Sky TV promises to double dividend, details another Sky Box fix due next week

Sky TV has reported results in line with expectations and held out the lure of a doubled dividend payout. And its CEO Sophie Moloney has addressed grief around the new Sky Box, given her take on NZ Rugby’s new streaming service, NZR+, and updated on the standoff that’s seen TVNZ absent from the Sky Pod’s channels.

Shares were up 1 per cent to $2.54 in mid-afternoon trading.

Full-year profit fell 18 per cent to $51 million - but when adjusted for one-offs including restructuring costs, rose 15 per cent to $56.7m.

Revenue rose 2 per cent to $754m on the back of price increases and total customer numbers from the year-ago 990,761 to 1.02 million as streaming gains outpaced another dip in satellite subscribers, whose numbers fell from 530,000 to 515,000.

Sky Broadband grew customers 45 per cent, albeit off a low base, to 26,089.

The immediate outlook was flat, in part because of increasing costs associated with the rollout of the new Sky Box, with $45m to $55m net profit for FY2024.

But Sky also said it’s shooting to double its full-year dividend from FY2023′s 15 cents per share to 30 cps by 2026.

Sky Box spending hump

Speaking to the Herald shortly after the results were released, Sky chief executive Sophie Moloney said the increased profit payout would be possible as capital expenditure - pushed to 10 per cent by the Sky Box rollout - fell back to its historic 7 to 9 per cent - and programming costs cooled. She said Sky would still pursue exclusivity “for key content we know will add value” but was open to non-exclusive deals in other areas. She said the recently renewed deal with Warner Brothers Discovery was cheaper than Sky’s last contract with the US giant.

Sky was also through its restructuring for the streaming age, and FY2024 was the final year of a “step-up” in sports content costs.

Despite the noise, Sky’s results revealed a relatively modest uptake of its new hardware so far.

As of June 30, 35,000 customers had moved to the new Sky Box - or about 7 per cent of those who had been using one of the old decoders. A further 13,000 customers moved to the cheaper Sky Pods.

Sky also said “more than 18,000″ customers of the old Vodafone TV (which had around 150,000 users, though with many using it as a free-to-air box only, at the time it was shuttered) migrated to their chosen Sky product during the second half.

Sky earlier said that in the first half it spent $7m keeping the lights on at Vodafone TV as it assumed costs for the service after missing its initial Sky Box rollout deadline.

TVNZ detente?

A number of ex-Vodafone TV users have complained to the Herald that the Sky Pod lacks TVNZ’s channels in its electronic programming guide - meaning they don’t appear in its TV Guide, and can’t be accessed via the remote. There is a workaround involving the TVNZ+ app, which offers both live and on-demand streams, but early adopters have found it slow and fussy.

The hope is that the state-owned broadcaster’s new leadership will be less hard-nosed on an EPG deal than under the Simon Power regime.

Moloney said this morning she is “looking forward to meeting with [acting CEO] Brent McAnulty at TVNZ to discuss this further. We think it makes sense for New Zealanders to be able to access the TVNZ channels in ways that work for them – including on the Sky Pod if that’s the way they choose to view their content.”

More Sky Box fixes on the way

The firm is still very much in the thick of its new Sky Box rollout, however - which has drawn wall-to-wall complaints on social media over slow performance and bugs.

“I would never have allowed the box to go out into the market if I hadn’t been using it for a long time without any issue. It’s just the nature of when you’re dealing with a software interface that each time you do a release, different things can show up.

“As of this month, those core recording issues that were causing much of the frustration have been fixed.”

Sky CEO Sophie Moloney: "I would never have allowed the box to go out into the market if I hadn’t been using it for a long time without any issue. It’s just the nature of when you’re dealing with a software interface that each time you do a release, different things can show up." Photo / Dean Purcell

Moloney told the Herald another round of software fixes would go out next week (if you have the new Sky Box, the software update should arrive next Wednesday via its internet connection and be automatically installed).

What are the remaining glitches that will be addressed in the August 30 update?

“There was a residual issue with some split recordings we had, if there was any kind of weather interference,” Moloney said.

The fix will also address closed captions and pay-per-view capability.

“There’s also some improved navigation and response times with the remote control,” Moloney said.

“The team is very aware of the importance of not just regression testing but the important process of quality assurance. We’ve just had a couple of days with our board talking about that, and the processes that we’ve put in place with the support of our new technology partner TCS.

Mumbai-based TCS is the outsourcing firm that was in the frame as Sky cut 170 local jobs as some tech, content and helpdesk roles were shifted to the Philippines or India. Moloney said at the time there was a net gain in support staff. TCS is only involved in the tech component.

“TCS has done a lot of work with Foxtel as well, so they have a very good understanding of the environments we’re operating in,” Moloney said.

The Sky CEO is even to lay it on the line, saying “‘I’m really excited and I have to say for the Rugby World Cup, if you wanto to have the best viewing experience with all of the 48 games delivered and highlights easy to view, the new Sky platform is the way to go. Or of course, you could watch on Sky Sport Now.”

NZR+ takes the field

Where does the Sky CEO see NZ Rugby’s new NZR+ streaming service fitting into the market?

For now, NZR+, which launched last week, is offering documentaries and behind-the-scenes footage, though pundits see it as a vehicle for direct-to-fans, pay-per-view or subscription streaming in the future.

“Our understanding is that it’s very much about the global audience; the All Black fan base that is not being reached currently,” said Moloney, who got a pre-launch preview.

“I know there’ll be interest in what it means for the longer term, and I suppose that will be a discussion. For now, I can say we’ve got a deep partnership that runs to the end of 2025 where all of the live content is with Sky.”

Some elements extend further, including Rugby World Cup rights that Sky holds through to 2029.

Sky made its own stab at catering to international fans when it bought RugbyPass in a deal worth up to US$40m in 2019. In the event, Sky wrote off most of the value of the acquisition, RugbyPass was flicked on to World Rugby last year, on undisclosed terms, at the same time as Sky regained RWC rights.

Shares closed on Wednesday at $2.52. The stock is down 1.76 per cent for the year.

Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.