LONDON (AFP) – European pay-TV giant Sky, set for a takeover by 21st Century Fox, announced yesterday a drop in profits, hit by the rising cost of showing live English Premier League football.
A fall in operating profits for the first nine months of Sky’s financial year overshadowed a rise in revenues, the company said in an earnings statement, as it announced also a tie-up with Game of Thrones maker HBO regarding new television drama series.
“In a year in which we are absorbing significantly higher programming costs, we continue to make further progress on our efficiency plans, with operating costs down a further one percent,” Sky said.
Group revenues increased five per cent to £9.64 billion ($12.37 billion, 11.52 billion euros) in the nine months to March 31 compared with the equivalent period in 2015/16.
Operating profit dropped 11 per cent to around £1.0 billion as Sky was hit by additional costs of £494 million linked to screening live Premier League matches featuring sides including Manchester United, Liverpool, Arsenal and Leicester.
Sky said it had added 106,000 new customers during its third quarter, or three months to the end of March.
Separately, Sky said it had agreed a $250-million (232-million euros) production deal with HBO “to oversee a development slate of world class drama series”.
Sky shares were up 0.1 per cent at 983 pence in early London trading following yesterday’s updates that were published after the European Commission earlier this month cleared Fox’s multi-billion dollar buy-out of Sky.
“Sky’s outlook comments are generally upbeat, as they anticipate positive momentum going into the final quarter, notwithstanding the broader uncertainties surrounding the UK consumer as the fallout from the Brexit timetable begins to emerge,” said Richard J Hunter, head of research at Wilson King Investment Management.
“Elsewhere, the company’s ability to innovate and a multi-year production partnership with HBO provide further building blocks for growth.”
Media tycoon Rupert Murdoch’s Fox announced in December a deal to buy the 61 per cent stake in Sky it did not already own for 11.7 billion pounds.
The tie-up stirred fears that the Murdoch family would gain too much control over Britain’s media and the UK government has announced its own probe into the deal.
“With Sky set to be acquired by 21st Century Fox, today’s results are a bit of a side show, though perhaps that’s a good thing because the numbers represent a little bit a wobble,” said Laith Khalaf, senior analyst at stockbroker Hargreaves Lansdown.
Century Fox is one of the world’s largest entertainment companies with a vast portfolio of cable, broadcast, film, pay-TV and satellite assets across six continents.