Sky news update: there has been a lot of excitement circulating Sky after their latest figures however some suggest they could do more harm than good.
Sarah Simon who is a media analyst currently working for Berenberg bank suggests that despite their latest success, not everything in Sky’s garden is as picturesque as it seems. Simon predicts that the latest figures are actually a cause for concern and that the broadcasters numbers actually include a ‘SELL’ note and should therefore brace themselves for a fall in the price of their shares.
Her main concern is that their ARPU figure stayed flat and that is figure is not being helping with the combination of the DTH numbers. She feels that the ARPU figures on NOW TV is so little compared to DTH that it is now meaningless and shouldn’t be considered when making analytical decisions. The ARPU has been stuck at £569 p/a for the past year now, and has not been affected by the 800,000 new subscribers to Sky’s ‘paid for’ services or the movie rental figures doubling in the past three months.
On top of this Sarah is concerned that the news programming acquisitions available to Sky that increase and improve frequently will bring about an inflation cost to the company. If this does occur it will increase sharply as the 2013-2014 financial year progresses. The UEFA Champions League rights could play a part in this with the price expected to increase for the first time since 2008.
Currently ITV pay roughly £160 million to air the Champions League, with Sky paying £240 million. However with the new addition of BT Sport, the prices could supposedly reach near £1 billion for a three year contract for the rights. With the supposed inflation cost on top of this Sky could be looking to pay well over £1 billion in the near future, for TV rights alone. On the other hand Sarah Simon didn’t find problems with all the figures and said that some indicate room for exponential growth in a lot of products for the pay-TV giant.
Overall Sky have had a fantastic first quarterly with the only major figure to decrease being operating profits. They look set to continue growing and dominating the pay-TV market. However there is potential for their current figures to back fire and pay over £1 billion very soon which would hurt Sky’s bottom line.
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