KEY POINTS:
Sky Network Television is expected to fulfil market expectations with an improved profit margin for the June year, driven largely by a healthy increase in subscriber numbers.
The pay television operator forecast in February a net profit after tax of $75-80 million, up from $60.1m a year earlier.
Analysts are expecting Friday's profit announcement to show the subscriber base pushed through 700,000 from 667,270 a year ago.
Likewise its churn factor - the percentage of subscribers who decide to disconnect from the service - is expected to decline, having already fallen by 13.5 per cent in the 2006 year from 15.8 per cent a year earlier.
Sky's failure to secure rights to the Rugby Would Cup is not expected to impact on the company's future earnings.
"They have never had the world cup before and, at the end of the day, people don't subscribe to Sky just for the sake of a short tournament," said Rob Mercer, head of research at Forsyth Barr.
Mercer did not expect a big variation from the company's mid-year guidance, but he expected earnings before interest, tax, depreciation and amortisation to be a bit ahead at $252m.
Goldman Sachs JB Were strategist Bernard Doyle said he expected a net profit near the bottom end of the range of about $76m, although he expected the company to show strong subscriber growth. He said a highlight for Sky would be the successful launch of the video-on-demand service through MYSKY.
The full-year dividend was forecasted to rise by three cents to 11.0 cents a share.
But Mercer said there was a chance the increase could be bigger than that - and confirm Sky's strong cash flow position.
Mercer said, however, that if subscriber growth came in under expectations, competition from Freeview, or slowing economic conditions, might be to blame.
Freeview, which is backed by TVNZ, CanWest TVWorks, Maori Television, and Radio New Zealand, will issue a progress report on Monday on the uptake of its new digital television service.
