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Sky cuts losses, lifts sales

By Phil Boeyen, ShareChat Business News Editor

Wednesday 13th February 2002

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Pay broadcaster Sky Network Television (NZSE: SKY) is still losing money but is boasting record subscriber numbers and a low churn rate in its interim result.

In the six months ended December the company lost $13.19 million, a considerable improvement on the previous interim loss of $19.55 million.

Earnings before interest, tax, depreciation and amortisation were up strongly by 43.5% from $36.3 million to $52.1 million. Total sales were $141.5 million compared with $119.5 million previously.

Sky says strong subscriber growth was a highlight of the first half with its subscriber base reaching an all time high of at 443,000 at the end of December. Around one third are taking the company's digital service with the remainder on analogue.

An agreement with TelstraClear to carry Sky's programming is set to push subscriber numbers up even further, giving the company another 25,000 customers.

Sky says the churn rate, which measures the number of subscribers who disconnect their service, set a record low of 21.8% during the reporting period, down from the previous year's 22.9%. Net churn, calculated by removing subscribers that reconnect has also fallen to 14.4% compared to 17.1% in the prior year.

The company continued development of interactive services during the period and says pay-per-view remains the flagship of its interactive services with revenue of $4.8 million for the six-month period.

"Sky commenced the download of Open TV, Sky's interactive television operating system. Work is still on-going to resolve some outstanding software issues," the company says.

"Regardless of these problems, digital subscribers now have access to a new interactive program guide, weather and games, which has been well received. Over six thousand customers have signed on to the interactive games to date."

Majority shareholder Independent Newspapers (NZSE: INL) announced it was "very pleased" with Sky's positive result and says the company is on target to meet its objective of achieving break-even during the second half of calendar 2003.

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