Now that Comcast owns Sky, the big US cableco is aiming to produce some sky-high results within Europe by expanding its local content production and further exploiting its streaming capabilities.

Speaking on the company's second-quarter earnings call last Thursday, Comcast executives laid out ambitious plans to send Sky soaring over the clouds. In particular, they talked about their intent to develop much more original programming for both Sky's legacy satellite TV service and newer NOW TV OTT service through their new Sky Studios initiative.

"Sky continues to develop a strong lineup of original content, including their highly acclaimed Chernobyl, which debuted in the second quarter," said Comcast Chairman, CEO and President Brian Roberts on the earnings call, according to a transcript supplied by SeekingAlpha. "On the back of this success, we launched Sky Studios to expand our production capabilities and more than double the investment in local original content."

Besides developing more original shows like Chernobyl, Comcast officials intend to acquire more European content for Sky as they seek to broaden Sky's reach beyond its UK home base. They aim to use that extra content for both the Sky satellite TV platform in the UK and the broader Now TV streaming service, which operates in the UK, Ireland and Italy with plans to expand further throughout Europe.

"In terms of Sky Studios, really our focus is on our own originated content and European content," said Jeremy Darroch, group CEO and executive director of Sky Limited. "And I think this is going to be extremely powerful for us because, I think, there's a big opportunity to develop European stories at a scale that we've never really seen before."

The Sky programming push comes as Comcast seeks to turn its new Sky unit into the same kind of cash machine that its cable operations have become in the US. That task is more complicated with Sky, however, because satellite TV operations, unlike cable units, can't fall back on broadband growth when video growth wilts.

The good news for Comcast is that Sky is still growing at a healthy clip. The unit added 304,000 customers in the second quarter, boosting its sub total to 24 million at the end of June, up 4.4% on a year-over-year basis.

Largely as a result, Sky revenue climbed 2.4%, excluding the impact of fluctuating currency exchange rates, to $4.8 billion. Cash flow rose 19.9% to $772 million, also excluding the impact of currency exchange rates.

But the bad news is that as more new customers subscribe to Now TV or existing Sky subs switch over to Now TV, the unit's revenues per customer are bound to fall. In a sign of this trend, Sky's direct-to-consumer revenue grew just 1.7% in the spring quarter, dragged down by the decline in average revenue per customer as Now TV accounted for the bulk of net adds.

Comcast officials downplayed this issue on the call. They said they will be able to spread the new Sky content across both the satellite TV and streaming platforms to keep their overall content and distribution costs in check, thereby keeping their video operations profitable.

"Remember, in Europe particularly, we're buying content for the market as a whole," Darroch said. "So we can use our content very efficiently, either on the DTT service or the streaming service. So it's one of the reasons, whilst revenue from our streaming brand, NOW TV, tends to be lower, our cost basis is much, much lower as well."

Comcast executives are hoping to use a similar formula in the US, where they intend to launch a new SVOD service from NBCUniversal next April. Plans call for the offering, to be based on the Now TV platform in Europe.

NBCU CEO Steve Burke said the new OTT service will mainly feature licensed movies and TV shows like The Office, rather than exclusive originals, at least at first. Plans call for the service to be free with ads for the roughly 52 million Comcast and Sky video subscribers. For other consumers, it will be a subscription service, reportedly priced around $12 per month.

Despite a market crowded with incumbents like Netflix and Amazon, as well as such new entrants as Disney, WarnerMedia and Apple, Burke said he's not worried about the new entry's ability to compete. "Our service is very different from Netflix," he said, noting that NBCU has assembled more than 500 people to develop the new offering. "We believe we've got some ideas that are innovative and don't really want to share those until we get right close to launch, but we're very pleased to have The Office and very optimistic about our streaming plans at this point."

— Alan Breznick, Cable/Video Practice Leader, Light Reading