox is still waiting on a decision from the British government on its move for the share of Sky it does not already own. Darroch said that process had not distracted his team.