Sky Network Television, which has been grappling with a loss of subscribers to online rivals, wrote down its value by $360 million at the end of its financial year, resulting in a $240.7 million annual loss.
The Auckland-based company wrote down the value of its goodwill to $1.07 billion from $1.43 billion, which pushed its annual accounts for the year ended June 30 into the red. Excluding the writedown, Sky TV’s underlying profit increased 2.6 percent to $119.3 million from $116.3 million a year earlier.
New Zealand’s largest pay-TV company has been haemorrhaging customers with 57,055 leaving in the latest financial year, although the company noted it had curtailed the loss in the second half to 11,049 customers compared with 46,006 in the first half.
To better compete with online rivals such as Netflix, Sky TV has cut prices and turned its focus to offering more content through internet and mobile services. Still, growth in new services hasn’t made up for the loss of its traditional service, with core satellite revenue falling 6.1 percent to $681.2 million in the latest year while revenue from other subscriptions edged up just 3 percent to $84.7 million.
“Over the next few years we anticipate that more customers will transition from our satellite service to our online products, and our goal is to continue to serve them in ways that best meet their needs and budgets,” said chief executive John Fellet. “Our industry is evolving into a world where internet delivery of content will eventually dominate, and we are well placed to transition with it.”
Fellet said the company’s management team had worked hard to take costs out of the business, with expenses down 7.1 percent to $656.3 million in the latest year.
“We have managed to increase underlying profits and control costs while implementing a transformational strategy that ensures we keep delivering our great content to New Zealanders in ways that they want,” he said. “Sky is building up a strong suite of online products to meet the needs of all New Zealanders, both now and in the future, while continuing to deliver to our core customer base, particularly those who don’t yet have access to fast internet.”
“It’s a careful balance, but strategically important.”
Ahead of today’s results, analyst forecast Sky TV would post a 2018 profit of $115.6 million, falling to $102.2 million in 2019, and $101.1 million in 2020, according to Reuters data.
The stock has an average ‘hold’ recommendation, according to Reuters. The shares rose 0.4 percent to $2.66 at the market open, having shed 5.4 percent over the past year.
Sky TV will pay a 7.5 cents a share final dividend on Sept. 14, taking the annual dividend to 15 cents, down from 27.5 cents in 2017.