KEY POINTS:
Sky Network Television slashed its full year profit forecasts by up to 17 per cent today, blaming lower advertising revenue, the cost of promoting Prime and a slow-down in the installation of MySky recorders.
The news came as Sky reported a 23 per cent rise in net profit after tax to $36.5 million for the six months to the end of December.
Last August Sky expected full year profit to be between $80 million and $90 million. Today the company has revised its expected profit to be between $75 million and $80 million.
Sky Television said the biggest proportion of the revision is attributed to a drop in ad sales.
Predicted ad sales are down four per cent for the calendar year and a much higher percentage for the two quarters that make up this six months reporting period, the company said.
"We think it will turn around but I am not sure it will turn around enough to grow 2 per cent which is what we anticipated when we did the budget," it said.
Total revenue increased by $37.3 million, or 14 per cent, to $303.4m, compared to the same period last year, Sky said today.
Average monthly revenue per subscriber (ARPU) increased by 3.3 per cent to $60.28.
Other factors contributing to the increase in revenue included a 7.4 per cent increase in subscriber numbers, and the inclusion of $11.7m of advertising revenue from Prime, which was not owned by Sky in the comparative period.
Subscriber numbers increased by 16,215 since June 30 2006, and increased 47,199 for the 12 months ending December 31.
Subscriber growth had continued to improve in 2007, with the subscriber count reaching a new high of 690,994 yesterday, Sky said.
Half year operating costs increased by 13.6 per cent to $223.8m, with programming costs up $15.6m.
The rise was a result of higher subscriber numbers, costs associated with the introduction of three new channels and an additional $7.3m of the programming costs incurred by Prime.
Gross subscriber churn, a measure of subscribers who disconnect their service, was 13.8 per cent, slightly down from 13.9 per cent in the previous comparable period.
The amount of time subscribers spent watching Sky channels had continued to increase with most of the increase in viewing occurring on Sky's basic channels, the company said.
An interim dividend of 5 cents per share is to be paid.
During the half year Sky added new pay-per-view channels and three new basic channels -- MTV, The Documentary Channel and Fox News.
It also launched Sky Mobile TV, a joint venture with Vodafone, delivering a bundle of at least eight channels to Vodafone's 3G customers.
Sky is also planning to broadcast live events including rugby, international cricket and European football on a pay-per-view basis as part of the mobile service.
In October the Optus D1 satellite was successfully launched, with Sky's satellite service moved to it on November 15.
The new satellite would allow Sky to initially increase its channel capacity by 25 per cent, and it had more power to improve the signal strength, the company said.
Free-to-air channel Prime, bought by Sky a year ago, had an initial decline in viewing while the Sky management team revised the programme schedule and developed strategies to re-position the channel.
Prime's share of peak viewing had increased to an average for the six-month period of 6.1 per cent from 4.6 per cent for the comparative six-month period, Sky said.
Shares in Sky Network Television closed yesterday at $6.11 and fell four per cent following today's announcement to trade at $5.86 at 11.12am.
- NZPA
