Sky TV lifts revenues, announces $70m cash return

Sky TV plans to return $70 million to shareholders by cancelling some of its shares and will resume paying dividends after reporting a 41% rise in its net profit and growing its revenues for the first time in six years.

The share cancellation would not be a typical buyback, chief executive Sophie Moloney said.

Instead, all shareholders would see their number of shares reduce in proportion, so their shareholdings would still have the same value, and they would receive a cash payout of about 40 cents a share, which Sky expected would not be subject to tax in the same way as a dividend.

The company posted a net profit of $62m, which it said was above guidance, and grew revenues by 4% to $736m.

Chairperson Philip Bowman said the company was in a ‘‘solid cash position’’ – in part thanks to the sale of its Mt Wellington campus this year, which resulted in a $14m one-off gain – and had ‘‘an improved earnings outlook’’.

In addition to the capital return, Sky will resume paying dividends after suspending them in 2019, announcing a final dividend of 7.3c a share, which it said equated to 60% of its free cash flow.

Moloney said a new Sky box that she expected to be ‘‘transformational’’ for Sky would still be released in the spring, after its launch was pushed back by a few months earlier in the year. Moloney expected the device would be available to Vodafonetv customers before that service was switched off at the end of October.

Moloney said Sky’s strong result delivered on its promise that it had reached a turning point.

In June, Sky terminated talks to acquire radio and outdoor advertising business Mediaworks after a backlash from shareholders opposed to the proposal, paving the way for the capital return.

Sky said the number of Sky box subscribers fell 4.5% over the year, but the revenue growth was achieved in part thanks a 14% rise in the number of people subscribing to its Neon streaming entertainment service and 53% growth for Sky Sport Now.

Sky also reported it had signed up ‘‘close to 18,000 customers’’ for its Sky Broadband service after its first full year in the market.

Sky forecast it would achieve revenues of between $750m and $770m in the current financial year and a net profit of $50m to $60m.