Sky Network TV's share price
rallied sharply today after the company produced a 22 per
cent lift in its first half net profit and as investors
appeared to shrug off any potential threat that Telecom might
pose to its pay TV business.
The company reported a $82.1 million net profit, raised its
earnings outlook for 2013/14, and increased its interim
dividend payout to 14c from 12c.
Sky TV now expects to report earnings of $155m to $160
million for the full year, up from last October's guidance of
$145m to $155m.
The improved financial position was primarily due to the
continued success of My Sky - a service that allows customers
to record programmes - as well as a fall in programming
costs, which were abnormally high in the previous comparative
period because they included the costs of the Summer
Sky's shares finished at $6.08, up 33c from Friday's close
after the morning announcement.
"Essentially the result is a good one because they have
lowered their programme costs, which is a key element," Greg
Fraser, senior investment analyst at Mint Asset Management,
Fraser said Telecom had made it clear that they did not
intend to compete with Sky TV. "They (Telecom) are certainly
not interested in chasing the key sporting content, which is
the real basis on which Sky Tv's business is built," he said.
As it stands, Sky has New Zealand exclusive rights to the
Super 15 rugby union competition and to All Black test
"What they (Telecom) are looking at is a more expanded
offering for the broadband and mobile phone customers. "It's
something to make their customers more sticky to Telecom, but
not necessarily with internet TV as a core product ," Fraser
The equivalent in Australia is Fetch TV, which some local
telcos carry but which do not feature sport.
MY Sky subscribers now represent 56.7 per cent of Sky's
subscriber base compared to 50.1 per cent in the previous
Sky's gross churn - the percentage of subscribers that
discontinue their subscription over the period - was 13.3 per
cent, down from 14.6 per cent in the previous period.
Programming costs - which comprise both the costs of
purchasing programme rights and also programme operating
costs - fell by $13.5 million.
Telecom, which plans to change its name to Spark, said last
week that it intended to enter the the internet television
Fraser noted that Sky had renewed its with relationship with
Telecom's main opposition - Vodafone. "There is plenty of
pushback from Sky in that regard, so they are certainly not
going to rest on just being a video provider," he said.
Blair Galpin, equities analyst at Forsyth Barr, said a number
of players were lining up to launch in the online tv area.
"There is a lot more interest in that space but there is no
one (online) provider in New Zealand," Galpin said. "To me
the winner will be the one who can provide the best content
that can meet people's needs," he said.
- By Jamie Gray, APNZ