Business

Sky profits dented by higher football rights costs

  • 26 January 2017
  • From the section Business
Sky sign at British Sky Broadcasting headquarters in west London Image copyright Getty Images

Broadcaster Sky has reported a 9% fall in operating profits after paying more for broadcast rights to Premier League football matches.

Operating profits at the company fell to £679m for the six months to 31 December.

However, Sky said that its financial performance had been "good".

Rupert Murdoch's 21st Century Fox owns 39% of the company. Late last year, it offered to buy out the remaining 61% of the business.

Broadband switchers

Sky has 22 million customers in the UK, the Republic of Ireland, Italy, Germany and Austria.

Chief executive Jeremy Darroch said: "In a year in which we are absorbing significantly higher programming costs, as a result of the step up in Premier League costs, our financial performance has been good."

Operating profit was £65m lower on the year before, even though the costs of the Premier League rights rose by £314m in the period.

Image copyright PA

The company said it had added more than 500,000 new customers.

However, in the UK, its churn rate, the annual percentage rate at which customers stop subscribing to a service, rose to 11.6% from 10.2% in the same period the year before.

Sky said this reflected the increased proportion of broadband customers, who have a greater propensity to switch providers.

It added that six million households were Sky broadband customers.

Bid battle

The offer from 21st Century Fox for Sky is the second time Mr Murdoch has tried to assume full control.

Five years ago he also attempted to buy out Sky's independent shareholders through his News Corporation company, which has since been split into 21st Century Fox and a new News Corporation - the publishing and Australian broadcasting business.

Fox needs regulatory approval for the $14.6bn (£11.7bn) offer in both the UK and Europe, where it does about a third of its business.

Sky's independent directors have backed the bid, but a number of shareholders have expressed concerns about this acceptance.

They have questioned the supposed independence of the Sky board, pointing out that Rupert Murdoch's son James is both chairman of Sky and chief executive of Fox. Other directors hold positions at both 21st Century Fox and Sky.

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