Sky TV beats profit forecast, guide to first revenue growth since 2016

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Sky TV reported net income of $ 47 million for the 12 months through June 30, 2021, beating its forecast of $ 37.5 million to $ 45 million, which in turn was an increase from $ 20 million initially planned.

Last year, the pay-TV provider reported a net loss of $ 156 million after write-downs and adjusted net income of $ 41 million.

The company also announced this morning a 10-to-1 consolidation of its long-depressed stocks, which will take effect on September 16.

FY21 revenue fell 5% to $ 711.2 million as Sky continued to earn streaming subscriptions at a rapid pace (Neon, Sky Sport now and Rugby Pass subscriptions grew 57% in total), but its much higher paying satellite subscribers continued to decline. from 585,248 to 554,690 a year ago.

The total number of customers fell from 989,569 to 955,168 a year ago, with the continued decline of satellite customers and the growth of streaming, but also the loss of a large number of customers who got Lightbox for free under its former Spark owner if they had a broadband or mobile account with the phone company. – an arrangement that continued until Sky brought Lightbox to Neon in June.

EBITDA rose 14% to $ 186.4 million while spending fell 8% to $ 538.3 million.

Sky faces a major problem where users of its streaming woes pay only about a quarter of what it costs per month than its traditional satellite subscriptions, which means revenues have continued to decline.

However, this morning Sky gave a forecast for FY22 revenue of $ 715 million to $ 745 million, which would represent its first revenue growth since 2016 if it can deliver on its promises.

The company is also forecasting EBITDA of $ 115-130 million and net income of $ 17.5-27.5 million for the current year. (More information on Sky’s annual results soon).

Speaking to the Herald shortly after the release of today’s results, CEO Sophie Moloney said guidelines are subject to change if Delta’s outbreak persists and causes a major disruption to the sporting schedule. On the bright side, Moloney said Neon subscribers have increased since the start of the last lockdown.

To help increase revenue and reduce churn, Sky introduced Sky Broadband earlier this year – offered at a discounted price unless you exit Sky’s pay-TV service and return your set-top box. .

A recent survey of Sky customers raised a number of other possible incentives to boost retention, including the potential appeal of company seats at rugby matches and overseas travel.

Sky also faces the persistent problem of Hollywood studios and TV content creators increasingly turning to direct-to-consumer apps – a trend accelerated by the skyrocketing success of Disney +, which sees Sky paying more for rights, losing rights (as with most Disney content) or settling for non-exclusive offers (as with its latest Discovery renewal, among others).

Earlier this week, as Chorus released its annual results, its CEO, JB Rousselot, said his company has seen network traffic continue to grow – and that it expects CBS and Discovery’s direct-to-consumer applications to be coming soon. launched in New Zealand, further stimulating new media traffic.

Today, Moloney confirmed that Discovery’s launch of a stand-alone streaming deal is expected, under the terms of Sky’s new non-exclusive contract.

New decoder planned for mid-2022

Sky is at least looking to keep third-party apps inside its tent with the imminent release of a next-gen Skybox that will work, offer all of its channels over UFB fiber in resolution up to 4K ultra-high definition, and include support for third-party applications.

Moloney said the new Android-based box would be at the heart of Sky’s plan to increase revenue and profits.

Moloney said it will include third-party apps like Netflix, Prime Video, and Discovery + from Amazon.

Sky CEO wants as many app choices as possible and says the fact that the new box will be Android-based will reduce development costs and make it easier to integrate streaming services – potentially including Spark Sport -.

Moloney said she wanted as many apps as possible on Sky’s new box as part of its “one remote control to rule them all” strategy to become a one-stop-shop aggregator, negotiations had yet to open with Spark on the inclusion of its application, or any other possible Clip from the sky of the ticket.

Some analysts believe that a streaming-capable 4K box is long overdue. But at the same time, aware of some customers’ refusal the last time Sky did a major set-top upgrade, Moloney said “there won’t be a forced march” to the new Android box. Those who like the current decoder will be able to keep it.

Lull in sports wrestling

Pay-TV broadcasting now faces at least a period of relative calm on one front – sport, where the Rugby League rights settlement (with the World Cup going to Spark but the NRL remaining with Sky until ‘in 2027) represented the last major showdown. a code for several years.

The question now is whether Sky will need to raise the price of Sky Sport to account for its new five-year rugby rights deal, which started this season and costs $ 80 million a year.

In May, Sky increased the price of Neon by 15% to $ 15.99 per month.

Sky shares closed at 16.2c on Tuesday. Although the company has its upgrade guidelines, the stock has yet to reclaim most of the ground it lost during the early stages of the pandemic.

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