Sky’s programming costs top £1.7 billion as it reports strong results

BSkyB’s programming deal with HBO and increased investment in original content have contributed to an £88 million rise in programming costs in the nine months to end March.

The News Corp-backed pay TV operator inked an output deal with HBO in mid-2010 and then created the Sky Atlantic channel in early 2011 to house that content. It has also recently invested in a raft of original UK programming and has pledged to spend £600 million a year on British content by 2014. These programming initiatives were responsible for a 5% increase in programming costs, taking the total to £1.7 billion.

“More than half of the year on year increase was attributable to entertainment costs, which included a full nine months of Sky Atlantic programming as well as increased investment in original UK content,” Sky said.

Channel costs also increased, £22 million, as Sky added new high definition channels to its service. It had 4.2 million HD subs at the end of March. Sky also said that 250,000 of its customers can now watch its 3D service.

The company reported strong results this morning. It added 15,000 TV subs and has 10.3 million TV customers. The company was keen to flag that 3.2 million customers now take TV, internet and telephony, meaning it has eclipsed Virgin Media as the largest triple play provider in the UK. The total subscriber base is now 10.55 million.

Sky reported a 5% year-on-year increase in revenue of £5.1 billion for the nine months to end-March. Operating profit increased 25%, taking the total to £939 million.

“In what remains a tough economic environment, strong and consistent execution of our plan has delivered good growth across our product range,” said Jeremy Darroch, Sky’s CEO. “The decision to focus our marketing on home communications has paid off with our fastest quarter of growth since launch and confirmation that Sky is now Britain’s favourite triple play provider.”