22 Aug 2017

Sky TV profits hit by piracy and streaming services

7:12 pm on 22 August 2017

Listed broadcaster Sky Network Television has made a weaker full-year profit after a fall in subscribers and higher programming costs.

Its net profit in the June year fell 20.9 percent to $116 million, compared with $147.1m last year.

Revenue dropped 3.7 percent to $893.5m, after a fall in residential and installation revenues.

The company's expenses have risen because it had to pay more for programmes, including the Olympics, PGA Golf and America's Cup.

Customer numbers fell nearly 28,000, or 3 percent, to 824,782, mostly from its traditional satellite service, but also from its niche services.

Chief executive John Fellet said competition and piracy were eating into the business.

"Piracy has become our biggest competitor.

"The big problem is the increasing ease by which pirated content is accessible," Mr Fellet said.

He singled out the sale of devices with software to connect to overseas sources of pirated content, and said Sky has taken legal action to fight the use of such devices in New Zealand.

Mr Fellet also said Sky has had no choice but to go to court to stop other media outlets abusing the use of video highlights, often sports events, without permission and without paying for it.

But he acknowledged the company needed to keep up with the changing habits of viewers.

"We believe we have to offer content where and how the customer wants it."

Mr Fellet said the decision of the Commerce Commission to turn down Sky's planned merger with telecommunications company Vodafone was flawed.

But he said the companies are moving on, and will work closely together in the future.

Sky cut its dividend payout to its lowest level in four years to 27.5 cents a share from 30 cents.

Get the new RNZ app

for ad-free news and current affairs