No single content partner is crucial to Sky’s continued success and continued investment in the pay TV operator’s homegrown content will be a key focus for the company going forward, according to CEO Jeremy Darroch.
Darroch, answering a question on parent company Comcast’s Q1 earnings call on the impact of streaming, said: “I don’t feel there’s any single partner that we need to keep on the platform and, as part of that, and continuing to invest in our own channels and content has been a key theme and will be a theme for us going forward.”
He said that while streaming would “be disruptive to an extent”, Sky’s own channels or originals had “outperformed all of the pay TV providers in our markets” in the quarter.
“I think if you look at our hand and all the assets we’ve got, we’re going to be in a good place to navigate and continue to thrive in that environment,” he said.
Darroch was speaking after a quarter in which Sky took a significant hit on earnings, with pro forma adjusted EBITDA down 17.0% to US$663 million. Excluding the impact of currency, adjusted EBITDA decreased 11.3%, reflecting a 4.4% increase in operating expenses, partially offset by higher revenues.
Sky’s EBITDA was hit in particular by increased programming costs from new contracts for Serie A and Champions League football rights in Italy and Germany. Comcast CFO Michael Cavanagh said that this would improve in the second half, when the pay TV operator will benefit from a new, lower-cost English Premier League contract.
Sky performed solidly overall operationally, adding 112,000 net new customers in the quarter. However, revenue was up only by 1.9% excluding currency impacts. Darroch said that this was due to a number of factors, including fewer pay-per-view events, and commented that the “the macro environment is a bit more challenging in Europe” with a weak ad market that could be hit further by Brexit.