Rising cost of Premier League gives Sky profits a kicking

Sky fights off BT's challenge with a rise in customers and revenues but its profits take the brunt of increasing costs.

by Gabriella Griffith
Last Updated: 19 Nov 2014
Long before this season’s matches commenced on the UK’s football pitches, a battle was raging behind the scenes over where the nation’s football fans would be tuning in to watch the games. Now, the first results of BT’s challenge to Sky’s Premier League dominance have been revealed – Sky profits have taken a tumble.
 
Adjusted operating profit at Sky was down 8% in its first quarter to £285m as it took on higher costs of Premier League rights – all down to BT’s meddling: when BT secured the rights to broadcast live Premier League games last year, this pushed up the cost of the rights for Sky by £220m or 40% to £2.3bn. Ouch.
 
But despite these added costs, and the toll they have taken on the company’s profits – Sky is doing pretty well in other respects. Revenues were up by 7% to £1.84bn and with 50% more paid-for subscription products – its customers passed the five million mark. Sky welcomed 111,000 new broadband customers in the first quarter - a rise of 9% on last year and TV subscriber numbers increased by 37,000 to 10.45 million.
 
‘We have made a very good start to the year,’ said Jeremy Darroch, chief executive of BSkyB.
 
‘Strong growth across the board drove a 7% increase in revenues and we added 50% more new subscription products than last year as customers continued to respond to the quality and value we offer. Adjusted operating profit was in line with our expectations as we invest in new services and absorb higher Premier League costs.’
 
Proving that BT’s attempts to derail Sky’s dominance haven’t had a massive impact, total viewing of Sky Sports was up almost 15% on last year, with a 40% growth in viewing through Sky’s mobile service Sky Go.
 
Advertising revenues rose by 7% to £102m – recovering from last year’s dent in viewing caused by the Olympics.
 
Shares in the company have risen by 5.52% this morning to 927p.
 
‘While the consumer environment remains challenging, we are well placed as we execute a strong set of plans for the rest of the year,’ said Darroch. Back of the net.

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