UPDATE: Sky TV shares sink to 3-week low 6 May 2016
Related articles
- NZ consumers grow more upbeat, may resume spending Business
- Knowles quits as CEO of KiwiBank Business
- NZ migration bolstered by British invasion Migration
- NZ manufacturing activity reaches highest since 04 Business
- NZ dollar hits 22-month high vs euro Business
- OceanaGold finds new gold deposits at Fraser mine Business
- Transpower gets go-ahead for $170m SI upgrade Business
- NZ home sales creep up in March, still subdued Property
- NZ economy expands at fastest pace in two years Business
- New Zealand food prices fall in February Business
Friday 06 May 2016 10:53 AM
UPDATE: Sky TV shares sink to 3-week low as drop in subscribers dents 2017 earnings outlook
(Adds share price reaction starting in first paragraph, broker comment in seventh)
By Tina Morrison
May 6 (BusinessDesk) - Sky Network Television shares sank 13 percent, making it the biggest decliner on the NZX benchmark index today, after the pay-TV operator said subscriber numbers are expected to fall further this financial year, causing earnings next year to miss analyst estimates.
The Auckland-based company forecast it would have 830,000 subscribers at the end of its financial year on June 30. Subscriber numbers dropped 1.5 percent last year to 851,561. It expects to lose 45,000 core residential pay-TV subscribers this year and gain about 25,000 subscribers for its online services such as Neon and FanPass.
Its shares fell 69 cents to $4.80, after earlier touching a three-week low of $4.75. They have dropped 25 percent in the past 12 months.
Sky TV retained its forecast for 2016 earnings, which it said in February would see net profit at the lower end of its previously advised range of $153 million to $158 million, down from $172 million last year. However, it said the loss of subscribers would "adversely impact" its 2017 earnings compared to current analyst consensus estimates. The company didn't detail the estimates. Analysts expect the company's net profit to fall to $155 million in 2016, and decline further to $146 million in 2017, according to the mean forecast in a Reuters survey.
The pay-TV operator is losing its dominant hold on premium content with the introduction of online streaming video services such as Netflix and Spark New Zealand's Lightbox offering. Still, it retains rugby rights, which are seen as a linchpin in securing domestic viewers. The company attributed the forecast loss in subscribers for this year in part to the roll-off of subscriber contracts following the Rugby World Cup in 2015.
It didn't expect the rate of subscriber loss this year to continue next year given customer departures are reducing due to the diminishing impact of the Rugby World, and because it expects a subscriber lift from upcoming major sport events including the Rio Summer Olympics in August 2016 and the Lions Tour in June 2017.
"It's been on the cards for quite some time that increased competition was going to have an effect on Sky TV and I think those numbers are now quite evident that has been the case and the company has lost a fair chunk of subscribers," said Grant Williamson, director at Hamilton Hindin Greene. "Investors are pretty concerned about it and they have obviously knocked that share price down pretty significantly.
"The announcement has proved that the company is having a pretty difficult time," he said. "They say that the bleed is not likely to continue which is probably right, you will always have the diehard subscribers that will continue, but trying to regain numbers, that is going to be a very difficult proposition. Where growth is going to come from, it's difficult to see and that's another reason investors are particularly worried," Williamson said.
Sky TV said it expects to provide an update on capital management and growth initiatives by June 30, after appointing investment bank Citigroup to provide advice. The company has previously said it is looking at capital management as it ends a period of investment, which it expects will deliver strong free cash flow in the future and at the same time, it's considering several investment opportunities.
The shares are rated an average 'hold' according to the mean estimate of seven analysts compiled by Reuters.
(BusinessDesk)
ends
News
Hilary Timmins' Award-Winning UK Documentary Series To Inspire NZ Students
29 Jun 2020 Education
Dream Catchers, produced and directed by Hilary Timmins, celebrates the success stories of more than thirty inspirational New... more
New Zealand reaffirms support for Flight MH17 judicial process
7 Mar 2020 News
Ahead of the start of the criminal trial in the Netherlands on 9 March, Foreign Minister Winston Peters has reaffirmed the need to... more
Business
NZ Government's Economic package to fight COVID-19
17 Mar 2020 Business News
The Coalition Government has launched the most significant peace-time economic plan in modern New Zealand history to cushion the... more
NZ Government announces aviation relief package
19 Mar 2020 Business News
Transport Minister Phil Twyford today outlined the first tranche of the $600 million aviation sector relief package announced earlier... more
Living
Diversity was Key at New Zealand Trade Tasting in London
6 Jun 2022 Food & Wine
New Zealand Winegrowers Annual Trade Tasting was recently held in London, on Wednesday 4 May, in Lindley Hall.
It was the first... more
Kiwi author stuns Behind the Butterfly Gate
12 Jan 2022 Arts
Hidden behind the Butterfly Gate is where the secret has been kept for 76 years...
New Zealand writer Merryn Corcoran’s... more
Property
Fairer rules for tenants and landlords
17 Nov 2019 Property
17 NOVEMBER 2019
The Government has delivered on its promise to the over one million New Zealanders who now rent to make it fairer... more
New Zealand Government will not implement a Capital Gains Tax
17 Apr 2019 Property
The Coalition Government will not proceed with the Tax Working Group’s recommendation for a capital gains tax, Jacinda Ardern... more
Migration
Boosting border security with electronic travel authority – now over 500,000 issued
19 Nov 2019 Migration
19 NOVEMBER 2019
We’ve improved border security with the NZeTA, New Zealand Electronic Travel Authority, which helps us to... more
Christchurch reinstated as refugee settlement location
18 Aug 2018 Migration
18 AUGUST 2018
HON IAIN LEES-GALLOWAY
The announcement that Christchurch can once again be a settlement location for refugees... more
Travel
Gallipoli Anzac Day services cancelled
19 Mar 2020 Travel & Tourism
The New Zealand and Australian Governments have announced this year’s joint Anzac Day services at Gallipoli will be cancelled... more
New Zealanders advised not to travel overseas
19 Mar 2020 Travel & Tourism
New Zealanders advised not to travel overseas
more
Sport
The Skipper's Diary: Sir Richard Hadlee honouring his father and NZ's Forty-Niners
27 Oct 2019 Cricket
NZNewsUK London Editor Charlotte Everett spoke to Sir Richard Hadlee about why he’s chosen to publish his father’s... more
PREVIEW: All Blacks v England semi-final
26 Oct 2019 Rugby
The two most convincing quarterfinals winners are set to square off in a semifinal showdown for the ages when the All Blacks meet old... more
Columns
Gordon Campbell on the Gareth Morgan crusade
11 Nov 2016 Opinion
Gordon Campbell on the Gareth Morgan crusade
First published on Werewolf
The ghastly likes of Marine Le Pen in France and Geert ... more
Gordon Campbell on the US election outcome
10 Nov 2016 Opinion
Column - Gordon Campbell
Gordon Campbell on the US election outcome
Well um.. on the bright side, there (probably)... more
Kiwi Success
Congratulations to Loder Cup winner
26 Sep 2018 People
25 SEPTEMBER 2018
The Loder Cup, one of New Zealand’s oldest conservation awards, has been awarded to Robert McGowan for 2018... more
Appointments to New Zealand National Commission for UNESCO
16 Aug 2018 Appointments
16 AUGUST 2018Appointments to New Zealand National Commission for UNESCO
HON JENNY SALESA
Associate Education Minister Jenny Salesa is... more
Recruitment
Historic pay equity settlement for education support workers
14 Aug 2018 Recruitment
14 AUGUST 2018Historic pay equity settlement for education support workers
RT HON JACINDA ARDERN
HON CHRIS HIPKINS
Prime Minister
The... more
Historic pay equity settlement for education support workers
22 Aug 2018 Recruitment
14 AUGUST 2018Historic pay equity settlement for education support workers
RT HON JACINDA ARDERN
HON CHRIS HIPKINS
Prime Minister
The... more