INL-Sky merger on hold

WELLINGTON - A proposed merger between Independent Newspapers and its 49 per cent owned associate Sky Television is on hold.

INL managing director Mike Robson said the board had had a thorough look at the merger but decided to put it to one side.

An analyst said a merger was likely to be reviewed in 18 months.

INL would be reluctant to merge because Sky was poised to report losses over the next 12 to 18 months as it poured money into its satellite TV business, the analyst said.

A merger would also require work on shareholder agreements as investors typically bought Sky for its growth whereas INL was more attractive as an income stock.

Sky TV this week posted a $26 million loss for the year to June 30 that impacted on both companies. INL's result for the year to June 30 rose 14.5 per cent to $34.6 million after accounting for a $13.4 million loss from Sky.

Mr Robson said the pay-TV operator's bottom line was a victim of its own success. Sky TV was investing heavily in digital technology as more subscribers moved from UHF to the network's satellite service.

INL's pre-tax operating profit was $74.5 million, 40.1 per cent ahead of the previous year, on sales revenue of $582.9 million, which was down 41.7 per cent.

Revenue from circulation was up 3.9 per cent over the previous year. The profit is still well down on the $50 million INL recorded in 1998. But since then Sky has been impacting on INL accounts.

Net debt increased to $359.9 million as a result of the increased investment in Sky.

INL's share price closed down 1c to $4.15 yesterday.

- NZPA