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

 

Scoop Business: Wheeler Downplays Scope For ‘Large’ Rates Fall

Reserve Bank governor Graeme Wheeler says some market commentators are predicting further declines in interest rates that would only make sense for an economy in recession, although some easing is likely to be needed to maintain New Zealand’s economic growth. More>>

ALSO:

Ruataniwha Dam: Consent Conditions Could Mean Reduced Intensity

Legal advice sought by the Hawke’s Bay Regional Council on the Ruataniwha Dam consent conditions has confirmed that farmers who sign up to take water from the dam could be required to reduce the intensity of their farming operation to meet the catchment’s strict nitrogen limit. More>>

Health And Safety: Bill Now Sees Rules Relaxed For Small Businesses

Health and safety law reform sparked by the Pike River coalmine disaster has been reported back from the industrial relations select committee with weakened requirements on small businesses to appoint health and safety representatives and committees. More>>

ALSO:

Bearing Fruit: Annual Fruit Exports Hit $2 Billion For First Time

The value of fruit exported rose 20 percent (up $330 million) for the June 2015 year when compared with the year ended June 2014. Both higher prices and a greater quantity of exports (up 9.0 percent) contributed to the overall rise. More>>

ALSO:

Interest Rates: NZ Dollar Jumps After RBNZ Trims OCR

The New Zealand dollar jumped more than half a US cent after Reserve Bank governor Graeme Wheeler cut the official cash rate by a quarter-point and said the currency needs to be lower, while dropping a reference to criteria that justified intervention. More>>

ALSO:

Drones: New 'World-Class' Framework For UAVs

The rules, which come into effect on 1 August, recognise the changing environment and create a world-class framework that accommodates ongoing development while still ensuring the safety of the public, property and other airspace users. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news