Sky proves capable of weathering Netflix storm amid questions over future ownership

The broadcaster is adapting its offering in a fast moving marketplace. The results show it's working

(Getty)

The death of the satellite dish is coming. Sky’s plan to make all its channels and content available online is being sold as a way to access new customers, people who live in flats for example.

However, the increasing popularity of internet TV will inevitably call time on the satellite as a means of broadcasting, and perhaps sooner than people think.

The flurry of recent tweaks Sky has made to its model, of which the launch of more web based services is one, are as much defensive as they are about accessing new markets. They have been forced on it by the market.

The company has also realised that customers would eventually have rebelled against being presented with a limited number of bundles full of stuff they didn't necessarily want. To prevent that from happening they are now increasingly able to pick and choose.

The risk to Sky is that this reduces the closely watched revenue per customer (down £1 to £46 a month in the latest numbers).

The pay off is that there may be more of them, and Sky already has 12.9m, with 255,000 new ones added in the UK and Ireland and the rate of churn reduced (slightly) during the first six months of its reporting year.

At the top end they can pay up by taking out a long term contract on the fancy Q box, with its ultra HD viewing, and its multiscreen facility and its What Hi Fi award.

Or they can pick and choose through the web only Now TV, now accessible through the traditional television via a whizzy new stick. Or they can opt for something in between.

The Sky offer of today is thus hardly recognisable from what existed as recently as five years ago.

Its rapid moves might be adaptive as much as they innovative but they show it is capable of responding to the rapidly changing environment in which it operates at a time when others are faltering.

That, its international growth, and the £1.1bn in earnings it throws off, help to explain why Sky is still such a prize, and why it is being so vigorously fought over.

The days when it can be called “Britain’s monopoly satellite broadcaster” may soon over but, for now, it remains a very important company.

The outlook is cloudy, simply because the outlook for the market is cloudy.

The Competition & Markets Authority deciding the bid by Rupert Murdoch's 21st Century Fox is not in the public interest, but that a Disney bid may be if American watchdogs will let it buy the lion's share of Fox, has only added to the uncertainty.

For now Sky is proving it is capable to weathering all these storms. And ask yourself which would you rather hold shares in, or own, Sky TV or ITV? The answer’s very easy.