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Sky TV's profit drops 15 per cent

NZ NewswireNZ Newswire 25/08/2016 Pattrick Smellie

Sky Network Television has reported a 15 per cent fall in tax-paid profit for the year to June 30 of $146.7 million, although the drop is partly thanks to Vodafone merger costs.

Some $14.4m of one-off costs incurred in relation to the planned merger, which is structured as a takeover of Vodafone NZ by Sky, came straight off the bottom. Underlying profit of $157m compares with a $171.8m net profit in the previous year.

The other major source of additional cost during the year was for programming, chief executive John Fellet said in a letter to shareholders released with financial statements to the NZX.

"In a lot of industries, competition normally results in a price war," he said. "In the content industry, it becomes an arms race."

The broadcaster increased subscriber numbers over the year to 852,679, although customer churn rose to 17.5 per cent from 14.5 per cent.

Revenues were flat at $928.2m, a 0.1 per cent increase on the previous year.

The company declared a final dividend of 15 cents per share.

Mr Fellet acknowledged that "the launch of numerous new business models" for broadcast content has "challenged incumbent players both in New Zealand and around the world".

The shares last traded at $4.69, up 2.2 per cent so far this year.

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