Sky Keeps the Focus on Earnings Amid Fox Takeover SuspenseBy
Pay-TV company’s quarterly operating profit rose 8 percent
CEO: ‘We’ve not been distracted by the approach’ from Fox
Sky Plc, the pay-TV company being acquired by Rupert Murdoch’s 21st Century Fox Inc., delivered rising profit in the fourth quarter, and said it’s stayed focused on the business as the U.K. government evaluates the 11.7 billion-pound ($15.4 billion) transaction.
Operating profit increased 8 percent to 455 million pounds, the company said in a statement Thursday, as shows like “Game of Thrones” and “Riviera” helped draw in subscribers. Earnings per share advanced 19 percent in the period, Sky said.
“We’ve achieved further good growth despite a number of headwinds,” Chief Executive Officer Jeremy Darroch said on a call with reporters. “We’ve not been distracted by the approach we’ve had from 21st Century Fox.”
Sky, facing rising costs for premium sports content like Premier League soccer and competition for viewers from Netflix Inc. and Amazon.com Inc., has sought to diversify by boosting spending on scripted entertainment. It also delved into the U.K. wireless market, starting a mobile-phone service using Telefonica SA’s O2 network last November.
The results come as investors weigh the likely success of the Fox deal, which if completed would offer a 10 percent yield to Sky’s current share price. The U.K. government is expected to make a decision on the next step in the process in the coming weeks, and if the deal fails to complete by year-end Sky must pay its shareholders a special dividend of about 170 million pounds.
“In some ways, the results are academic as the main driver for the share price is the Fox bid,” Liberum’s Ian Whittaker wrote in a note to clients. “Our view is that the bid is likely to go through.”
Sky’s shares were little changed at 964.5 pence at 9:39 a.m in London, below the 1,075-pence offer from New York-based Fox.
Full-year revenue at Sky was up 10 percent to 12.9 billion pounds, the company said. Analysts expected sales of 13 billion pounds, according to the average of estimates compiled by Bloomberg. Operating fell 6 percent to 1.47 billion pounds, Sky said, citing the rise in Premier League costs.
Churn, the 12-month rolling rate at which customers leave the business, was 11.5 percent in the U.K. and Ireland, Sky’s biggest market. That compares with a rate of 11.2 percent a year earlier.