Sky 2007 Half Year Results

SKY Television announced today a net profit after tax of $36.5 million for the six months to 31 December 2006, an increase of 23.0% on the previous year’s interim result.

Total revenue increased by $37.3 million to $303.4 million, an increase of 14.0% compared to the same period last year. The average monthly revenue per subscriber (ARPU) increased by 3.3% to $60.28. Other factors contributing to the increase in revenue were a 7.4% increase in subscriber numbers, increased installation revenue for “MY SKY” and the inclusion of $11.7 million of advertising revenue from Prime, which was not owned by SKY in the comparative period.

Operating costs increased by 13.6% to $223.8 million. Programming costs increased by $15.6 million, attributable to higher subscriber numbers, the costs associated with the introduction of three new channels and an additional $7.3 million of the programming costs incurred by Prime, which was not owned by SKY in the comparative period.

SKY’s subscriber base continued to grow, with an increase of 16,215 subscribers since 30 June. 2006. The 47,199 increase in subscribers for the 12 month period ending 31 December 2006 continues to demonstrate the strong growth that SKY has experienced since 1990.

Churn, a measure of subscribers who disconnect their service, remained low, with gross churn reducing to 13.8% from the comparative period of 13.9% showing that subscribers continue to receive value from the SKY service.

The amount of time subscribers spend watching SKY channels has continued to increase with most of the increase in viewing occurring on SKY’s basic channels.

Since 31 December 2006 subscriber growth has continued to improve. As of yesterday, the subscriber count reached a new high of 690,994.

The SKY Board has resolved to pay a fully imputed interim dividend of 5.0 cents per share. This is an increase of 25% over the dividend paid in the comparative period. The record date for payment of the dividend will be 16 March 2007 and the payment will be made on 23 March 2007.

A new initiative during the interim period was the addition of seven new pay-per-view channels resulting in movie content increasing on SKY’s pay-per-view platform with up to five new movie premieres each week. Several new channels were launched during this period including three new basic channels; MTV in August 2006, The Documentary Channel in November 2006 and Fox News Channel in December 2006. On 1 January 2006 SKY launched Star Plus, a 24 hour Hindi general entertainment channel.

Another major event in SKY’s development was the launch of “SKY Mobile TV”, a joint venture with Vodafone, delivering a bundle of at least eight channels to Vodafone’s 3G customers. SKY is also planning to broadcast live events including Rugby, International Cricket and European Football on a pay-per-view basis as part of the mobile TV service.

During the period SKY confirmed a deal with the International Netball Federation Limited to be the host broadcaster of the 2007 World Netball Championships to be held in Auckland. Under the agreement SKY and TVNZ will jointly hold the New Zealand rights to the event with SKY providing “LIVE” coverage of 32 games and the opening and closing ceremonies, as well as highlights from the remaining games.

The Optus D1 satellite was successfully launched on 13 October 2006. SKY’s satellite service was transitioned to this satellite on 15 November 2006 with only minimal disruption to SKY’s digital channels. The new satellite has been designed to have more New Zealand designated transponders, allowing SKY to initially increase its channel capacity by 25%. The D1 satellite also has “more power” which will improve the signal strength.

SKY’s free to air channel, Prime, has performed well over the six month period. SKY purchased Prime on 8 February 2006. There was an initial decline in viewing while the SKY management team revised the program schedule and developed strategies to re-position the channel. As a result of these initiatives, Prime’s share of peak viewing has increased to an average for the six month period of 6.1% from 4.6% for the comparative six month period.

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