Report Overview

Sky UK Q3 2019 results: balanced, but more to come?

While Sky’s overall revenues continue to rise, Q3’s growth was hampered by a significant fall in advertising revenue and to a lesser extent a slowdown in content sales

Underlying EBITDA growth was in the mid-teens. Next quarter, Sky will continue to benefit from lower Premier League rights costs versus last season, and profit appears on track to meet full year guidance

Q3 saw a rare decline in Sky’s total number of customers due to the conclusion of Game of Thrones. Sky clearly understands the value of unique content—recently extending its HBO deal. In our view, this was essential, since without a distribution deal for Disney+ (launching in the UK in March) Sky would lose Disney’s alluring content

Contents

Headline financials

Continued DTC subscription growth; ARPU weighing a little less

Content revenue: healthy; still awaiting BT cross-wholesale deal

Advertising revenue: weak European markets plus gambling bans

EBITDA: on track to meet full year guidance

Wider context and other developments

• Disney+, Sky Studios, HBO deal
• Rumoured interest in imminent Champions League rights auction
• Healthy relationship with Channel 4 extends to AdSmart
• Entering the business broadband market

List of charts/tables

Figure 1: Headline financials ($m) and YOY constant currency growth rates

Figure 2: Sky direct-to-consumer revenue YOY growth at constant currency

Figure 3: Sky retail customer net adds (000)

Figure 4: Average series viewership for HBO programmes on Sky Atlantic