The beginning of 2015 has, by all accounts, been a tough start to the year for Sky. What began with good news in the form of Sky being named as one of the hundred most sustainable corporations quickly slipped into slightly more contentious territory as BT purchased EE to begin offering unparalleled deals across home phone, mobile, TV and broadband and the Premier League rights auction cost Sky an astonishing £4.2 billion. That, along with tough competition from all sides of the industry, had forced Sky's stock price further and further down as investors worried that the British TV giant no longer had what it took to exist in such a complex market.
Matters were compounded further with the acquisition of Sky Deutschland and Sky Italia during the latter half of 2014, a deal which saw Sky spend a total of £7 billion at the time on two businesses which were failing to return profits at a regular basis (or at all, really). It's not hard to see, therefore why Moody's saw fit to downgrade Sky's business and why investors were a touch hesitant to get back on board with the company for the long term. Taking a look at Sky's stock today though, reveals something different: Sky stock is at a fifteen year high, after rising 3.18 percent to 1,005p on the London Stock Exchange. So what's going on?
Put simply, investors are starting to see the method in Sky's apparent madness. Since purchasing the majority of Sky Deutschland's stock, they've held a buying order to purchase any and all remaining stock in the company and now they're going to take it off the stock market and integrate it fully with the UK, Ireland and Italian parts of the business. That means lower running costs across the board and a huge amount of autonomy for Sky to restructure the businesses in new, innovative ways, like consolidating the Sky helpline phone number and free Sky telephone number into one service.
There's also the matter of the Premier League rights, which, while obviously overpriced, will at least secure Sky Sports as the premier location to see any and all football matches. Indeed, Sky have also signed a new deal with the Football League and MLS Association to broadcast lower league English games and top flight American football matches, in historic deals. With those deals now behind them, Sky can once again get down to the business of getting and keeping customers.
Indeed, we mustn't forget about Sky's new deal with O2, which will see a Sky branded mobile phone network launched running on O2's infrastructure. That'll mean that Sky can offer so-called 'Quad Play' deals which feature mobile, TV, broadband and home phone in one deal. That'll make a huge difference to Sky in the battle to beat BT and Virgin.
With these changes, Sky's outlook is suddenly looking much rosier and investors are once again interested in getting involved with the British pay-TV giant who was not long ago left out in the cold.
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