Our huge loss is really our gain, says Sky TV

By SIMON HENDERY media writer

Pay television operator Sky TV has chalked up another enormous half-year loss, but says the result is simply a reflection of the company's healthy growth.

Sky TV lost $19.6 million in the six months to December 31 - a four-fold increase on the $4.7 million deficit it recorded for the same period in 1999. The result was in line with analysts' expectations.

The company gained more than 20,000 subscribers during the period, taking its total UHF and satellite subscriber base to over 397,000.

That growth, during what Sky said was traditionally its slower half-year, pushed subscriber revenue up 20 per cent.

Total operating revenue was up from $130 million to $144.5 million.

Chief financial officer Paul Smart said a significant factor in the loss was the fall in the New Zealand dollar, which added $8 million to the cost of buying overseas programmes.

Another factor was an increase in depreciation - up to $45 million from $36.8 million last year - most of which involved writing down the value of set-top boxes as subscriber numbers grew.

"So ironically, the greater the loss, to some extent, the better we're doing," Mr Smart said.

Asked when Sky might become profitable he said: "Within the next couple of years we should get close to making a profit if the growth continues."

When told that the "within the next couple of years" phrase was one that Sky executives had been using for several years now, Mr Smart said forecasts were prone to change as expectations for growth changed.

"You could make the business profitable relatively quickly by just stopping growth, but strategically that wouldn't be the right thing. "

Analysts expect Sky's loss will contribute to a fall in profit for parent company Independent Newspapers Ltd, which is due to announce its half-year result today.

Sky TV closed down 5c at $3.75 yesterday.