BSkyB's record results mask some serious issues

Problems with rivals.

At first glance, BSkyB’s annual results merit a tick in every important box. Its key metrics all moved upwards: cross-sell rate, total customer numbers, revenue and profit all showed strong growth.

In particular, BSkyB is focused on boosting its average annual revenue per customer: that metric rose by over 5 percent or £29 to £577 compared with last year. It is a sobering stat. The average Sky customer is now paying £48 per month. It is all a far cry from the early days of satellite television.

The writer is old enough and sufficiently nostalgic to recall signing up to the short-lived Sky rival, British Satellite Broadcasting at the princely rate of £10 per month. Circa 1990 – give or take. It also came complete with a relatively natty squarial dish.

Release of Sky’s results also serves as an annual reminder – at least for some of us – of just what good value the BBC offers at a fraction of the cost:  a snip at £145 per year. Back at Sky, revenues rose 7 percent year-on-year to £7.2bn; pre-tax profits rose by almost 6 per cent to £1.26bn.Customer numbers inched up a tad (by around only 34,000) to 10.4m, perhaps suggesting that the market may be nearing saturation. Sky’s response is to ramp up its efforts to grow its Now TV offering, launched as a direct rival to Netflix and Amazon’s LoveFilm.

Sky said that more than 50,000 customers have used its £9.99 per day sports ‘day pass’ on Now TV, aimed at non-Sky subscribers. Sky is also launching a Now TV set-top box for £9.99, targeted at non-Sky subscribers, enabling them to connect their TV to the internet.

Future targets for Sky include boosting its numbers of customers – currently around 35 percent - who opt to take the full bundled service of television, telephone and broadband. Officially, Sky is relaxed about the growing threat posed by rival BT.

If you believe that, you will believe anything.

A marketing war of sorts has blown up between BT and Sky. BT has spent a reported £1bn to buy sports rights for its TV service and is offering them for free to its broadband customers from August. BSkyB in turn is to offer free broadband to subscribers to its sports channels. If you believe BT and Sky’s PR teams, this means that customers are the winners.

If there is a winner out there it is the English Premier League and other sports rights holders. The cost to broadcasters of valuable sports rights continues to soar. In the markets, BT is outscoring Sky, with Sky shares down this morning by 3.5 percent to 820p; they are down almost 10 percent from a year-high of 905p.

By contrast, BT shares rose by 0.5 percent this morning to 336p and have soared by 44 percent since the turn of the year.

Two last points on Sky’s future plans. It said that it will add more channels - including 20 new channels to its catchup TV service. Just what we all need. Yet more channels. On a positive note, at a recent Digital Banking Club debate I chaired, the star-turn was a presentation from Steph Coleman, director of customer journeys for BSkyB. Coleman is on a mission, backed up with serious investment, to make Sky’s customer service experience the best in the country. Her presentation was mighty impressive; I would back her to get results.

Photograph: Getty Images

Douglas Blakey is the editor of Retail Banker International

Photo: Getty
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Can Philip Hammond save the Conservatives from public anger at their DUP deal?

The Chancellor has the wriggle room to get close to the DUP's spending increase – but emotion matters more than facts in politics.

The magic money tree exists, and it is growing in Northern Ireland. That’s the attack line that Labour will throw at Theresa May in the wake of her £1bn deal with the DUP to keep her party in office.

It’s worth noting that while £1bn is a big deal in terms of Northern Ireland’s budget – just a touch under £10bn in 2016/17 – as far as the total expenditure of the British government goes, it’s peanuts.

The British government spent £778bn last year – we’re talking about spending an amount of money in Northern Ireland over the course of two years that the NHS loses in pen theft over the course of one in England. To match the increase in relative terms, you’d be looking at a £35bn increase in spending.

But, of course, political arguments are about gut instinct rather than actual numbers. The perception that the streets of Antrim are being paved by gold while the public realm in England, Scotland and Wales falls into disrepair is a real danger to the Conservatives.

But the good news for them is that last year Philip Hammond tweaked his targets to give himself greater headroom in case of a Brexit shock. Now the Tories have experienced a shock of a different kind – a Corbyn shock. That shock was partly due to the Labour leader’s good campaign and May’s bad campaign, but it was also powered by anger at cuts to schools and anger among NHS workers at Jeremy Hunt’s stewardship of the NHS. Conservative MPs have already made it clear to May that the party must not go to the country again while defending cuts to school spending.

Hammond can get to slightly under that £35bn and still stick to his targets. That will mean that the DUP still get to rave about their higher-than-average increase, while avoiding another election in which cuts to schools are front-and-centre. But whether that deprives Labour of their “cuts for you, but not for them” attack line is another question entirely. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.

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