Hike in spending; Fanpass numbers revealed. UPDATE: Shares fall 13%; shareholders approve pay hike for board.
PLUS special feature audio: Lance Wiggs on whether the board deserved that pay hike, and Sky's future in the rapidly-changing media
PLUS special feature audio: Click the NBR Radio box for Lance Wiggs on whether the board deserved that pay hike, and Sky's future in the rapidly-changing media market.
See also: Competition hits Sky TV: chairman
UPDATE: The 27% director fee pool increase was approved. See update end of story.
EARLIER: Sky TV is forecasting a fall in net profit next year of up to 11% amid new threats from online competitors.
The pay TV broadcaster's net profit after tax (NPAT) for the year to June 30, 2015 was $172 million.
It's guidance for 2016, issued this afternoon, is between $153 million and $158 million.
Editda is forecast at $335 million to $345 million from 2015's $380 million.
Shares (NZX:SKT) fell 13% on the news.
The warning came from chief executive John Fellet at the company's annual meeting, now underway in Auckland, and in a statement to the NZX.
Capital expenditure is forecast to increase from 2015's $115 million to $125-130 million.
Revenue is predicated to be flat at $928 million to $938 million.
Mr Fellet had already flagged that investors should not expect any dividend increase in 2016 as his company incurs extra costs fighting new competition and our falling dollar pushes up the cost of overseas content. A post-World Cup come-down is also possible.
The threat of new media, and Sky TV's reaction, is a dominant theme.
Fanpass subscriber numbers
The company today offered more detail on the launch of its Fanpass.co.nz service, which offers season passes to NRL, Formula One and Super Rugby games, plus daily and weekly passes to Sky Sport channels 1 to 4.
"Early results are positive, since launch eight weeks ago. The app has been downloaded more than 13,000 times and more than 17,000, Fan Passes have been purchased," Sky TV chairman Peter Macourt says.
A software upgrade to existing MySky boxes that will allow on-demand broadband content is due to be completed by Christmas. A project to replace older decoders with MySky boxes is due to take place over the next 18 months. The two decoder initiatives have a combined cost of $120 million.
Mr Macourt did not reveal any subscriber numbers for Neon, Sky TV's competitor to Netflix and Spark's Lightbox that launched earlier this year.
However, the chairman did offer that "unfortunately, in the short term the cost of these new services is greater than the revenue opportunity."
Pay hike
Sky shareholders voted to approve a 27% increase of the company's director's fee pool to $900,000 from the current $750,000.
Recent additions to the board include tech entrepreneurs Geraldine McBride and Derek Handley.
Shareholders Association chairman John Hawkins says the notice of meeting on the resolution gave comparisons to other companies' directors' pools, but without knowing the number of directors involved it was worthless. He said there was also no reference to recent increases in base director fees, which when added to the latest pool increase, would mean a total increase of 53.8% in just five years.
“I struggle to see why the Sky TV directors’ fee should be higher than that of Air New Zealand, given the relative complexities of running the two companies and it would be 50% more than the Port of Tauranga, which has a similar market capitalisation,” Mr Hawkins says.
NBR's Tim Hunter is at Sky's AGM. Check back later for his full report.
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