Boost for Sky after 177,000 rise in customers

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Entertainment group Sky attracted 177,000 new customers in the first three months of 2016, down 160,000 on the previous quarter as it shifts away from heavy price discounts to focus on its new, high end Sky Q service.

The group is concentrating its marketing efforts on the launch of Sky Q, which is aimed at its most loyal TV customers, rather than offering bigger broadband deals.

​As a result broadband net additions in Britain were 46,000, about half the level seen a year earlier.

​Sky’s chief executive Jeremy Darroch said the group has stepped back from some heavy promotional activity in Britain.

“Our main focus has been on launching our new premium offering Sky Q during the quarter,” he said.

“We’ve been really pleased with the early response we’ve seen.”

Sky initially used Premiership soccer to become a leader in the British market, but has since broadened its offer with more sport, premium US drama and original programming to increase customer numbers after losing some soccer rights to rival BT. ​

BT has outbid Sky for several Premier League packages and the lucrative Champions League.

It faces a similar challenge in Germany, where rights to the Bundesliga will be shared in the next auction in June.

“We know that over time - you can see it in the UK - we have to do fresh things, so there’s big opportunity in entertainment channels and box sets and our own commissioned content,” said Mr Darroch.

The group reported a 12 per cent rise in operating profit to £1.14bn on revenue up 5 per cent to £8.72bn for the nine months to March 31.

Richard Hunter, head of research at Wilson King Investment Management, said: “Sky continues to make progress on a number of fronts, set against competitive challenges which show little sign of abating.

“Growth in customer numbers and products remains impressive, whilst innovations such as Sky Q and new deals including a tie-up with Sony as well as Formula 1 bode well for future prospects.

“Less positively, profits at Sky Deutschland and Sky Italia have yet to materialise, whilst the loss of the UEFA Champions League rights are an affirmation that Sky will not have its own way in the pay TV space.”

Roddy Davidson at Shore Capital added: “We are mindful of the impact of an increasingly complex and competitive environment, featuring rapid growth in streaming services and BT’s content offer, but believe Sky’s content base and commitment to delivery across multiple platforms and revenue models places it in a strong position.”

​As part of its plans for future expansion, Sky has built a world-class technology facility in Leeds to tap into the region’s technology expertise.

Sky opened the third building on the site last month and has recruited 350 people to work at the hub, bringing the total number of employees in Leeds to over 1,000.

The hub, based at Leeds Dock, is focused on creating Sky’s next generation of websites and apps across its services.

The company said that Sky@Leeds Dock has established a “dynamic and creative environment” that will transform the way Sky’s technology teams operate.

The teams based at the site are responsible for best-selling products such as Sky+ and Sky Go.

Matt Grest, head of technology at Sky@LeedsDock, said: “We’ve added around 350 highly skilled people to the workforce. They are working on a range of Sky’s digital products.

“Sky’s website and mobile apps, Sky Sports, Sky News, Sky.com, – it’s all developed out of Leeds.

“It has had a significant economic impact – we share the vision of Allied London, our landlord here. We want this to be the best place to work in the North of England.”