Price rise for Sky Sport this year 'more likely than not'

Thursday, 24 February 2022

Sky TV is no longer in defensive mode, chief executive Sophie Moloney says.

It is more likely than not Sky Television will increase the price of Sky Sports from about the middle of the year, chief executive Sophie Moloney says.

But Moloney said Sky could also consider making Spark Sport available as an app on the new set-top box it plans to launch around then, without taking a cut of Spark’s revenues from the service.

That could make it easier for sports fans to get all their sports content, including domestic cricket, from one device, she said.

Sky mulled an increase in the price of Sky Sport, which currently costs $31.99 a month, last year.

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But Moloney said it had not increased the price of the service since 2019.

She indicated the service was getting more valuable, as a result of Sky winning back the right to broadcast EPL matches from August.

Sky TV chief executive Sophie Moloney says Sky Sport price rise ‘more likely than not’.

“Rights inflation”, for example the increased costs of its rugby rights, was also a factor, she said.

“A sports package increase is something that we are having a look at.”

It was fair to say a price rise was more likely than not, but Sky needed to have a conversation with its customers first, she said.

Making Spark Sport available as a paid app on Sky’s new set-top box looked like a “great opportunity”, Moloney said.

“The nature of that deal and how it works would obviously be subject to discussions direct with Spark.”

It was not necessarily the case that Sky would want to clip the ticket, she indicated.

“If it can be structured so that there is an opportunity for new revenue growth, we're always keen on that.

“[But] ultimately, what we want to do is make it really easy for New Zealanders to have the best of their content opportunities delivered in one place, so that is the main focus,” she said.

Sky says it is on track to get its new set-top box into homes by the middle of this year.

Moloney made the comments after announcing what she described as a solid financial result for the company in the six months to the end of December.

Sky Television will resume paying dividends to shareholders this year after managing to grow its pay-TV revenues over the same period in 2020.

Its profit for the first half of its financial year fell 29 per cent to $28 million, but the company reaffirmed its upgraded profit guidance for the full year.

The company indicated it could return some of the $55m cash-gain it expects to achieve in March through the sale of its Mt Wellington headquarter properties, through a capital return to shareholders.

But Sky said it was also “actively investigating investment opportunities to accelerate business growth”.

Moloney would not go into specifics on those opportunities, including on speculation they might involve a tie-up with media firm NZME.

Sky’s revenues for the half-year rose by 4.1 per cent to $372m after a protracted period of decline, with its customer numbers growing 6 per cent to 983,561 due to growth in its streamed offerings.

But the number of Sky Box customers – those who receive its service via satellite – fell by about 10,000 to 545,002 over the six-month period, which was similar to the drop it experienced in the first six months of 2021.

The company is banking on the release of a new set-top box mid this year that will support 4K viewing and streaming apps, and that will come with a remote control able to accept voice commands, to arrest that trend.

But Moloney indicated Sky still expected to end the calendar year with fewer Sky Box customers than the 545,002 it had at the start of the year.

Nevertheless, Sky as a business was no longer in “defence mode”, she said.

“We now have a greater understanding of our existing and prospective customer base, an enhanced portfolio of rights and a balance sheet which is able to embrace opportunity and growth, as well as to recommence distributing dividends to our investors.”

Moloney said Sky had offered “a valued and crucial service” during the Covid lockdowns.

“We saw a continuation in the positive trend of increased customer numbers, even with the reduced ability to complete Sky Box installations during the lockdowns.

“Annualised churn in Sky Box customers has continued to reduce to a new low of 9.1 per cent and there is a growing trend of customers entering into longer term subscriptions to Neon,” she said.

Sky shares were trading down 3.7 per cent at $2.59 in lunchtime trading.