Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Up to six years for Igloo to breakeven: TVNZ

TVNZ, Sky TV to wait up to 6 years for Igloo to breakeven, state broadcaster says

By Paul McBeth

April 3 (BusinessDesk) - Television New Zealand and Sky Network Television may have to wait up to six years before their Igloo budget pay-TV service gets into the black, according to the state-owned broadcaster.

The Auckland-based broadcaster doesn't have any specific sales targets for the first 12 months, and Igloo will take "a number of years to build a subscriber base and to reach a breakeven position," TVNZ said in a written answer to Parliament's commerce select committee.

"We recognise it could (be) anywhere between 4-6 years for the business to breakeven," TVNZ said.

The state-owned broadcaster stumped up $12.3 million for a 49 percent share in the joint venture with Sky TV in a bid to broaden its revenue streams, and has recognised losses of $2.2 million, according to its first half report.

Igloo was slated for a July 2012 launch, though that was delayed until December. Before the delay, partner Sky TV was expecting to have 50,000 subscribers by June 30 this year, though that's since been pared back with chief executive John Fellet telling NBR that Igloo could attract 30,000.

TVNZ told the committee that pay-TV opens up the broadcaster to "consumer paid for content" and is part of a wider move to cut reliance on advertising revenue.

The drive to find new revenue streams comes as the broadcaster is under greater pressure from the government to maintain its return.

In a Dec. 20 letter, Broadcasting Minister Craig Foss told chairman Wayne Walden the government expects at least a 9 percent return on average equity over the next three years, and wants TVNZ to change its dividend policy to a proportion of cash flow rather than net profit.

The broadcaster's existing dividend policy is to pay 70 percent of forecast net profit, and it's targeting a $9.8 million return from the 2013 financial year. The broadcaster's net profit dropped 26 percent to $14.2 million in the final six months of 2012.

TVNZ's operating cash flow shrank to $13.7 million in the six months ended Dec. 31 from $31.8 million, with much of that from reduced government funding. There was a net increase of $3.2 million in the six month period, leaving TVNZ with cash and equivalents of $8.5 million as at Dec. 31.

The broadcaster has scope to take on more debt with $10 million in borrowings amounting to a gearing ratio of just 6 percent, well below its upper cap of 40 percent flagged in its 2013 statement of intent.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Xero Approves: No More Need For Written Signatures On Tax Returns

The passing of legislation that will allow Inland Revenue to accept electronic signatures will free up accountants and others from an outdated system. More>>

ALSO:

Budget Building Battle: Bill English Blames Council On Housing

The Nation: Finance Minister blames Auckland Council for housing shortage, saying it is responsible for land, housing and infrastructure supply in the city, while government provides rental subsidies... More>>

ALSO:

Megiaglommeration: NZME And Fairfax Apply For Authorisation To Merge

The Commerce Commission has received an application from Wilson and Horton Limited (trading as NZME) and Fairfax NZ Limited seeking authorisation to merge their media operations in New Zealand. More>>

ALSO:

Brewing: Lion To Buy Cult Upper Hutt Brewer Panhead

Lion - Beer, Spirits and Wine (NZ), New Zealand's biggest beer maker, has agreed to buy Panhead Custom Ales from the family of founder Mike Neilson, its second such purchase of a popular craft brewer after the acquisition of Dunedin-based Emerson's Brewing Co in 2012. More>>

ALSO:

Half Empty: Fonterra's 2017 Opening Forecast Below Expectations

Fonterra Cooperative Group raised its forecast farmgate milk payout for next season by less than expected as the world's largest dairy exporter predicts lower prices will crimp production and supply will pick up. The New Zealand dollar fell. More>>

ALSO:

Pest Control: Mouse Blitz Team Leaves For Antipodes

The Million Dollar Mouse project to rid Antipodes Island of mice is underway with the departure of a rodent eradication team to the remote nature reserve and World Heritage Area. More>>

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news