KEY POINTS:
Pay TV giant Sky Television is planning a buy-back of around $60 million in shares after a fruitless search for new acquisitions, chief executive John Fellet said yesterday.
Fellet discussed the plans after announcing a 29 per cent rise in net profit for the year to June 30.
He said it was too early to indicate details of the buy-back, which would need to be approved by investors, including Sky's 41 per cent shareholder Rupert Murdoch's News Corp.
Sky still had to discuss regulatory issues, including how a buy-back might affect News Corp's stake.
"We have to look at the issue of their stake creeping up - if we bought back some of the company News Corp's stake would increase."
He doubted that News Corp would want to take part in the buy-back. Fellet and Sky chief financial officer Jason Hollingsworth declined to specify the size of the buy-back but indicated the company's capital position would accommodate $60 million.
Fellet said Sky had looked at acquisitions, including a billboard company. But there were no companies that were a perfect fit. "I guess you'd say the best buy is for Sky to buy shares in itself."
Net profit
Sky declared a fully imputed final dividend of 5 cents per share, giving a total dividend for the year of 10 cents compared with last year's total dividend of 8 cents per share.
Net profit was $77.8 million, up from $60.1 million last year. Operating profits had increased from $247.7 million to $294.4 million, though the rise was partly due to the accounting treatment on lease payments to use the new Optus D1 satellite, Fellet said.
Capital expenditure dropped from $86.8 million to $81.4 million but $15 million had ben delayed and would be recorded in the 2008 year.
Fellet said the first generation MySky Personal Video recorder had helped continue the declined level of churn, the percentage of subscribers who disconnect their service .
But he confirmed that difficulties acquiring the hardware for a new second-generation MySky meant that its launch had been delayed from March to June.
He said that if there were any longer delays the company would have to review its promotion of MySky.
He acknowledged that marketing strength from Sky had helped its free- to-air channel increase ratings. But he said programming, which included high-profile shows Extras and Top Gear, had been well-scheduled to ensure a boost in audience and revenue.
Prime earned $7 million for the seven months trading that it was held by Sky last year, and $23 million for the full year. Forsyth Barr media analyst Rob Mercer said that the results were in the middle of expectations.
The result is the last for Sky in its position of having a monopoly on digital TV now that the Freeview platform is up and running.
But Mercer said the free-to-air platform and the imminent development IPTV would be irrelevant given their uptake was likely to be relatively small.
Freeview would cannibalise Sky's uptake, especially for the basic package where people only picked up free to air channels. Shares in Sky TV closed down 14c at $5.31.
