Sky Network TV, controlled by Rupert Murdoch's Independent Newspapers Ltd, has finally reported a profit -- the first time since it launched its digital network five years ago.
The company posted a June year net profit of $671,000 compared with a $30.2 million loss a year ago.
Still, no dividend was posted.
Total
revenues rose 13.6 per cent to $391.3 million.
The number of subscribers reached 542,891 at June 30, a gain of 39,642 over the previous year. This breaks down into 421,473 digital subscribers (77.6 per cent), 119,321 UHF subscribers (22.0 per cent) and 2097 other commercial subscribers.
Churn, the way subscribers who disconnect their service, fell from 19.9 per cent to 17.6 per cent and net churn, calculated by removing subscribers who reconnect, fell from 11.7 per cent to 10.8 per cent.
Ebitda (earnings before interest, tax, depreciation and amortisation) increased by 39.4 per cent to $150.8 million.
The increased earnings, signalled in a May guidance notice was achieved by continuing improvements across several areas of the business, chief executive John Fellet said.
"Even without the full benefit of the recent appreciation of the New Zealand dollar, Sky has continued to improve its position by negotiating better programming arrangements with movie distributors."
A rise in the New Zealand dollar, particularly against the US dollar, lowers Sky's cost of buying programmes.
"These improved arrangements, together with a 4.9 per cent increase in satellite Arpu (average revenue per unit) have contributed to the improved result, Mr Fellet said.
Subscriber revenue grew by 15.9 per cent, advertising revenue rose by 18.8 per cent to $19.6 million and commercial revenues grew 13.8 per cent to $22.3 million.
Total operating expenses, excluding unrealised foreign exchange, increased by 4.2 per cent with programming costs as a percentage of revenue falling from 48.3 per cent to 43 per cent.
Sky told analysts it expected the current year result to be at the lower end of market forecasts.
There is strong speculation Independent Newspapers, which owns two thirds of Sky, will engineer a merger with Sky that would entail new shares issued to existing shareholders of both companies.
Since selling its New Zealand publishing business to John Fairfax Holdings at the end of June for $1.2 billion, INL has been mulling its future.
INL, which is 45 per cent owned by Mr Murdoch's News Corp, requested the independent valuation by Bancorp which reportedly valued the company at between $4 and $4.30 a share.
INL has a cash kitty of $754 million. Its only asset other than Sky and its cash is the Geelong Advertiser, estimated to be worth $60 million.
Telecom Corp owns 12 per cent of Sky.
Sky shares were initially down today but were up 1 cent to $4.64 shortly after the result announcement.
- NZPA
Sky Network TV, controlled by Rupert Murdoch's Independent Newspapers Ltd, has finally reported a profit -- the first time since it launched its digital network five years ago.
The company posted a June year net profit of $671,000 compared with a $30.2 million loss a year ago.
Still, no dividend was posted.
Total
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