Sky TV beats profit forecast, sees swing to light entertainment during lockdown

Wednesday, 25 August 2021

Sky TV says many subscribers are turning to light entertainment shows, such as Love Island, to help them through the Delta lockdown.

Sky Television chief executive Sophie Moloney has played down the impact of the Delta lockdown on the business after reporting an improved financial result.

The company reported an above-forecast net profit of $47.5 million for the year to the end of June and forecast it would grow its revenues in the current financial year, for the first time since 2016.

Moloney said a difference between the current lockdown and last year’s was that this time there was a “heap of sport still happening around the world”.

“A key learning from the last lockdown was ‘light-hearted is good’,” she said.

In keeping with that, shows such as reality show Love Island and comedy The White Lotus were doing well on Sky and its streaming Neon service at the moment, she said.

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Moloney said there were “some discussions that are ongoing” after it appointed investment bank Jarden to handle approaches from potential investors in June.

The appointment sparked speculation of a possible takeover of Sky.

Sky TV chief executive Sophie Moloney described its result as “very positive”.

But she said there was nothing in the nature of the current discussions that the company would need to report on under its continuous disclosure obligations.

The company’s goal was to “make sure anyone who is interested in us is going to drive shareholder value”, she said.

“People being interested in us is something I would expect given our current market capitalisation.”

Moloney described Sky’s annual result as very positive, despite revenues for the year to the end of June slipping 4.7 per cent to $711m.

The profit figure was boosted by a number of one-off gains and Sky TV is forecasting its net profit will drop back to between $17.5m and $27.5m in the current financial year.

The one-off gains this year stemmed in part from the sale of its outside broadcasting business OSB and content-cost savings from cancelled sports events.

Its profit forecast for the current financial year does not include any proceeds from the planned sale of land or buildings at its Mt Wellington headquarters.

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Sky TV said its core satellite TV business was “stabilising”, with a net loss of 3.8 per cent of customers over the year, versus a 5.4 per cent decline in the previous year.

The number of subscribers for its streaming services rose 57 per cent on a “like for like basis”.

Sky TV said it remained on track to begin distributing its next-generation set-top box by the middle of next year.

The device will double as a MySky recorder and a media player able to access internet TV services such as Netflix, and will be able to show programmes in 4K and be controlled using voice controls as well as via a remote.

The company has not released details of how many broadband customers it has signed up since launching into the broadband market in March.

But Moloney indicated it was comfortable 3 to 5 per cent of its set-top box customers would have signed up by June next year which would imply a customer base by then of about 20,000.

Moloney said Sky’s ambition was to achieve revenue growth of $75m to $100m by 2024.

“At the same time, we must make further permanent reductions to operating costs in a focused and sustainable way,” she said.

Sky’s costs this year will reflect a “step-up” in contents costs, including for rugby and costs associated with the Tokyo Olympics which had originally been budgeted for the year just closed.

Sky has previously signalled it might need to review the price of Sky Sport.

Moloney said the company had done “a heap of customer research” and was doing some modelling, the result of which could be considered by the company’s board later this year.

But she said no decisions had been made and it could not be presumed at the moment that prices would rise.

“It is about trying to make sure we are getting to the right value for our customers while acknowledging that we have had a significant ‘uplift’, particularly on the sports rights side,” she said.

Sky TV also announced it would consolidate its shares, which have been trading under 20 cents for more than a year, so shareholders would get one share in the business for each 10 shares they currently own.

The change should make no difference to the value of investors’ holdings.