Sky TV’s Fellet accuses news media of piracy, biased reporting

LATEST: Sky boss’ wonky, unrealistic take on Amazon

Sky TV boss John Fellet delivered a strong attack on news media groups in his annual report to shareholders, accusing them of piracy and biased reporting.

The pay-TV company’s net profit fell 21% to $116.3 million for the year to June 30 as revenue fell 4% to $893.5 million.

Discussing the result, Mr Fellet said piracy had become Sky’s biggest competitor.

While the company was fighting illegal distributors, devices and websites, he said there was “an even more subtle form of piracy going on by companies who should know better.”

Mr Fellet did not name any media companies but referred to Sky’s legal action alleging copyright infringement, which is against TVNZ, MediaWorks, NZME and Fairfax.

He described the companies’ actions, involving the use of Sky video clips without permission, as “a planned and regular exploitation of our content.”

Mr Fellet said it had been a difficult decision to seek legal remedy, citing a Mark Twain adage – “Never pick a fight with people who buy their ink by the barrel.”

“I certainly understand this quote now more than ever. The media companies in question have spent a lot of effort running every negative article they can find about Sky, some of which sadly are justified but many are not. I suggest this context is worth remembering the next time you read an article or opinion piece that appears to have a strong bias against Sky.”

Within Sky’s overall revenue mix, subscription revenue fell 3% to $807 million, although an increase in subscriber numbers for Fanpass and Neon led to a 4% rise in “other subscription revenue.”

Subscriber numbers for Neon and Fanpass rose 49% to 79,936 compared to a year earlier, while its satellite subscriber numbers fell 5% to 705,652.

Advertising revenue fell 8% to $68.1 million.

Programming costs rose 5% to $349.4 million. Sky said the increase included the rights costs of the Summer Olympics, the PGA Golf and America’s Cup in 2017 as well as a full year’s impact of the new SANZAAR contract starting on January 1, 2016, and costs relating to on-demand content and new channels such as Viceland.

Sky’s abortive merger with Vodafone contributed one-off costs of $2.1 million.

Mr Fellet said both companies had wanted to appeal the decision. “However, as time went by it became apparent that we could action many of the opportunities and synergies through commercial agreements without the escalating costs of a merger.”

The company declared a reduced final dividend of 12.5c a share, down from 15c the previous year, taking the 2017 total payout to 27.5c, down from 30c in 2016.

Sky TV's other challenges on the piracy front recently have included people streaming Joseph Parker bouts through Facebook live -- where a number of small-scale damages have been won.

The pay TV broadcaster also recently filed action in the High Court against My Box, a company that sells low-cost "Kodi" boxes in New Zealand that allow people to watch Sky-owned content on overseas services. Sky is seeking $1.4 million in damages. A date has yet to be set for a hearing.

All content copyright NBR. Do not reproduce in any form without permission, even if you have a paid subscription.