Check against delivery
I want to take a second to thank Claire and the Enders team for getting us all together today. It’s no mean feat to have so many of us in this room and we’re very grateful to you for making this happen.
We meet at a time when our industry is changing rapidly and I’m sure you will continue to hear much today about the amount and pace of change.
I’ve spoken at many of these types of events over the years and every time there is a gathering like this, whatever year it’s in, I’m always struck at how people always think they are meeting at a time of great change.
In one sense they are right, because that’s just the way it is. Our economy, our society, even our environment, is different to the one our parents were born in, and different to the one our grandkids will see.
However, the risk is that we confuse changing times with exceptional times. Profound change is not exceptional. It’s normal.
And it’s dangerous to get those things confused, because it can make us think profound change is a phase and stability is inevitably around the corner.
It’s not, if anything the pace of change is likely to increase over the coming years not diminish.
Change is constant and what businesses do in that world, to stay successful and relevant for the longer-term has to be a constant too.
So, the thing I want to talk about today is: what do we do about it?
How do we, at Sky, and all of us in this industry, think about stepping into change and building successful businesses for the future. Businesses which have the ability not just to adapt but to thrive in a constantly changing world and to be successful for the long-term.
Change at Sky
Now, if you read the business pages over the last year or so, you’d think the only change that mattered at Sky was a change in ownership. I’m pleased with the way we managed that process, we secured a good outcome for shareholders and I’m excited about our future as part of Comcast.
But I believe I can speak on behalf of all of my colleagues when I say they are pleased to have the sale behind us.
And the reason I say that, is because what really matters is not the headlines on the price paid or the excitement of a deal. What matters is how we can continue the journey this business is on and better equip ourselves to succeed.
That’s a journey that has already taken us from where we started in Isleworth 30 years ago; to become Europe’s biggest direct-to-consumer media company; but more importantly, I believe onwards to a better future, not just next year but for the long term.
As that new future now unfolds let me first tell you what we won’t be doing.
We won’t ever think that what we do today, on its own, will stand the test of time.
That mindset – which believes past success will keep competition at bay – was what we saw from the commercial TV sector when we began to challenge them in the late Eighties. It didn’t work then and it certainly won’t work now.
So, we see it differently. We see the past as a floor to what we do, not some sort of cage to constrain us. Its true value is the strong platform it gives us to build upon.
At its simplest, it really comes down to three things:
- First, being relentlessly focused on meeting consumers’ needs and providing what they want. We never forget this North Star.
- Second, a belief in constant renewal. A constant commitment to re-inventing the business; to innovation; and to always being relevant in changing times.
- And third, recognising that the bigger you are, the more responsibility you have. That the business practices that might have been appropriate for a start-up are not necessarily okay for a business with scale and power.
That is a recipe that, at least for now, works for us. And is one I think drives a successful approach to business.
Consumer focus at Sky
Let me start by talking about the consumer.
We have over 23 million direct paying customers today and we reach over 120 million people across Europe, regularly.
I’m very proud of the work our team does day-to-day to build and serve that customer base.
Every day Sky engineers walk into people’s homes and install kit in their living rooms, sometimes in their bedrooms and kitchens. It’s a privilege to be trusted like that.
Every day, more and more customers use our new services, like Sky Q, to enjoy the content they love. That is technology we have developed, here in the UK, that goes beyond anything else in the market today.
Across all our markets we have high levels of customer satisfaction, low levels of complaints and strong brand perception and recognition. To give you just one number; for the last 11 quarters, Sky has been the best performing major broadband, pay-TV and landline provider in the UK according to Ofcom Complaints Data.
All of this great but it isn’t enough.
Our true guide is what the consumer wants. And I deliberately use the word consumer.
What are their habits and preferences today and what are their emerging attitudes that will determine their habits and preferences tomorrow. We are voracious for knowledge and insight on how consumers are behaving and how that is likely to change in the future.
Businesses that succeed in changing environments never lose focus on consumers -their end user - as well as their customers. They are relentless in their pursuit of understanding what the man or women on the street really thinks and expects of them – both in the products they produce and the values they have.
Constant Renewal at Sky
And because those expectations are constantly rising, a business that focuses on consumers has to be just as passionate about constantly renewing what it does.
I used to think that Kodak were beaten because they didn’t invent the digital camera but of course they did invent it. They just didn’t act upon it with sufficient conviction.
They were too wedded to their existing products to change their business model.
Part of the challenge I think is that businesses have a tendency to over complicate things, spending too much time defining complicated problems and then trying to identify single point outcomes – predicting winner and losers – rather than thinking of the big shifting plates that could affect them and then building positions early in these.
It seems to me that our ability to precisely predict the future is pretty limited and so the only true choice you have in business is whether to disrupt yourself and try and do that smartly or let someone else disrupt you. Stepping into these trends early, with the belief that you can adjust as you move keep moving forward, is much better than risk being left behind.
Every day I try to make sure we aren’t caught out by that and I spend much of my own time on this.
That’s why we introduced Sky+ in the face of people warning that it would kill the channels we need to carry and our advertising business.
Now, “to Sky+” is a verb.
And it is why, even when Over-The-Top was seen as a threat to traditional distributors, we started offering Sky Player, our first streaming service in 2005 and we built our own OTT platform to work alongside our traditional business.
NOW TV has grown to be one of the largest over-the-top platforms across Europe.
And Comcast will be using that technology – developed down the road in west London – to power their new OTT platform in the US.
We are launching Sky Q, our top of the range platform, in continental Europe without using our satellite infrastructure as the latest addition to our product range. We are able to do this because we have spent much of the last ten years learning, developing and honing our skills in what it takes alongside our existing services.
Likewise, in the coming age of AI; of virtual reality; of rapid transformation, there will always be a need to renew the products and services we provide. You’ll not be surprised to hear that we have programmes in place that cover all of these areas.
We will always be willing to adapt our business model to fit the needs of the consumer rather than expect them to adapt to meet the needs of our business.
And being part of the Comcast family only enhances and underwrites our ability to do more, move faster and to better serve our customers and audiences.
Together we have almost 50 million of the world’s most valuable pay television households, already represent around 12% of the world’s video and broadband revenues and we spend over $24 billion a year on acquiring and producing programming. We are amongst the very largest of sports and news broadcasters globally and handle a meaningful proportion of the world’s daily internet traffic with our fast broadband networks on both sides of the Atlantic.
Just a few months after first coming together, we are already seeing clear benefits flowing in both directions. For example, we’ll be bringing Comcast’s own voice interface to Sky Q later this year and our broadband customers in Italy will benefit from Comcast’s xFi product. When NBCU launch an AVOD service in the US next year, it’ll be Sky’s OTT technology platform that has helped to enable that. We are making good use of each other’s content on screen, are working to serve our global advertisers better and all the while becoming a more capable and a more efficient organisation. We have started transferring Sky colleagues to the US and Comcast colleagues to Europe. And we have been together for less than six months.
I personally find the combination very compelling and the next few years at Sky will see us unlock many more opportunities here as well as contributing significantly to the overall Comcast family.
This commitment not just to change, but to permanent renewal speaks deeply about who we are, how we see the world and what we believe we need to do. And if I reflect on my own time running Sky it’s been the single biggest change in our business. Bigger than any product or initiative and I believe firmly embedded now in our mindset.
Responsibility at Sky
But focusing on consumers and committing to renewal are not enough. There is a third pillar that is just as important to our long-term prospects.
Responsibility. How we operate. The values and principles that underpin the way we work.
There is no great insight here.
Ask anyone walking down the street outside, they’ll tell you that this stuff matters. It matters to our licence to operate, and its increasingly important to consumer behaviour as well.
The interesting thing for us is that what ‘responsibility’ means in practice has had to change as we have changed.
30 years ago, when Sky was created, we thought our commercial mission and our social mission were pretty much the same: to provide more choice to consumers. That, in and of itself would be enough.
You’ve got to remember, when we started, the news was at 6pm, 9pm, 10pm or in your newsagent the following day.
You could watch the cricket, but you’d be constantly interrupted for horse-racing.
If you wanted to watch the Simpsons, you had to buy it on Betamax.
Well we, along with others, changed that.
Millions of hours of sport
More access to TV than ever before.
But as we grew and shifted from being an upstart to a scale player, we realised that our approach to responsibility had to grow too.
Simply delivering our service to consumers was not enough. And as we became bigger, more capable and with more resources, the opportunity to use our voice became greater.
How we did things mattered to.
This meant thinking about our operations. We took a position on the environment because it was a major issue affecting our customers and colleagues and they cared about it.
13 years ago, we were the first media company to go carbon neutral.
Then came Sky Rainforest Rescue which helped protect a billion trees in the Amazon and latterly Sky Ocean Rescue.
Through this initiative Sky will have completely eliminated all single use plastic out of our supply chain in just two years.
By 2020, nearly one thousand tonnes of plastic will be removed from our business. That’s the equivalent weight of seven blue whales.
We think we can go further. So, we are now working with our partners - like the Premier League and National Geographic, amongst others, to see how we can take the learnings from our business and help others think and act in the same way.
Sky for Safer Kids
We are also a family service and have a long history in responsible broadcasting and protection of vulnerable groups.
We recognise that we have a responsibility to children and parents – not just from regulation but from the services we have chosen to provide. After all no-one forced us to provide the services we do.
This year we are accelerating how we meet that responsibility.
We will roll out a new product - Broadband Buddy - which puts control of the family’s screen time in the hands of parents and gives them the power to create filters so children only see what they should.
And I am very pleased that Sky will be the first business in Europe to partner with Common Sense Media to create another level of safeguarding for parents and children.
You’ll hear next from them about the amazing things they do and how they are helping parents navigate some of the challenges families are facing.
Lessons from the banking crisis
This idea of responsibility is increasingly important for the media industry because we are part of the social glue for society. We are part of what shapes identity.
That can be a good thing.
We know our locally made programming is part of the cultural life of the countries in which we operate.
Broadband and mobile can help bring people together. A WhatsApp group or a Facetime chat makes all the difference as families increasingly live apart.
Simply sharing news can be great for boosting our understanding of the world.
But these things also come with risks.
Social media, as we now know, is shaping how elections are fought and impacting the mental health of our children.
The business models of the technology companies seem to allow them to trade without having the same kinds of obligations as most other companies – like paying tax that society expects and needs.
When paying your taxes, employing people and complying with the law are competitive disadvantages, you know something has got to change.
And we have seen what happens when an industry with immense disruptive power like that, fails to use that power responsibly.
We are still living with the consequences of the banking crisis more than 10 years later.
The banks could have acted earlier, but instead they pushed the boundaries of what was legal rather than thinking enough about what was responsible.
What banking did for the economy, social media could do for social cohesion.
But there is a big difference.
It is far easier to patch up financial institutions than the institutions of democracy and society.
Evolution of responsibility in our sector
So, it is vital that every company, especially in our sector, recognises the need not just to focus on consumers, not just to renew its products and services, but also to think about responsibility.
As an industry, we’re on that journey.
But I think we can do more.
“Move fast and break things” can work for a start-up; but when you’re among the biggest, most powerful companies in the world, it may not be possible to fix the things you break.
My first instinct in these situations is always to look for self-regulation.
But there are times when that approach won’t work.
And I am pleased that the government, and indeed politicians of all persuasion have come together to recognise this is one of those times.
It is illogical that if you watch something on your TV it is highly regulated, but if that video comes through YouTube or Facebook, our policy framework gives it a free pass.
This is in part because we are in an entirely different world to the one tech platforms were born into. Where policy makers once saw their role as fanning the flames of growth for these businesses, they now recognise that they need to apply the same framework to this sector as they do every other. A framework organised around rules, oversight, and consequences.
Because we know that without that, these organisations will keep changing in ways that suit them, but not necessarily society.
Social media and digital technology can deliver so much good, but we all now accept it has a dangerous dark side. It needs rules just as much as TV does or financial services or any other powerful part of our society.
The rise of social media and the algorithms they rely upon is just one part of the way our world is changing.
But, let’s not think about this change as a unique feature of a particular time. Let’s see it for what it is: permanent and profound.
The challenge for all of us – in business and in government – is to design systems and processes that can make the most of the constantly changing world. And to step into that, not kick the can down the road.
It starts by recognising that our achievements in the past are never going to be enough to secure success in the future. They are a floor not a ceiling.
Instead we need to focus on what works:
Consumers as our north star
A commitment to constant renewal
Recognising that responsibility grows as we grow.
These are three things that seem to me at the heart of what makes a business successful in the long term.
None of this is rocket science. All of it is enlightened self-interest.
All of it is stuff we can do in our day-to-day whatever our specific role is inside a business.
But it depends on listening to the people outside our organisations who, rightly, have high expectations for what we do and how we do it.
At Sky we have tried to embed these principles to drive our success. If we continue to get this right, then our journey over the next 30 years will be even more rewarding for our customers, for our business but also for the societies in which we live and thrive.