Sky has started to reap benefits from its substantial reduction in sports rights costs in Italy and Germany, helping to grow group EBITDA by 76% in Q3, despite a slight drop in revenue

With this change in strategy, the business model in Italy is undergoing an upheaval. Meanwhile, the UK continues to perform well, with further promise on the horizon thanks to the bold launch of Sky Glass

This streaming TV is a future-proofing leap forwards in Sky’s ever-more-central aggregation strategy, starting the business down the long path to retiring satellite, though this is probably still over a decade away

Sky’s revenue was up 15% in Q2, back to pre-COVID levels despite some lingering pandemic effects such as most pubs and clubs remaining closed. EBITDA fell by a third, driven by higher costs from sports rights, since very few live sports events took place in Q2 2020

The impact of “resetting” football rights is already evident in Germany and Italy, with 248k net customer losses across the group despite growth in the UK. However, Sky will make substantial savings, and we expect this will more than offset lost revenues

Meanwhile, Sky continues to strike deals with other content providers, solidifying its position as the leading household entertainment gatekeeper. In time, apps for NBCU’s Peacock, ViacomCBS’ Paramount+, ITV Hub, and, in Germany, RTL TV Now and DAZN, will all be aggregated within Sky Q

After a strong post-pandemic rebound, Sky has the opportunity to leverage its strong reputation with consumers to meet the challenge posed by new competitors and the studios’ direct-to-consumer transition, establishing Sky Q as the ultimate gatekeeper of video subscription homes.

Sports rights costs in Germany and Italy have been cut significantly, while Sky’s spend on UK Premier League rights will decrease in real terms. Savings will ease the financing of the shift to original content, which, associated with owner Comcast’s NBCU output, anchors the aggregation strategy.

Fibre deployment in the UK and Italy presents a subscriber and revenue growth opportunity, and underpins the gradual shift away from satellite to online content distribution.

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The Creative Industries accounted for 6% of UK GVA in 2019, more than the automotive, aerospace, life sciences and oil and gas industries combined. The UK’s Creative Industries are the largest in Europe and are central to promoting the UK’s soft power globally.

At the core of the creative economy is the AV sector, which, in turn, is driven by the UK’s PSBs. In 2019, the PSBs were responsible for 61% of primary commissions outside London and are the pillar upon which much additional regional economic activity depends.

Going forward, only the PSBs are likely to have the willingness and scale to invest in production centres outside London with sufficient gravitational pull to reorientate the wider creative economy towards the nations and regions.

21CF’s bid for 100% ownership of Sky has been referred for a Phase 2 investigation to the Competition and Markets Authority (CMA), which will decide by 6 March 2018

Third parties Avaaz and Ed Miliband MP complain of the influence of the Murdoch Family Trust (MFT) and family members over the UK’s news agenda and political process 

A remedy could insulate Sky News from this influence. The offer of a Sky News Editorial Board at Phase 1 was refused. Third parties will ensure the debate in Phase 2 is very lively

The Federal Communications Commission’s Privacy Order (FCC) was overturned by the Senate, clearing the way for ISPs to ramp up consumer data-driven advertising revenue.

While Google and Facebook dominate digital advertising in the US as in other markets, the US is alone in removing regulatory barriers to ISPs taking a piece of the pie.

US ISPs now have a self-regulatory regime for consumer rights on transparency, security and data breaches; but in the UK and EU, privacy advocates prefer enforceable rights.

Secretary of State (SoS) Karen Bradley has made an initial decision to refer 21CF’s bid for Sky to the Competition Markets Authority (CMA) for a detailed consideration of media plurality concerns, to be finalised in the near future

The issue at hand is the potential increase in the influence of the members of the Murdoch Family Trust (MFT) over the UK’s news agenda and political process. The SoS rejected the remedy for Sky News brokered by Ofcom

Ofcom’s non-negative decision on the fitness and propriety of 21CF to hold Sky’s broadcast licences cleared another hurdle in the event the merger is finally accepted