On the back of lower-than-expected financial guidance for 2013, pay-TV company Sky confirms Olympics coverage was an "expensive lesson" costing millions of dollars.
Investors reacted strongly, with Sky shares (NZX: SKT) dropping 24 cents, or almost 5%, to $5.01 this morning, after starting the year at $5.30.
Sky Network Television, which is controlled by Rupert Murdoch's News Corp, reported a 3% lift in annual profit today.
Sky ceo John Fellet said in a post-result briefing the deal to cover the London Olympics was done in 2007, when advertising revenue and subscriber numbers were trending up.
While Prime had record viewer figures, and the Olympics were the best viewed since the time-zone friendly Sydney Games in 2000, he says they were an "expensive lesson".
"In hindsight, we over-committed to the event."
Sky, which had 10 Olympics-dedicated channels for London, might even bow out for the Rio de Janeiro Games should the numbers not stack up, he says.
"If we're unable to find a favourable outcome we'll pass on it next time."
The average analysts' predictions for FY13 leading into today were EBITDA $359 million and NPAT of $138 million.
However, Sky's guidance is EBITDA between $335 million and $340 million and NPAT $120 million and $125 million.
Mr Fellet says 50% to 75% of the difference between analysts' expectations and Sky's guidance was down to the Olympics.
David Williams
Fri, 24 Aug 2012
Fri, 24 Aug 2012
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