In addition, we compared the estimates of Sky’s returns against a set of comparator companies, selected from large samples of UK and international television, media and telecommunications companies. The study involved an in-depth valuation of Sky’s intangible assets, focusing on the customer base. The analysis considered the costs of creating Sky’s customer base, and their evolution over the useful economic life of the customer. As part of the benchmarking analysis, a detailed topology of the television, media and telecoms sectors was developed and a quantitative clustering analysis was conducted. Ofcom used the results of this study as part of the evidence in its pay-TV market investigation.
Ofcom subsequently commissioned Oxera to conduct further analysis into the cost of capital and to interpret the profitability estimates. Click here to access this follow-up report.