Tough talking helps Sky to minimise loss

Savings on programming costs have allowed pay TV operator Sky Network Television to substantially reduce its first-half loss.

The pay TV company yesterday reported a net loss after tax of $4.4 million for the six months to December 31, compared with a $13.2 million deficit the year before. The company will not pay an interim dividend.

Chief executive John Fellet said Sky had continued to increase its subscriber base and reduce losses, primarily through tough negotiations with programme suppliers.

"A year ago in this period, 49 per cent of total revenue went to programming. Now it's down to 42 per cent goes to programming - and we're adding more and more programmes."

The result did not include anticipated benefits from the strengthening New Zealand dollar because of currency hedging. Sky buys its programmes in US dollars.

Fellet repeated the company's aim to make a profit in the first half of its next fiscal year.

Sky's revenue rose 11 per cent to $186.1 million during the last half year.

It now has more than 516,000 subscribers, 74 per cent of whom receive its more expensive digital service.

Earnings before interest, tax, depreciation and amortisation rose 33 per cent to $71.6 million, bettering analysts' estimates of about $68 million.

Much of Sky's losses have been attributed to the outlay in decoder technology to match the company's rapidly growing subscriber base.

Mr Fellet said those costs were still there.

"This is a business that costs us $850 to install and, right off the bat, we only probably receive $199 worth of revenue. You've got to be in it for the long haul."

Sky shares closed up 8c, or 2.2 per cent, at $3.68 yesterday.

- NZPA