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SBD Global/January 31, 2014/Finance

Sky Reports Rise In Sales Despite 'Noisy' Competition From BT Sport

Sky has tried to shrug off the “noisy” competition from pay-TV rivals as it "delivered an increase in first-half sales, boosted by on-demand services," according to Sharman & Mance of the FINANCIAL TIMES. The U.K.'s biggest pay-TV operator is "being squeezed by higher costs for sports rights and marketing as it faces more aggressive competition" from BT. Sky reported adjusted operating profit for the six months through December, down 8% compared to last year, at £595M -- "broadly in line with analysts' expectations." The broadcaster paid £108M in a one-off increase to its deal to show the EPL. Marketing costs in the period also rose 13% year-on-year to £613M as it "sought to lure subscribers to its growing number of products." But revenues were up 7.6% at £3.75B, "adjusted to reflect the addition of former O2 broadband customers taken on last year in a deal for Telefonica's fixed-line business" (FT, 1/30).

BT BATTLE: In London, Mark Sweney reported broadband subscribers, "the focus of its battle with BT," grew by 110,000 to 5.1 million in the last three months of the year. Investors "are keeping a keen eye on the company's churn rate," the proportion of customers that leave Sky, to "gauge the impact of BT's deep-pocketed spending on building its TV service." There "has been speculation" that Sky might need to "add a mobile offering to boost its range of products to customers." When asked about a potential deal with Vodafone, Sky CEO Jeremy Darroch "did not explicitly deny that talks had taken place," but said speculation of a merger or acquisition was "wide of the mark." Darroch: "We talk to lots of different companies about lots of things, it is part of the ecosystem of the market" (GUARDIAN, 1/30).
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