Sky TV Profit Drops Amid Economy & Disruption, Shares Rise
Table of Contents
Resilient Performance Amidst Challenges
Sky New Zealand is demonstrating resilience in a challenging economic climate, maintaining a positive outlook despite recent hurdles. While reporting a 2.1% decrease in revenue to $750.7 million and a 3% dip in EBITDA to $148 million,the company is focused on strategic initiatives and delivering value to shareholders.
Dividend Commitment and Strategic Wins
despite the economic pressures, Sky has reaffirmed its commitment to shareholders, declaring a full-year dividend of 22 cents per share – a slight increase from the previous year and exceeding both guidance and analyst expectations. Notably, the company is on track to double its dividend from 2023 levels to at least 30 cents per share by FY2026, representing a 36% year-over-year increase. A recently finalized rugby deal and this dividend commitment were highlighted as key achievements.
Sky faced significant disruption earlier in the year due to delays with its satellite replacement, the D2, managed by partner Optus. The company was forced to temporarily shift customers, incurring direct costs of $4.4 million. However, Sky anticipates these costs will be largely offset by approximately $8 million in compensation from Optus by the end of FY2026. The impact of the disruption was felt, but the company is working to mitigate its effects.
Customer Trends: Shifting Preferences
Sky is observing evolving customer behavior. While traditional sky Box and Sky Pod subscriptions decreased from 479,000 to 448,000, streaming services are gaining traction. Sky Sport Now subscriptions increased from 125,000 to 150,000, and Neon, Sky’s entertainment streaming platform, saw a modest increase to 259,000 subscribers. This shift reflects a broader trend towards on-demand and digital content consumption.
| Platform | FY2024 Subscribers | FY2025 Subscribers | Change |
|---|---|---|---|
| Sky Box/Pod | 479,000 | 448,000 | -31,000 |
| Sky Sport Now | 125,000 | 150,000 | +25,000 |
| Neon | 258,000 | 259,000 | +1,000 |
Broadband Growth, But Revenue Per User declines
Sky Broadband continues to expand its customer base, growing from 26,000 to 51,000 subscribers. However, average monthly revenue per customer decreased from $75.05 to $70.31, resulting in overall revenue growth of $28 million to $37 million. This suggests a focus on acquiring subscribers, possibly through competitive pricing strategies.
Economic Pressures and Delayed Initiatives
The challenging economic surroundings is a significant headwind, with Kiwi households facing increasing financial pressure. Sky anticipates these conditions will persist, particularly in the first half of the financial year. as a result, the company has delayed some planned initiatives, including the rollout of dynamic ad insertion on Sky Go and further development of Ultra high Definition (UHD/4K) content.
Discovery NZ integration Progressing
Sky is currently integrating Discovery NZ (now known as Sky Free), a process expected to take 12 to 18 months. Initial assessments have been positive, with no unexpected issues identified. The company will provide a more detailed update with its first-half FY2026 results.