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

 

RESEND: Sky TV turns to a $240.7M annual loss

RESEND: Sky TV turns to a $240.7M annual loss after $360M writedown

(Removes repeated paragraph)

By Tina Morrison

Aug. 24 (BusinessDesk) - Sky Network Television, which has been grappling with a loss of subscribers to online rivals, wrote down its value by $360 million at the end of its financial year, resulting in a $240.7 million annual loss.

The Auckland-based company wrote down the value of its goodwill to $1.07 billion from $1.43 billion, which pushed its annual accounts for the year ended June 30 into the red. Excluding the writedown, Sky TV's underlying profit increased 2.6 percent to $119.3 million from $116.3 million a year earlier. Sales revenue fell 6 percent to a six-year low of $839.7 million.

New Zealand's largest pay-TV company has been haemorrhaging customers with 57,055 leaving in the latest financial year, reducing the total to 768,000, although the company noted it had curtailed the loss in the second half to 11,049 customers compared with 46,006 in the first half.

To better compete with online rivals such as Netflix, Sky TV has cut prices and turned its focus to offering more content through internet and mobile services. Still, growth in new services hasn't made up for the loss of its traditional service, with core satellite revenue falling 6.1 percent to $681.2 million in the latest year while revenue from other subscriptions edged up just 3 percent to $84.7 million.

"We acknowledge that the satellite business has probably peaked," chief financial officer Jason Hollingworth told BusinessDesk. Still, he said the traditional TV business "suits a lot of people well and I think those people will be around with us for some time, but we also acknowledge that a lot of people want to watch content differently and we are trying to create those products."

While the average revenue generated from customers taking its newer services was lower than that generated from its traditional satellite customers, they were profitable because Sky TV had already paid for the content they used and didn't have to provide infrastructure such as set-top boxes, he said.

Sky TV plans to renew its satellite lease when it expires in 2021, Hollingworth said, noting the service appealed to rural New Zealand as well as an older demographic who didn't have broadband, and that the technology was capable of handling high-demand sporting events.

Chief executive John Fellet said in the earnings announcement that the company's management team had worked hard to take costs out of the business, with operating expenses down 7.9 percent to $553.9 million in the latest year, and capital spending down 27 percent to $58.2 million.

"We have managed to increase underlying profits and control costs while implementing a transformational strategy that ensures we keep delivering our great content to New Zealanders in ways that they want,” Fellet said. “Sky is building up a strong suite of online products to meet the needs of all New Zealanders, both now and in the future, while continuing to deliver to our core customer base, particularly those who don’t yet have access to fast internet.

“It’s a careful balance, but strategically important."

Ahead of today's results, analysts forecast Sky TV would post a 2018 profit of $115.6 million, falling to $102.2 million in 2019, and $101.1 million in 2020, according to Reuters data.

The stock has an average 'hold' recommendation, according to Reuters. The shares fell 3 percent to $2.57, having shed 5.7 percent so far this year.

Sky TV will pay a 7.5 cents a share final dividend on Sept. 14, taking the annual dividend to 15 cents, down from 27.5 cents in 2017 and marking the lowest level since a 14 cents payment in 2010.

The annual earnings is set to be the last presided over by Fellet, although he will continue his involvement with the company as a director on the board. Fellet has been with the company 27 years, after joining as chief operating officer in 1991 and taking over as chief executive in 2001.

The board is conducting a global search for a replacement, including New Zealand-based and internal candidates. Hollingworth said today he was considering throwing his hat in the ring. He joined the company in 2002 and was previously CFO for TelstraSaturn.

Chair Peter Macourt said the company reduced its debt during the year to $235 million from $299 million, and said the board believes the company should continue to reduce debt to have the balance sheet strength to meet competitive challenges and to successfully negotiate renewal of key content deals.

(BusinessDesk)

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Energy Sector: Meridian Spilled Water To Hike Electricity Prices - Authority Ruling

The Electricity Authority has found that generator Meridian Energy manipulated the power market, costing consumers about $80 million. More>>

ALSO:

XE Data Update: RBNZ Official Cash Rate Decision

The RBNZ will keep the Official Cash Rate (OCR) at 0.25%. T he key points in the RBNZ statement are: RBNZ keeps the OCR unchanged at 0.25% Maintain the LSAP (large scale asset purchase) at NZD$60 billion. Committee prepared to use additional monetary ... More>>

ALSO:

Electricity: Kiwis Ignore Promise Of Cheaper Power

Electric Kiwi and Flick Electric Co are joint winners of Canstar Blue’s award for Most Satisfied Customers | Electricity Providers From putting on an extra layer – rather than turning on a heater – to turning off lights and choosing the energy-saving ... More>>

ALSO:

Economy: COVID-19 Contributes To 1.6 Percent Fall In March Quarter GDP

Gross domestic product (GDP) fell 1.6 percent in the March 2020 quarter, the largest drop in 29 years, as the initial effects of COVID-19 restrictions impacted on economic activity, Stats NZ said today. This quarter’s GDP results showed a widespread drop ... More>>

ALSO:


Electricity: Transmission Pricing For A Low Carbon Future

The Electricity Authority has decided on new guidelines for transmission pricing. James Stevenson-Wallace, Chief Executive of the Electricity Authority says the new guidelines will deliver significant benefits to consumers, through lower electricity ... More>>

ALSO:

ASB: Investor Confidence Falls To Four-Year Low

As the world grapples with the fallout from the most significant pandemic the world has seen in a century, economic concerns are weighing on investors, dragging investor confidence down to a four-year low in the first quarter of the year. For the three ... More>>

ALSO:

Science Media Centre: Funding For R&D In New Zealand – Expert Reaction

Research, Science and Innovation Minister Dr Megan Woods has today announced $401.3 million funding for research and development through Budget 2020 and the COVID Response and Recovery Fund. The fund includes $150 million for an R&D loan scheme, ... More>>

ALSO:


Science: 2019 Prime Minister’s Science Prizes Announced

The 2019 Prime Minister’s Science Prizes have been announced in a digital livestream event today. The Prizes recognise the impact of science on New Zealanders’ lives, celebrate the achievements of current scientists and encourage scientists of the ... More>>

ALSO:


RNZ: Fuel, Alcohol Costs To Go Up From Today

The increase today in the taxes on fuel, road user charges and alcohol is being called a tone-deaf move. More>>

ALSO:

Stardome Observatory: Young Kiwi Astro-Photographer Shoots For The Stars

Matariki by Josh Kirkley. The stars are aligning for up-and-coming Auckland-based astro-photographer Josh Kirkley (Kāi Tahu). During lockdown, one of his images was picked up by NASA and shared on the space agency’s Instagram to its 59.2 million ... More>>


DCANZ: Time For EU To Commit To A Level Playing Field For Trade

The Dairy Companies Association of New Zealand (DCANZ) has welcomed New Zealand Trade Minister David Parker’s statement that it is unacceptable for New Zealand exporters to continue facing an ‘unlevel playing field’ in the EU. Details leaked ... More>>

ALSO:

Potatoes New Zealand: Protecting NZ Fries As Part Of PNZ Pandemic Recovery & Transformation Plan

Potatoes New Zealand has met with Minister Faafoi this week to discuss investigating the potential importation of heavily discounted frozen potato chips into New Zealand. With MBIE’s support we are undertaking an investigation to gather evidence of the ... More>>

ALSO:


New Zealand Government: Supporting Kiwi Businesses To Resolve Rent Disputes

The Government will legislate to ensure businesses that suffered as a result of the COVID-19 response will get help to resolve disputes over commercial rent issues, Justice Minister Andrew Little announced today. More>>

ALSO:


Science Media Centre: Understanding 5G Concerns – Expert Q&A


Recent attacks on cell phone towers have brought concerns over the rollout of 5G technology into sharp relief.
While scientific research has consistently shown that the technology does not adversely affect human health, public concerns about its impact have spread around the world, fueled in part by growing misinformation online. The SMC asked experts to comment... More>>

ALSO:


Trade: Record Monthly Surplus As Imports Dive

Imports in April 2020 had their biggest fall since October 2009, resulting in a monthly trade surplus of $1.3 billion, Stats NZ said today. “This is the largest monthly trade surplus on record and the annual goods trade deficit is the lowest ... More>>

ALSO: