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Sky’s operating profit dips, plans outlined for Spanish service

European pay-television group Sky has reported a six per cent fall in operating profit due to the increased costs of rights to football’s English Premier League, while it has outlined plans to launch a “simple and affordable” OTT platform in Spain.

Sky today (Thursday) unveiled its financial results for the full year ending June 30, 2017 as its proposed takeover by media company 21st Century Fox continues to roll on. Sky reported an operating profit of £1.468bn (€1.64bn/$1.91bn), down £97m on the prior year amid additional Premier League costs of £629m.

Group revenues grew by more than £1bn to £12.916bn. UK and Ireland revenue was up four per cent to £8.6bn driven by a higher customer base, increased product take-up including Sky Fibre, Sky Q and Sky Mobile and the impact of pricing taken in the year.

Revenue in Germany grew nine per cent to £1.858bn behind what Sky said was good customer and product growth and a strong increase in advertising. In Italy, revenue increased by four per cent to £2.458bn reflecting higher average customers, more product penetration and increased advertising from free-to-air channels and on demand content.

Operating profit in the UK and Ireland fell by 14 per cent to £1.292bn. However, the case was different in Germany and Austria, as well as Italy, where these figures increased by 900 per cent and 139 per cent to £40m and £136m, respectively.

Looking forward, Sky said that it intends to launch an OTT service in Spain during the first half of the 2017-18 financial year, adding that the country has the Eurozone’s fourth largest economy and the market with the largest free-to-air headroom in Europe outside of its existing footprint.

“We will leverage our technology assets and brand, and over time… our strong position in content, whether from third parties or content we have created ourselves,” Sky’s chief financial officer Andrew Griffith said. “We don’t sit here with a big bank of content (for Spain). Today is more a statement of intent and we will come back with more detail.”

Karen Bradley, the UK’s Secretary of State for Culture, Media and Sport, last week confirmed that she has not yet decided whether to refer the proposed takeover of Sky by 21st Century Fox to the Competition & Markets authority for a ‘phase two’ investigation.

Bradley, who has already said that she is “minded to” refer the deal to the watchdog due to concerns about media plurality, said that, despite having received representations from various parties involved in the deal, nothing had led her to change her mind at this point.

Fox has already received regulatory approval in all other required territories for its proposed takeover of Sky. Fox is bidding to acquire the 61 per cent of Sky that it does not own.

Commenting on today’s financial report, Sky’s chief executive, Jeremy Darroch, said: “We enter 17/18 in a strong position with significant growth potential. Despite the broader consumer environment remaining uncertain, we are confident of delivering on the plans we’ve laid out as we continue to give our customers the best content, great products and industry leading service.”