Sky back on track after World Cup

By SIMON HENDERY

Sky Television's normally relentless subscriber growth was crash-tackled in the second half of last year by rival TVNZ's possession of the rugby World Cup.

The pay television company yesterday reported a first-half net profit of $12.4 million for the six months to the end of December, up from a $4 million loss for the same period a year earlier.

During the period Sky added 5150 subscribers, taking its total number of subscribers to 548,000.

The increase was well down on the 13,482 subscribers the company added during the same six-month period a year earlier.

"However, it is important to note that in the latest period, Sky's performance was tested with the rugby World Cup being shown on a competitive network," the company said.

At a briefing for analysts, it presented a graph showing the fall-off in subscriber numbers had not been as severe - and the recovery quicker - than for the same period in 1999 when the pervious World Cup tournament was played.

Sky is continuing to win subscribers over to its more expensive and profitable digital service.

While the number of Sky residential UHF subscribers fell 12 per cent to 104,000 during the half year, the number of residential digital subscribers increased 5.6 per cent to 359,000.

As a result, average monthly revenue per subscriber increased by 7.4 per cent.

The company is also having greater success attracting advertisers. Its advertising revenue rose 34.8 per cent to $11.6 million for the half year. Total revenue increased by 13.9 per cent to $212.1 million.

Sky, majority-owned by Independent Newspapers, will not pay an interim dividend.

Chief executive John Fellet said the business remained on track to report a full-year profit of between $28 million and $35 million, from earnings before interest, tax, depreciation and amortisation of between $175 million and $180 million.

The company said its programming costs as a percentage of revenue fell to an all-time low of 39.4 per cent during the half year, down from 42.4 per cent for the same period in the previous year.

While the company buys much of its programming in US dollars, its comprehensive hedging policy means the recent surge in the New Zealand dollar has not provided a windfall in savings.

Sky is 100 per cent hedged against the US dollar until the end of June at 50.9USc.