Sky Deutschland AG (SKYD), the German pay- TV operator controlled by Rupert Murdoch’s News Corp., is making its programs available on mobile phones and laptop computers in a bid to add subscribers in Europe’s biggest TV market.
Dubbed “Sky Go,” the 12 euro-a-month ($17) add-on package includes all Sky’s sports and movie content and can be accessed on demand on Apple Inc. (AAPL)’s iPad and iPhone, and on a laptop or desktop computer, Chief Executive Officer Brian Sullivan said in an interview. It will be the first time a content provider has created a “seamless” flat-fee service for all devices, he said.
“It really is breaking down all the walls,” Sullivan said in Berlin. “You hear a lot about TV everywhere, but right now that is just a theory. We deliver it today and will expand it massively this year.”
Shipments of handsets that allow users to surf the Web and download movies may gain 49 percent this year to more than 450 million units, according to International Data Corp. Sky Deutschland, whose 2.65 million subscribers at the end of 2010 trailed Kabel Deutschland Holding AG (KD8)’s 8.8 million, has posted five consecutive annual losses as it struggled to retain and win clients in a market with a wide choice of free TV channels.
Within the next 18 months, Sky plans to introduce the Sky Go on devices that run on Google Inc. (GOOG)’s Android platform as well as on games consoles and Internet-enabled televisions.
“We see it as revolutionary,” Sullivan said in the interview yesterday in Berlin. “There are many who are doing bits and pieces, but there’s nobody doing a complete multi- platform, multi-device seamless service. We think it is the way television will be consumed over the next ten to 20 years.”
The subscription will come on top of a Sky TV package that costs between 16.9 euros and 59.9 euros a month. In the fourth quarter, Sky customers paid about 30 euros a month on average.
Since Sullivan took over a year ago, he helped Sky raise 400 million euros to invest in premium services such as high- definition TV. The CEO has struck deals with other cable companies to deliver Sky content, and said he’s now in talks with Kabel Deutschland and Unitymedia.
Sky also faces competition from the very companies it relies on to carry its content, such as Deutsche Telekom AG (DTE), with its Web TV Entertain, and cable companies.
Kabel Deutschland, Germany’s largest cable operator, began offering video-on-demand in March in Berlin, Hamburg and Munich. Kabel Baden-Wuerttemberg GmbH & Co KG, the cable operator that agreed to be bought by U.S. billionaire John Malone’s Liberty Global Inc. (LBTYA), has a similar offer. Liberty Global’s Unitymedia plans to start offering video-on-demand in the “foreseeable future,” said spokeswoman Katrin Koester.
“Pay TV in Germany is relatively immature and the technology is probably ten years behind everywhere else,” Sullivan said. “We took a view that instead of trying to catch up, we’re going to try to skip a few steps and leap ahead.”
About 73 million western European households subscribed to pay TV at the end of 2010, or 42 percent of all TV households in the region, up 11 percent from 2009, according to E-Media Institute. Pay-TV adoption may slow to growth of 4 percent to 5 percent a year from 2011 to 2014, the London-based research forecasts.
Turning operations around in Germany may become a test case for News Corp. (NWSA)’s TV ambitions in Europe. The German pay-TV market, which led to the collapse of media magnate Leo Kirch’s Kirch Holding GmbH in 2002, has resulted in reported losses of 1.21 billion euros at Sky, formerly known as Premiere AG, since Murdoch’s initial stake purchase in 2008.
Sky, 49.9 percent owned by News Corp., reported a 2010 loss before interest, taxes, depreciation and amortization of 268.6 million euros and forecast its results will improve this year. First-quarter subscriber growth showed “underlying continued momentum,” Sullivan said.
The company’s stock, up 81 percent this year, is the best performer in Germany’s MDAX index, which has risen 4.2 percent. The shares added 10.7 cents, or 3.6 percent, to 3.07 euros at 11:11 a.m. in Frankfurt, giving the company based near Munich a market value of 2.2 billion euros. The stock has more than tripled from an all-time low of 82 cents in October.
“A year ago, everybody thought we were on life support and most people didn’t believe we were going to last very long,” Sullivan said. “That is not the case anymore.”
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