New satellite signals 15 new Sky channels

Sky Television is preparing to introduce 15 more channels in the next few years as it tries to attract younger, "MTV generation" viewers.

The pay-TV network's capacity would rise by 25 per cent to a total of 75 channels when a new satellite, the Optus D1, launched later this year, said Sky TV chief executive John Fellet.

Sky TV's current capacity was "maxed out", said Fellet, and new channels had been introduced by dropping under-performing platforms.

The new satellite would be "hotter" than the ageing Optus B1 it replaces, meaning more reliable and enhanced services - possibly including the introduction of high-definition programming in several years.

Increased capacity would be used to grow subscribers and viewership and was likely to continue Sky TV's steadily rising average monthly revenue per subscriber (Arpu).

Sky TV's total Arpu grew from $50.85 in December 2002 to $58.38 in December last year.

The broadcaster did not make a profit for five years after launching its digital satellite network in 1998 but has made money every year since 2003, last year posting a profit of $103.4 million.

Fellet said the company had been making the most of its resources by operating the network's channels at full capacity.

"I can't stand to have space and not have something in there. To me, that's like a grocery store - and if you don't have something for sale on one of the back shelves, you've got to put something there."

New channels that become available when the new satellite launches would be rolled out at a rate of one or two a year to maximise the impact of their introduction.

Some of the new offerings could be used to woo younger viewers being lost through the increasing fragmentation of media, said Fellet, a television veteran of more than 30 years.

"This year I've kind of felt for the first time in all my television experience, my customer base actually probably skews slightly older, not much, but slightly older than the population as a whole," said Fellet.

"I think it is because young males - and to some degree young females - are watching less television and doing things on the internet, they're texting, downloading things, playing video games.

"MTV, we think, helps address some of that," he said.

Sky TV would launch MTV in August, before the new satellite launches, by dropping a pay-per-view channel. The new satellite is expected to be launched in September.

CanWest's TVWorks, TVNZ and Government-owned transmission company Broadcast Communications Ltd also agreed to lease a transponder on the satellite with the aim of providing free-to-air digital television.

The free-to-air networks are part of a group, dubbed Freeview, which is likely to offer additional channels to encourage the public to buy digital set-top boxes needed to use the digital service.

Fellet said the Freeview arrangement was part of a natural transition as the industry switched from analogue to digital transmission.

He said international experience showed the move had not affected pay-TV significantly and free-to-air channels needed to be wary of adding channels that split up the advertising market and take viewers away from core offerings.

The additional free-to-air digital channels would have to go for niche programming to survive, said Fellet.

He did not expect competition for content to increase above the already fierce rivalry.

Sky TV shares closed down 3c on Friday at $5.57, near a year-low. In the past 12 months the shares have traded as low as $5.56 and as high as $6.70.


SKY HIGH

* As at December 31, Sky had 636,286 subscribers.

* 562,723 are digital subscribers and 70,848 are UHF subscribers.

* 40.5 per cent of New Zealand's 1,546,800 households subscribe.