Sky TV says its total customers grew from 991,000 to 1.05 million for the six months to December 31 as a dip in Sky Box customers (from 530,000 to 517,000) was offset by a gain in people using streaming services.
Between them, Neon and Sky Sport jumped from 436,000 to506,000 active subscribers.
The total includes subscribers to Sky Broadband (provisioned by 2degrees), whose numbers doubled to 23,000.
Despite the buoyant customer numbers, shares fell 3.2 per cent to $2.44 in early trading on a profit fall and narrowed full-year operating earnings outlook.
Net profit dipped from the year-ago $28m to $26m on rising costs - including some $7m on what Jarden analysts Arie Dekker and Vishal Bhula called “Keeping the lights on at Vodafone TV” - whose closure, and transfer of customers to wholesale partner Sky was delayed by months due to the Sky’s new hardware being behind schedule. (The pair called it a “solid” result overall and maintained their neutral rating. They expressed a preference for Sky salting away its $55m in cash for future rights deals amid the broadcaster’s push to return capital to investors).
Ebitda fell 14 per cent from the year-ago $85m to $74m.
But Sky said it was still on track to meet its full-year net profit guidance of $55-$60m.
A drive to cut $35m in costs, including 170 layoffs, is underway to achieve that aim.
Revenue edged up from the year-ago $372m to $379m as the average monthly revenue per Sky Box customer increased from $79 to $81 and Neon revenue jumped after a 12.5 per cent price rise to $17.99 in August.
Overall, average monthly revenue across Neon and Sky Sport Now rose 8 per cent, with the Neon price rise plus more customers over both streaming services opting for an annual subscription.
Advertising revenue jumped 12 per cent to $26m for the half, a return to pre-Covid levels.
Although Sky Box connections fell 5 per cent, Sky Box revenue increased over the half-year for the first time since 2014.
Sky said it now expects full-year revenue to be $750m to $760m, from its previous guidance of $750m to $770m.
It also lowered its full-year ebitda range from its previous forecast of $150m to $170m to $150m to $160m.
A 6 cents per share dividend was declared in line with previous guidance. Sky also increased its full-year dividend guidance from a $17m to $23m profit payout to $20m to $23m. A 15cps full-year payout is forecast. Ther dividend returned after a long hiatus in the second-half of FY2022 with a 7.3cps payout (totalling $12.8m), while $70m was returned to shareholders in November 2022 through a Court Approved Scheme.
A $15m share buyback was announced, representing 15 per cent of shares on issue.
“Sky’s shares are considerably under-priced, despite the significantly improved outlook for the business and the board’s decisive moves on capital management,” chairman Phillip Bowman said.
A $150m credit line remained undrawn.
After more than six months of delays - blamed on everything from pandemic supply chain issues, the war in Ukraine and last-minute tweaking - Sky has now begun the rollout of its new Sky Box ($200 up front) and Sky Pod ($100 up front), with ex-Vodafone TV customers receiving early units.
Capex increased 114 per cent to $40.2m with the rollout of the new hardware, as previously flagged.
After more than six months of delays, the rollout of the new Sky Box ($200 up front) and Sky Pod ($100 up front) is finally underway, with customers of the shuttered Vodafone TV getting priority. The new Sky Box supports Google speech commands, and supports Netflix, Disney+, Amazon Prime and any other app available via Google's app store.
The broadcaster is taking a softly-softly approach to the initial rollout, and emphasises that those who are happy with their existing decoder will face no forced upgrade.
The slow-track approach has also allowed Sky to grapple with early issues over slow channel changing and reception (neither of which have been an issue with a Herald review unit).
Earlier this week, Sky said it plans to cull around 170 staff as it looks to reduce its operations and a “multi-million’ figure in costs.
The proposed restructure could see 90 roles axed in its technology and content operations teams and around 80 in customer care, with roles going to the Philippines and India.
Around 100 help desk staff would remain in NZ.
Sky TV 24-month NZX performance,
The move was a sting in the tail after Sky’s full-year FY2022 result, delivered on November 2, when CEO Sophie Moloney announced chunky pay rises for all staff.
“We are very mindful of the economic headwinds that we are all facing and the importance of securing key talent in these times impacted by scarcity of labour,” Moloney said.
“To tackle this head-on, we have just announced our salary review which included an increase of 8 per cent for those earning less than $100,000 a year, and 5 per cent for those earning up to $250,000.”
Earlier, Sky moved to boost revenue for the second half of FY2023.
With Spark Sport vanquished (TVNZ will pick up its content from June) and increases in rights costs (from inflation and the addition of Formula 1 and the English Premier League), Sky revealed in mid-January it was increasing the costs of Sky Sport by $3 per month from March 1, and the price of its Sky Sport Now streaming app by $5 per month from the same date.
Sky TV shares closed Wednesday at $2.52.
The stock is down 5.41 per cent over the past year.
