Jeremy Darroch
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This document contains certain forward looking statements with respect to the Group’s financial condition, results of operations and business, and our strategy,
plans and objectives for the Group. These statements include, without limitation, those that express forecasts, expectations and projections, such as forecasts,
expectations and projections in relation to new products and services, the potential for growth of free-to-air and pay television, fixed line telephony, broadband and
bandwidth requirements, advertising growth, DTH and OTT customer growth, On Demand, NOW TV, Sky Go, Sky Go Extra, Sky+ HD, Sky Q, Sky Store, Sky Online, mobile,
Multiscreen and other services penetration, revenue, administration costs and other costs, advertising growth, churn, profit, cash flow, products and our broadband
network footprint, content, wholesale, marketing, synergies and integration, and capital expenditure.
These statements (and all other forward-looking statements contained in this document) are not guarantees of future performance and are subject to risks,
uncertainties and other factors, some of which are beyond the Group's control, are difficult to predict and could cause actual results to differ materially from those
expressed or implied or forecast in the forward-looking statements. These factors include, but are not limited to, the fact that the Group operates in a highly
competitive environment and faces competition from a broad range of organisations, the effects of laws and government regulation upon the Group's activities, the
fact that the Group’s business is based on a subscription model and its future success relies on building long-term relationships with its customers, its reliance on a
complex technical infrastructure which is subject to risk of failure, change and development, failure of key suppliers, the Group’s exposure to financial market risks, the
fact that the Group must protect its customer and corporate data and prevent breaches of security, risks inherent in the implementation of large-scale capital
expenditure projects, the fact that the Group relies on intellectual property and proprietary rights which may not be adequately protected under current laws or
which may be subject to unauthorised use and the fact that people at Sky are critical to the Group’s ability to meet the needs of its customers and achieve its goals
as a business.
Information on the significant risks and uncertainties is provided in the “Principal risks and uncertainties” section of Sky’s Annual Report for the full year ended 30
June 2016. Copies of the Annual Report are available from the Sky plc web page at www.sky.com/corporate and in hard copy from the Company Secretary, Sky plc,
Grant Way, Isleworth, Middlesex TW7 5QD. All forward looking statements in this document are based on information known to the Group on the date hereof. The
Group undertakes no obligation publicly to update or revise any forward looking statements, whether as a result of new information, future events or otherwise.
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VIDEO
4
5 UK and Ireland revenue excluding Sky Bet
1 94 233
380 550
776 1,008
1,249 1,434 1,545
1,847
2,231
2,681
3,069
3,465 3,810
4,111
4,504
4,908
5,275 5,854
6,496 6,627
7,018
7,377 7,820
8,371
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
+£3.1bn
+£2.6bn
+£1.9bn
+£0.8bn
Organic revenue (£m)
6
Customers
Products and customers as at 30 June and financials are 12 months to 30 June (2016 includes the 53rd week). 2008 is UK and Ireland only and 2016 is UK, Ireland, Germany, Austria and Italy.
Revenue
TV subscription revenue Other revenue
£12bn
2008 2016
£5bn
+£7bn
EPS
63.1p
2008 2016
24.9p
+38.2p
21.8m
2008 2016
9.0m
+12.8m
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8
Pay TV broadcaster
Entertainment for everyone
Broad range of packages
DTH, IPTV, OTT, Mobile
Every screen, everywhere
Triple play/quad play
Service to suit customers needs
Sports and movies centric
High reliance on big bundle
Exclusively DTH
Main TV in living room
Single play
Customer service on the phone
Broader, consumer-led business
9
• Reaching 56m households - free and pay TV
• No. 1 pay TV channel portfolio - 50% share of pay viewing
• Europe’s biggest investor in content - over £5bn p.a.
• Top brands
• Best partner for rights holders
• Own production capability
• Broad distribution - all major networks
Note: Pay viewing to Sky wholly owned channels and JVs
Hooten & the Lady
10
Sky+
launches
1999-2004 2007-2009 2005-2007 2011-2012 2010-2012 2015-2016
On demand launches
3D
launches
Sky Go
launches
NOW TV
launches
Sky Store
launches
Catch up TV
rolls out
Sky Player OTT streaming
Sky+ app launches
Sky+HD
launches
Mobile TV first introduced
2013-2014
Sky+ gets biggest overhaul since launch
Sky Go Extra
launches
NOW TV Box launches
Box sets launches
Sky Adsmart launches
Buy and Keep launches
Sky Advance launches
NOW TV hybrid box
Sky Q
Sky Kids App
VR
UHD
Interactive Sky Anytime
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Which of these brands is the leader in Entertainment?
Source: Kantar research 7-10 October 2016
Base: 8,793
Question: Which one of these companies do you consider to be the leading TV entertainment company?
13% agree
2nd
1st 1st
1st
53% agree 28%
agree
56% agree
17% agree
2nd
20% agree
2nd
12
Source: Kantar research 7-10 October 2016
Base: 8,793
Question: on a scale of 1-10 where 1 is not at all satisfied and 10 is extremely satisfied, how satisfied are you with your main home TV entertainment provider? Score are 6-10
Sky UK & Ireland product growth
Launch After 10 years
Broadband HD Multi-screen Sky Go Extra
Customer satisfaction
Germany & Austria
84%
Italy
92%
UK & Ireland
84%
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Original Direct To Consumer TV entertainment company
• Deep insights
– 6 hours per day in Sky universe
– 20,000 strong panel
– Data from millions of boxes
• Advanced analytics
– Specialist analysis
– Machine learning
• Combination drives performance and
competitive advantage
14
Content origination
and acquisition
Content curation
Propositions, pricing and
bundles
Sales and retention
Customer care
Viewing experience
and technology
15
£
Sourcing high res image of
Team Sky rider in wind tunnel
Sustained operating
cost improvement
Reduces costs as a percentage of sales whilst improving the customer experience
Provides fuel to invest
and deliver
higher profits
Highly effective and
productive model
Powerful application
across markets
16
Advertising
Customers
Home communications
Transactional, Rent and Buy
Mobile
Efficiency
Programme sales
TV products
HD
TV
Channel sales
17 Numbers are based on Group like-for-like
6% 6% 2% 15% Revenues Programming
investment
Other operating costs
EBIT
2010-2016 CAGR
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• Winning content portfolio
• Delivering direct to consumers at scale
• Clear brand leadership and happy customers
• Best in class sales capability
• Deep customer insights providing advantage
• Efficient and effective operations provides fuel to invest
• Financial model converts revenue growth into profit growth
Westworld
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Pay TV & comms
35% share
Advertising Transactional UK Mobile Programme &
channel sales
Total opportunity
+
7% share
+
7% share
+
27% share
+
20% share
= £60bn £15bn £2bn £3bn £11bn £29bn
For illustrative purposes only. Source: OFCOM communications report 2016; Company Results: IHS Trax Television Intelligence 2016. Programme and Channel Sales opportunity includes UK wholesale market for Sky channels and the size of UK TV
exports globally. Sky's other total revenue opportunities are the current market sizes for each of those revenue streams as sourced from various third parties.
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UK and Ireland Germany & Austria Italy
Maximise customer
lifetime value and
drive profit growth
Customer growth and
market penetration
Diversified revenue
growth and strong
operating leverage
Drive efficient and effective operating model
Invest where customers see value
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Positive and growing contribution from comms
Grow programming in line with revenues
Drive hard on operating cost efficiency
Mid to high single digit revenue growth
Operating profit growth ahead of revenue growth
EPS and FCF growth
Structured
approach to
costs
Strong & growing dividend
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Growing EPS and free cash flow
Strong and progressive dividend
Supplemented by capital returns
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• Europe's number 1 entertainment business and growing
• Track record of growth in all conditions
• Best in class capabilities built around deep customer understanding
• Significant opportunity for growth in all our markets, well aware of the challenges
• Management capability to move quickly at scale and win in dynamic markets
• Clear strategies to grow revenues, manage costs; to deliver sustained growth in
earnings and shareholder returns