FY 2016 has been an excellent year, with all three Sky markets showing improved performance as Sky delivered 7% revenue growth (5% after adjusting for 2016 being a 53-week year) and 12% increase in operating profit

The success reflects Sky’s commitment to product and service innovation and diversification in an increasingly fragmented marketplace combined with tight control of back office costs and focus on synergies

As a measure of its success, Sky has set new cost synergy targets of £400 million annual run-rate by FY 2020 and is aiming for continuing middle to high single digit growth in revenues, which should let it comfortably absorb the rising costs of Premier League and Bundesliga live televised rights under the next contracts

• The Commission proposes to require VOD services to implement a 20% share of EU works in catalogues, which Netflix already largely meets
• More impactful is the EU’s proposal for OTT SVOD services to provide access to the home service when subscribers travel in the EU, benefitting the UK’s 14 million subscribers
• TV broadcasters, which observe a 50% EU works threshold in their linear programming served on TV platforms and online players, will be able to opt-in to portability

Sky is steadily expanding its output of scripted content – now almost at the same volume as HBO’s. It is an attempt to strengthen the Sky brand in a more competitive market, the ultimate prize being exclusive association with ‘iconic’ content

So far so good: in the UK most originals deliver higher audiences than average and than US imports. Emergence of an iconic hit may be just a matter of time. Sky’s Italian productions are closer to the domestic hit status, but harder to sell to British viewers

The challenge for Sky is to stay in the global series budget race through US co-production and sales without compromising editorial sharpness. Continental European platforms increase Sky’s financial clout, but will require distinct content

This year marked the second annual IABUK Digital Upfronts. As well as Facebook, Google/YouTube, Aol, Yahoo!, Twitter, BuzzFeed, Vice and others, several traditional media companies – Sky, The Guardian and Global Radio – participated, reflecting the rising importance of digital media and digital media buyers to their businesses

Many of the pitches were informed by the key shifts in online content: it is increasingly cross platform, driven by mobile devices and focused on video programming, and these formed the main themes of the event

A key piece of context is the rise of social media and the shift to programmatic buying, which continue to driven down pricing for all but the most valuable inventory – audience scale, high value audiences and premium content have never been more essential

In Italy, pay coverage of the Champions League shifted from Sky to Mediaset Premium this season. Alongside a new Serie A contract, this adds an extra €300 million to Mediaset Premium’s cost base

The first results indicate that Mediaset is unlikely to meet its subscriber growth target. On current trends we expect cumulative EBIT losses of over €400 million by 2018

Mounting losses may force Mediaset to close or sell Premium, but fear of Sky may slow decision-making. Sky was probably right not to overbid for the Champions League and the savings should more than offset minor subscriber losses

News Corp’s original bid for full ownership of BSkyB was withdrawn because of the phone hacking scandal. It was never blocked by regulators. Had it not been for the scandal, the bid would almost certainly have been approved.

With the phone hacking scandal fallout largely over and the election of a friendly government, the climate is now much more favourable to a renewed bid. With undertakings, we believe it would be approved by regulators.

The increasingly global scale of TV and film distribution means the commercial case for the bid is, if anything, stronger now than in 2010. The questions are simply whether the right price can be agreed, and how high up it is on James Murdoch’s list of priorities.

Sky plc has produced a strong first quarter across its three markets in terms of subscriber growth, record low churn and continuing firm control over costs, which has contributed to a 5% increase in revenues and 20% increase in operating profit over the first nine months of fiscal 2015

As expected, practically all the retail customer growth in Q3 occurred in the UK & Ireland and in Germany & Austria. Nevertheless, the results were also positive in Italy, as it registered the highest net customer increase in 3 years and record low churn

It is still too early to judge the success of the Sky plc strategy in terms of synergies, innovation and content origination. Whilst the potential appears great, the imminence of the next Bundesliga auction is a reminder that the issue of sports rights inflation is unlikely to disappear even after the latest PL auction

Sky plc, the coming together of BSkyB, Sky Deutschland and Sky Italia, has enjoyed an excellent start, as adjusted H1 2015 figures delivered a 5% increase in revenues versus a 3% increase in costs, resulting in EBITDA growth of 7% and with free cash flow up by 25%

The strong financial results were accompanied by strong subscriber growth figures, especially in the operations covering Austria, Germany, Ireland and the UK, while all markets showed large reductions in churn, reinforcing confidence in the strategic approach of Sky plc

It is too early to assess Sky’s delivery of its target group synergies. Individually, the former BSkyB and Sky Deutschland markets may be showing much stronger subscriber and product growth, but they also look to be more exposed to risk over football rights, while Sky Italia has more going for it than may appear at first sight

Speculation has arisen about a possible acquisition by Sky of Mediaset Premium, the DTT competitor to Sky Italia. The unprofitable platform faces a 50% cost increase this summer due to the start of new football broadcast contracts

Getting rid of competition would allow Sky to raise prices, but also burden it with the new contracts. At best, if it kept the Premium subscribers on DTT to limit churn, Sky would have a small revenue upside

But the regulatory risk looks substantial, including mandated third-party access to the platform and wholesale of content. On balance, we believe that it would be better for Sky to let the situation play out

Sky Italia’s latest strategy presentation to investors focuses on a number of positive revenue-generating and cost-cutting initiatives it is taking in the Italian pay-TV market

Sky Italia is taking a disciplined approach to subscriber recruitment and upsell of optional products as it anchors its brand at the upper end of the Italian entertainment market, supported by proactive development of original content, advertising sales and IPTV distribution

Growing product penetration has helped to reduce churn and support ARPU growth, but Sky Italia’s ability to arrest subscriber erosion and return to growth in fiscal 2015 and beyond also depends on the degree to which the economic climate becomes milder, as expected by forecasters