INL and Sky TV report results below market expectations

By NZPA

Thursday 15th August 2002

Independent Newspapers Ltd (INL) and its 66 percent subsidiary Sky TV both reported results below market expectations today.

INL, 44 percent owned by Rupert Murdoch's Newscorp, posted a June year net profit of $37.8 million compared with $26.1 million a year ago. Analysts had picked a profit of $46 million.

Sky TV reported a loss of $30.17 million compared with $42.3 million the year before, higher than the predicted loss of $27 million.

Chairman Ken Cowley said INL would concentrate in the current year in improving margins which dropped during the year just completed from 23.2 percent to 22.6 percent.

However, he said the margins on ebitda (earnings before interest, tax, depreciation and amortisation) had risen 0.9 percent if Wellington was excluded.

"We have addressed this underperformance in Wellington with our decision to merge the two Wellington daily newspapers into the Dominion Post," he said.

Since the merger, the new paper had seen daily sales of more than 100,000.

Total costs had increased by 1.8 percent ($7.8 million), largely due to an increase in newsprint costs and circulation (2.3 percent).

Advertising revenue across the group was up by 2.3 percent ($7.7 million).

Despite funding a $36 million share buyback, INL's debt from the publishing division fell $10 million to $452 million due to strong operating publishing cashflows (up $5 million), reduced capital expenditure (down $5 million) and sharply lower income tax expense because of the transfer of Sky TV's tax losses on consolidation.

INL's outgoing chief executive Tom Mockridge said the overall result was that INL had funded an increase in its investment in Sky TV while increasing net profit by 45 percent.