Sky TV takes its cue from Trade Me

WILLIAM MACE
Last updated 05:00 27/08/2011

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Sky Television chief executive John Fellet says he wants the company to be "the Trade Me of the pay TV world" after posting another strong annual result.

Sky announced yesterday a $120 million profit for the year to June, up 16.7 per cent on a 7.4 per cent increase in revenue. It declared a fully imputed final dividend of 10.5 cents per share and a special dividend of 25.0 cents per share, to be paid on September 16.

The result highlighted the privileged position the broadcaster has in New Zealand's media market, which Fellet likened to Trade Me's dominance of the online auction market.

"eBay is the best online auction site in the world as far as volume, but Trade Me has done quite well here in New Zealand, so our goal would be to be the Trade Me of the pay TV world," he said.

Trade Me's part sale would help "crystallise" Sky's true value on the market.

Like Trade Me, Sky holds a huge section of its chosen market with little direct competition. It has an ever-increasing base of 808,000 subscribers, reaching into 48.7 per cent of households. It also has an enviable grip on sports broadcasting rights and increasingly popular programming.

Fellet put the profit increase down to growth in subscriber numbers, an increase in the average revenue per subscriber and a continued reduction in people switching off their Sky connections.

MySky HDi subscribers make up 35 per cent of all Sky subscribers, up from 24 per cent last year, and yield an average revenue per subscriber of $84.79 a month compared with $65.19 for those with a standard digital decoder. Overall, subscribers were up 3.4 per cent and total subscriber yield was up 4.2 per cent to $70.45.

Fellet said basic subscribers now saw more sense in paying extra for channels such as Rialto because they could use their MySky recorders to store films and watch them at their discretion.

The company's internet-platform iSky had given subscribers greater value for money, and revenue had been bolstered by the need to purchase an additional decoder in order to access Sky Sports through the online service.

A resurgent advertising market accounted for $62.7m of Sky's revenue, with advertising revenue from paid channels increasing 18.5 per cent and revenue from free-to-air channel Prime rising 13.9 per cent.

Sky is already weighing up its next venture – a new low-cost, pay-television service dubbed Sky Lite, or the addition of up to 24 more channels to its satellite service using spectrum freed up from the closure of analogue television broadcasts.

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Fellet said the popularity of Internet Protocol television, or IPTV, would guarantee more competition from overseas media channels.

- BusinessDay.co.nz

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