Sky reported a doubling of its annual losses last year as the media and telecoms company spent more on programming and costs relating to its broadband services and hardware such as mobile devices and Sky Glass TVs increased.
The company, which earlier this year cut 1,000 jobs, reported an operating loss of £224m for 2023.
Sky, which was bought by the US media company Comcast for £30bn in 2018, reported an operating loss of £111m in 2022. The company’s total revenues remained flat at £10.23bn.
The direct-to-consumer business, which includes its pay-TV, mobile broadband and streaming operations, grew revenues by almost 1.6% to £8.5bn. The company attributed this to the revenue growth of its internet-enabled smart TV Sky Glass as well as mobile, broadband and streaming services, fuelled by price increases for consumers.
Sky said the modest improvement was offset by a decline in the popularity of its Sky Q box as consumers move toward streaming and smart TVs for their viewing.
The company also recorded a slight fall in advertising revenue, from £1.27bn to £1.2bn, which it said had “held up well in spite of the market squeeze driven by the cost of living crisis”.
The company will face increasing market pressure when Warner Bros Discovery (WBD) launches its streaming service, Max, in the UK in 2026. WBD, which owns brands including HBO and franchises including Harry Potter and superhero franchises such as Superman and Batman associated with DC Comics, has a deal in place for all its content to run through Sky which is up for renegotiation next year. Without the WBD content and the US company as a rival, Sky’s revenues could come under even more pressure.
Emphasising the difficulties media companies face in managing collaborative deals, Sky also registered a £327m impairment due to the performance of its loss-making streaming service SkyShowtime, a joint venture with the US media company and Channel 5 owner, Paramount.
Sky’s total operating expenses increased from £10.3bn to £10.45bn, with programming costs increasing marginally to £3.45bn. Direct network costs increased to £1.66bn in line with its growing number of mobile and broadband customers.
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The group also took a £1.2bn write-down related to loans provided to its subsidiaries in Germany and Italy.
Sky’s employee costs increased from £843m to £887m as its number of staff grew from 9,528 to 10,036. The highest paid was unnamed director who received £3m.