Sky TV sees annual profit gain of up to 8.6% in 2015, flags new ondemand service

Sky Network Television [NZX: SKT], the country's dominant pay-TV operator, sees annual profit rising as much as 8.6 percent in the 2015 financial year, and plans to upgrade its customer set-top boxes and roll out a new web-based ondemand service.

The Auckland-based company forecasts annual profit of between $170 million and $180 million in the 12 months ending June 30, 2015, from $165.8 million in 2014, while revenue is expected to rise to between $930 million and $940 million, from $909 million in 2014, according to slides accompanying chief executive John Fellet's speech to shareholders at today's annual meeting.

The pay-TV operator anticipates capital expenditure to rise to between $115 million and $125 million in the 2015 year from $93.2 million in 2014. It plans to roll-out a new video ondemand service targeting non-Sky customers as it faces intensifying competition for viewers. From March it will embark on a plan to replace its old Sky decoders, giving existing customers My Sky recording services and internet connectivity.

"At completion in 2016, we effectively double our usable satellite capacity. Right now we are essentially dual broadcasting content to the two decoder types," chairman Peter Macourt said in speech notes published on the stock exchange. "This opens up future broadcasting opportunities for more channels, more HD content, and even ultra HD, with the increased capacity."

Sky TV today signed a conditional five-year deal to secure broadcast rights to the New Zealand Rugby Union and SANZAR unions for an undisclosed amount.

Securing the rugby rights has been a major plank in the company's success in penetrating almost half of the country's households, and its investment in broadcast equipment has meant it's the only entity able to offer comprehensive coverage of local rugby.

Still, Sky TV is facing increased rivalry from rivals using cheaper web-based platforms, such as sports-focused Coliseum and entertainment-focused offerings from Spark New Zealand, formerly Telecom, as well as overseas services from the likes of Netflix, Quickflix and Ezyflix.

Shares of Sky TV rose 2.9 percent to $6.10.

(BusinessDesk)