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Sky TV annual profit rises 21%, beating analyst estimates

Sky TV annual profit rises 21%, beating analyst estimates

By Tina Morrison

Aug. 22 (BusinessDesk) - Sky Network Television, New Zealand's dominant pay-TV company, posted a better than expected 21 percent gain in annual profit as it boosted revenue from more subscribers.

The Auckland-based company said profit rose to $165.8 million in the 12 months ended June 30, ahead of the $160.5 million forecast by analysts in a Reuters poll and higher than the $137.2 million profit a year earlier. Revenue increased 2.7 percent to $909 million as sales from subscription fees rose 2.7 percent to $809 million.

Sky, which is present in almost half of New Zealand's households, increased its annual profit for a fifth consecutive year as it garners more fees from an increasing number of subscribers, more of whom are moving on to its higher value My Sky service.

The company added a net 9,157 subscribers in the year through June, taking its total to 865,055. The number of residential subscribers, who account for about 82 percent of the total, rose 3.5 percent while wholesale subscribers fell 15 percent as customers who previously received the service through Telecom, now called Spark, transferred to Sky after the companies ended a wholesale agreement.

Average monthly revenue per subscriber rose 2.2 percent to $77.52 from the year earlier. Average revenue from My Sky users rose 0.4 percent to $87.22 a month.

The company eked out price increases across its most popular packages during the year with its 'basic + sport' offering, used by about 42 percent of customers, going up by 1.9 percent to $74.75 a month, while its 'basic + sport + movies' package, favoured by about 29 percent of customers, increasing 1.7 percent to $95.68 a month.

Sky increased the number of subscribers using its higher value My Sky decoder by 11 percent to 504,713 and 42 percent of the company's My Sky installations were to new Sky subscribers, compared with 27 percent the year earlier. My Sky customers now make up 61.1 percent of the company's residential customers, up from 55.5 percent a year ago, it said.

The number of customers who disconnected from the pay-TV service during the year fell to 13.2 percent from a 14.4 percent pace the year earlier, Sky said.

Sky's expenses fell 1.5 percent to $656.1 million from the year earlier. Programming costs fell to 30.8 percent of revenue from 32.7 percent the year earlier, which including higher rights and production costs because of the London Olympics.

The company will pay a final dividend of 15 cents a share on Sept. 12, up from 12 cents the year earlier. That takes the total annual dividend to 29 cents a share, from 24 cents in 2013.

Shares in Sky rose 0.9 cent to $6.57 in early trading on the NZX today, and have gained 11 percent so far this year. The stock is rated an average 'hold' according to analyst recommendations compiled by Reuters.


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