FIRST CUT: Sky TV FY earnings down 15%

FIRST CUT: Sky TV FY earnings down 15%, citing merger costs and content 'arms race'

By Pattrick Smellie

Aug. 26 (BusinessDesk) - Sky Network Television, the pay-TV broadcaster seeking a merger with Vodafone's New Zealand operations, reported a 15 percent fall in tax-paid profit for the year to June 30 of $146.7 million, although the drop is partly thanks to merger costs.

Some $14.4 million of one-off costs incurred in relation to the planned merger, which is structured as a takeover of Vodafone NZ by Sky, came straight off the bottom. Underlying profit of $157 million compares with a $171.8 million net profit in the previous year.

The other major source of additional cost during the year was for programming, chief executive John Fellet said in a letter to shareholders released with financial statements to the NZX.

"In a lot of industries, competition normally results in a price war," he said. "In the content industry, it becomes an arms race."

The broadcaster increased subscriber numbers over the year to 852,679, although customer churn rose to 17.5 percent from 14.5 percent.

Revenues were flat at $928.2 million, a 0.1 percent increase on the previous year.

The company declared a final dividend of 15 cents per share, payable Sept. 16 with record date of Sept. 9.

Fellet acknowledged that "the launch of numerous new business models" for broadcast content has "challenged incumbent players both in New Zealand and around the world".

The shares last traded at $4.69, up 2.2 percent so far this year.

(BusinessDesk)

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