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Sky TV forecasts strong profit growth

Sky TV chief executive John Fellet. Photo / David White.
Sky TV chief executive John Fellet. Photo / David White.

Sky Network Television, which received a warning from the antitrust regulator for potentially breaching competition law this month, sees annual profit rising as much as 13 per cent in the current 2014 financial year, and is preparing to ramp up its foray into mobile and web-based delivery with new products in the pipeline.

The Auckland-based pay-TV operator forecasts net profit of between $145 million and $155 million in the 12 months ending June 30, 2014, up from $137.2 million in the 2013 financial year, according to presentation slides accompanying chief executive John Fellet's speech at today's annual meeting and published on the stock exchange.

Earnings before interest, tax, depreciation and amortisation are expected to be between $355 million and $360 million, broadly in line with a year earlier. Revenue is seen rising to between $890 million and $900 million from $885 million in 2013. The shares fell 4.9 per cent to $6 in afternoon trading.

Chairman Peter Macourt told shareholders in Auckland that Sky TV is gearing up for the new assault on its grip on premium content from internet-service providers, which has seen web-based Coliseum Sports Media win the live rights to air the English Premier League, and they have new offerings in the works which will likely come out this year.

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"As the quality of internet distribution improves, as it will with the roll-out of ultrafast broadband, so does the number and depth of our competitors," Macourt said. "iSKY already delivers video on demand and live streamed content and Sky is embracing internet delivered content for the future."

Sky TV expects to announce "significant developments" in web-based content delivery this financial year, and is developing new products aimed at providing content over tablet and mobile devices, Macourt said.

The company is forecasting capital expenditure of between $100 million and $120 million in the 2014 financial year, up from $82.4 million in 2013, of which almost half came from install costs.

Sky TV has appointed two new tech-savvy directors in Snakk Media founder Derek Handley and former SAP executive Geraldine McBride to beef up the board's experience in mobile and software.

Access and availability of premium content is seen as a major driver in migrating internet users on to the government-sponsored ultrafast broadband network, which industry groups see as creating a convergence between telecommunications and traditional broadcasting.

Sky TV's Macourt fronted on the Commerce Commission's warning over allegedly anti-competitive clauses in its contracts with internet service providers, calling it a "good and expected result" in that no further action was warranted.

"Sky believes that it has always acted in the best interests of the company and that it has complied with NZ law at all times," he said.

- BusinessDesk

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