Sky has boosted pre-tax profits 17% to £1.19bn as its spend on entertainment costs increased by £70m.   

The broadcaster’s profits for the 12 months to 30 June were up from £1bn the previous year, with revenues increasing to £6.7bn over the period.

Sky added 312,000 new subscribers over the year taking its total to 10.6m homes, which bought a total of 28m products. The number of homes which take its triple-play package of TV, phone and broadband was up 21% to 3.4m while churn was down 10% in the final quarter.

Total programming costs increased 5% to £2.2bn, from £2.1bn in 2011, with the £70m increased spend in entertainment attributed to investment in Sky Atlantic and a boost in original UK content. 

Sky has beefed up its on-demand services, signing a deal to offer Channel 5’s VoD service, Demand 5, along with BBC and ITV content via its Anytime catch-up service.

IPTV service Sky Go has also been extended to include live access and on-demand content from eight children’s channels, including Cartoon Network, the Disney Channel and Nickelodeon.

Sky has also agreed a separate wholesale deal with TalkTalk to offer its portfolio of entertainment, sports, movies and news channels via the ISP’s portal on the connected TV service.

It also plans to pump £30m in marketing its online streaming service Now TV to consumers over the next 12 months as well as confirming plans it will be extended to include Sky Sports and Sky entertainment channels.

Sky has also invested $10m in internet connected set-top box manufacturer Roku. The move, which follows a Roku distribution agreement for Now TV launch, will give Sky the ability to rebrand and distribute its own versions of the streaming devices.

A beefed up Sky+ iPad app will enable consumers to use the device as a remote control for browsing the EPG and selecting shows to watch or record.  

Sky’s chief executive Jeremy Darroch said it was vital the business continued to diversify.

“Broadening the areas in which we can grow is a key part of our journey,” he said. “We will invest sensibly in areas where customers see value – in getting better on screen and improving our products and services – and maintain a strong focus on operating efficiency and cost control.”

He added an anticipated price rise of 2-3% later this year was unlikely to dent growth due to the current 24 month price freeze as well as content deals, such as F1 and Sky Atlantic and innovations including Sky Go.