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Sky Italia moves to a loss
Chris Forrester ©RapidTVNews | 03-02-2010
Sky Italia has just reported a US$30m loss, compared with a $10m profit for its previous quarter-year. News Corp, however, has had a great Q2, and that’s without the real impact of Avatar.
News Corp’s Q2 results were significantly better than most Wall Street analysts expected, led by overall revenue of $8.7bn and operating income at $1.2bn, both helping Rupert Murdoch paying out an extra 25% in terms of Class A shares.
Murdoch said News Corp would not be buying MGM, and is not interested in Miramax.
Here are the highlights:
Cable operating income $604m (up 35%)
Filmed entertainment $324m
Newspapers $259m (WSJ ad revenues up 5%)
Sky Italia “challenging” $30m loss
As far as Sky Italia is concerned, News Corp said: “Sky Italia generated a segment operating loss of $30 million as compared to income of $10 million in second quarter a year ago. Sky Italy continues to operate in an extremely challenging business and economic environment and subscriber growth is clearly below our expectations. However, it is important to note that this is a very profitable business, but we remain confident in the longer term growth in this under penetrated market.”
“In the quarter, Sky Italia’s totalled revenues declined by 2% in local currency terms as compared to the prior year's quarter. Monthly ARPU in the quarter averaged around €43 as compared to last year's €45 and this reflects the lower average tier mix, reduced pay per view revenue, and the [lag assessed] for various price promotions.”
“Overall costs in the quarter were flat as higher soccer costs were offset by savings and other programming. Sky Italia's subscriber base declined by 63,000 compared with the previous quarter, and as total quarterly gross editions of 150,000 were more than offset by churn. This puts our anti-subscriber levels at approximately 4.75 million.”
“At quarter end, over quarter end 2.1 million subscribers representing approximately 47% of the subscriber base were taking at least one premium service, compared with approximately 22% of the subscriber base a year ago. Importance of this is that the premium service subscriber's churn rate are about one fifth of the non-premium service subscribers.”
Rupert Murdoch added that there were a few areas of News Corp’s business not performing as well as he would like. “Sky Italia is faced with a tough economic environment and increased competition. But we're certainly enthusiastic about the potential of this business given the high quality of our service and the low penetration of page elevation in Italy.”
“The second is our affiliate Sky Deutschland. We've great confidence that the new management team headed up by Brian Sullivan who helped build BSkyB into a power house, would be able to make head way in yet another big market, with very low pay-TV penetration. As proof of our confidence in this business, we just increased our stake by 5 percentage points. Despite the challenges in these markets, we remain firm in our commitment to pay-TV around the world.”
© Rapid TV News 2010
