UPDATED: A surge in subscribers for its MySky HDi service has seen Sky Television post an unexpectedly high 19.1% rise in interim net profit.
READ ALSO: Freeview now in 22% of homes - and beating Sky TV in HD
But the company is still strugglin
UPDATED: A surge in subscribers for its MySky HDi service has seen Sky Television post an unexpectedly high 19.1% rise in interim net profit.
READ ALSO: Freeview now in 22% of homes - and beating Sky TV in HD
But the company is still struggling with a low level of subscriber growth overall and a depressed advertising market.
Revenue at the pay television operator (NZX: SKT) for the six months ended December was up 6.6% on the previous year to $369 million, while ebitda rose 10.7% to $144.7 million.
The result was above analysts' expectations, with First NZ Capital forecasting a revenue rise of 4.9% and ebitda up 5.3%.
The results were also better than expected from the analysts at Forsyth Barr, with ebitda $5.4 million higher than expected and profit $1.9 million ahead of their forecasts.
Chief executive John Fellet attributed the growth to consumer interest in the MySky HDi service, with last year’s results adversely impacted by the launch of the product.
During 2009, the number of subscribers grew by 108% from 70,384 to 144,148, with those subscribers now representing 18.8% of the company’s satellite subscriber base.
Most of the growth did come from the company’s existing customer base, with 83.1% of MySky subscribers migrating from the standard digital decoder.
Those subscribers appear to be keen to hold on to the new service, with Mr Fellet reporting a “significant reduction” in subscriber churn with a gross churn rate of 10.7% for MySky HDi over 2009, compared to a 14.4% rate for subscribers on the standard digital decoder.
The MySky surge has seen a 6.1% in average revenue per user, up from $63.49 to $67.35.
Sky also recorded a 6.2% in satellite subscribers, although this was partly due to the company’s push to get subscribers off the 20-year-old analogue network, which is due to shut down next month.
However, the company has conceded that its relatively low net subscriber growth was a disappointing outcome.
While the company was tracking ahead of the previous year up until October, the six months to December only saw net subscriber growth of 5976 compared to 10,493 in late 2008.
Mr Fellet said November and December had been “challenging months” for Sky.
“While churn is down compared to the previous year we have been struggling to generate new sales over these summer months. This has continued into January. So while many of our existing subscribers have been happy to commit to paying more for the services offered by MYSKY HDi during these difficult economic times, it has been difficult to attract non-subscribers during these summer months.”
But he said there may be a return of interest with the commencement of some winter sports in February and March.
Another gloomy spot on Sky’s books could be seen in the advertising revenue. In the six months its total revenue fell by 16.3% to $27.6 million, worse than the total advertising market drop of 10.9%
But with advertising representing just 7.5% of the company’s total revenue, Sky has confirmed it will still pay a fully imputed dividend of 7.0 cents per share with the record date of 5 March, with a supplementary dividend of 1.2352 cents per share also being paid to non-resident shareholders.
Forsyth Barr analyst Rob Mercer said it was a pleasing result which should give the market confidence that the MySky business model would add substantial value to its business over the next few years
He also pointed out that it was the first time in several years that the company had reported earnings ahead of expectations because of the higher costs associated with bringing on new services and upgrading its business.
