Sky TV first-half profit rises 13%   23 Feb 2015

Sky TV bumps up profit and revenue but net subscriber numbers are down

By Fiona Rotherham

Feb. 23 (BusinessDesk) - Sky Network Television, the country’s dominant pay-TV operator, has reported increased profit and revenue for the first half despite a net loss of 8,707 subscribers.

Net profit was $92.5 million for the six months ending Dec.31, up about 13 percent on the previous period, mainly due to lower depreciation and amortisation expenses of $54.1 million and a 31 percent drop in financing costs, due to borrowings reducing last year, the company said in a statement. Sales rose 1.8 per cent to $464.5 million ,reflecting an increase in subscriber revenues of 3 percent.

That was mainly due to a boost in My Sky subscribers,who now represent nearly two-thirds of Sky’s satellite subscriber base compared to 58.6 percent in the previous period. There’s a continual migration of subscribers from its standard digital decoder to My Sky, with 529,001 My Sky subscribers at the end of last year compared to 486,252 in Dec. 2013. Gross churn for My Sky was 11.9 percent compared to the churn rate for subscribers on the standard digital decoder during this period of 16.8 percent.

But chief executive John Fellett said a disappointing aspect of the six-month result was the net loss of 8,707 subscribers, although this was typical in the July to December period, having occurred in the past two years.

In late 2013 Sky launched an attractive one-year offer to attract subscribers as the TAB shut down its free-to-air channel and broadcast on Sky’s platform instead. Some of these subscribers, who had enjoyed a good discount, disconnected during the half-year at the end of that one-year deal, Fellett said.

“Our challenge has been attracting new subscribers to the platform in a period where the industry is transitioning,” he said.

The internet had created opportunities for new entrants and new business models but Fellett said while that made trading conditions challenging in the short-term, in the longer term it will help grow the overall market to consumers have had previously resisted pay-to-air tv.

He said Sky’s next goal was to download to all My Sky decoders a software update which would allow them to connect to the internet, allowing access to content in either the traditional linear format or an On Demand basis. It will also roll out My Sky boxes to all digital subscribers.

Programming costs, which comprise both the costs of purchasing programme rights and programme operating costs, increased by $10 million, mainly due to the higher cost of the cricket rights and the Commonwealth Games which were not included in the previous period.

The board has declared an increased fully imputed dividend of 15 cents per share with the record date being Mar.10.

Sky shares are currently trading at $5.82, up 1.8 percent this year.

(BusinessDesk)

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