Daily ShareChat: Sky TV

Thursday 24th June 2010

First NZ Capital analyst Sarndra Urlich says she is now more confident about the momentum behind Sky Network Television's recent subscriber growth trends.

"Based on our assumptions of a more supportive macro backdrop, combined with an 'affordability boost' driven by personal tax cuts, a continued benign competitive environment for some time, and an upcoming 'killer event' in the form of the 2011 Rugby World Cup (RWC), we believe that the outlook for subscriber growth will be positive over the medium term," Urlich says.

She is forecasting the year ending this month will have been a subdued one for subscribers but Sky will gain about 30,000 in 2011 and 41,000 the following year, which will be boosted by the RWC 'kicker.'

A key change to her assumptions is the mix of subscriber type.

"We are now assuming 45% MYSKYHDi subscribers as at full-year 2013 (previously 41%). Clearly, a higher weighting of MYSKYHDi subscribers at about $83 per month ARPU (average revenue per unit) has a positive revenue impact," she says.

News Corp's US$12 billion (NZ$17 billion) takeover offer last week for the 61% of Britain's BskyB pay TV operator is likely to support the sector over the near term but she doesn't believe News Corp is interested in taking out Sky's minorities. News Corp owns 44% of Sky.

Recommendation: Neutral (raised from underperform).

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