Sports keeps Sky going strong
Profits slip 14.4% but Rio Olympics rating numbers please broadcaster
ky Network Television is holding on to its strong position in sport broadcasting and i s pleased with how the Rio Olympics rated.
Sky TV reported a 14.4 per cent fall in net profit for the year to June 30 of $ 147.1 million.
Sky attributed part of the drop in profit to the costs associated with its bid to merge operations with Vodafone New Zealand.
Revenues were flat at $ 928.2m, a 0.1 per cent increase on the previous year.
Some $ 14.4m of one- off costs incurred in relation to the planned merger, which is structured as a takeover of Vodafone NZ by Sky, came straight off the bottom. Underlying profit of $ 157m compares with a $ 171.8m net profit in the previous year.
Chief executive John Fellet said viewer numbers for the Rio Olympics were initially disappointing, but picked up midway through the first week of broadcasting.
Sky recorded 10.6 million viewers on free- to- air Prime, 17.9m viewer hours on traditional Sky TV and 13.3m viewer hours on Over- the- top Sky, which includes streaming platforms such as Fanpass, Sky Go and its dedicated Olympics app.
“We were able to use technology to extend the content to more people and more hours, which is the whole key to advertising the cost of these things as they go up,” Fellet said.
New broadcasting deals with NRL, netball and golf have been secured for Sky, and it will be broadcasting the EPL. This maintains Sky’s position as the home of sport.
“Our goal is always to have a wide selection [ of sport] so there’s always something to watch at all times.”
The broadcaster increased subscriber numbers to 852,679, although customer churn rose to 17.5 per cent from 14.5 per cent.
The churn rate from November 2015, after the Rugby World Cup, to March this year was higher than ever recorded for Sky.
Fellet said the summer after a Rugby World Cup when the All Blacks skip a Northern Hemisphere tour is always a time of high churn, but the added competition from streaming services such as Lightbox and Netflix intensified the churn rate.
He said Sky “scored an own goal” by releasing a software update that users could download to upgrade their MySky boxes and give access to OnDemand content.
“On the surface it sounds like a great idea . . . unfortunately we downloaded also a font that certain individuals could not see well.”
Sky TV
Fellet said he thought in the time it took to get that font fixed Sky experienced customer churn.
The other major source of additional cost during the year was for programming.
“In a lot of industries, competition normally results in a price war,” Fellet said in a letter to shareholders. “In the content industry, it becomes an arms race.”
Fellet acknowledged that “the launch of numerous new business models” for broadcast content has “challenged incumbent players in New Zealand and around the world”.
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John Fellet, Sky TV chief
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