Big drop in Sky subscribers

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radomatic

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#1569757 10-Jun-2016 20:55

tdgeek:

Can you explain the 400 million profit vs the reported loss?

Page 22 of their slides is a great place to look. NZ Herald link to them here otherwise here they are on Document Cloud.

It places Vodafone NZ's underlying EBITDA (a fuzzy ish measure) at $463 million, their EBITDA after one-off costs are taken into account at $445 million, and their EBIT at $56 million. It doesn't reveal the profit number, but we know what that is from other releases. There is a fair amount of financial engineering going here to take $463 million EBITDA down to a $120 million loss.

I believe this is primarily to do with how their debt and relationships with the parent companies are structured. This is isn't revealed in the slides. Though I do recall a good analysis on NBR. It's behind a pay wall so I can't look it up right now. I will take another look once I'm back at work and see if I can find it.

This is not to say VFNZ is a cash cow - a loss is a loss. But there is more to it than you might think and the underlying profit is certainly there.

ockel

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#1617939 26-Aug-2016 15:33

Oh my. It was a whopper of a drop wasnt it? A big drop in Sky subscribers. From 851,561 in June 15 to 852,679 in June 16. I still make that a drop of 0%.

So Sky management expected 830,000 subscribers at year end with that being a drop of 20,000 subscribers (being a loss of 45,000 core satellite subscribers offset by a gain of 25,000 of Neon/FanPass).

So either it didnt lose as many satellite subscribers as expected or it added more Neon/FanPass subscribers than expected.

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#1617943 26-Aug-2016 15:37

The post Olympic period will be interesting

Here is a crazy notion, lets give peace a chance.

tdgeek

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#1617959 26-Aug-2016 16:01

ockel:

Oh my. It was a whopper of a drop wasnt it? A big drop in Sky subscribers. From 851,561 in June 15 to 852,679 in June 16. I still make that a drop of 0%.

So Sky management expected 830,000 subscribers at year end with that being a drop of 20,000 subscribers (being a loss of 45,000 core satellite subscribers offset by a gain of 25,000 of Neon/FanPass).

So either it didnt lose as many satellite subscribers as expected or it added more Neon/FanPass subscribers than expected.

If the revenue rose by a teeny fraction and the subscribers rose by a teeny fraction, the ARPU seems to be stable. The 14% drop in profit was higher costs, probbaly all content payments?

ockel

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#1617967 26-Aug-2016 16:16

tdgeek:

ockel:

Oh my. It was a whopper of a drop wasnt it? A big drop in Sky subscribers. From 851,561 in June 15 to 852,679 in June 16. I still make that a drop of 0%.

So Sky management expected 830,000 subscribers at year end with that being a drop of 20,000 subscribers (being a loss of 45,000 core satellite subscribers offset by a gain of 25,000 of Neon/FanPass).

So either it didnt lose as many satellite subscribers as expected or it added more Neon/FanPass subscribers than expected.

If the revenue rose by a teeny fraction and the subscribers rose by a teeny fraction, the ARPU seems to be stable. The 14% drop in profit was higher costs, probbaly all content payments?

Yep, content costs up big 12% (or $35m) yoy. Broadcasting and infrastructure are up $4.8m "due to increased internet delivery costs for on demand content and OTT products (NEON, FANPASS)."

The 14% drop in profit includes $13.4m of Vodafone merger related costs. Adjusting for this profit dropped by 9.6%.

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tdgeek

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#1617976 26-Aug-2016 16:36

ockel:

tdgeek:

ockel:

Oh my. It was a whopper of a drop wasnt it? A big drop in Sky subscribers. From 851,561 in June 15 to 852,679 in June 16. I still make that a drop of 0%.

So Sky management expected 830,000 subscribers at year end with that being a drop of 20,000 subscribers (being a loss of 45,000 core satellite subscribers offset by a gain of 25,000 of Neon/FanPass).

So either it didnt lose as many satellite subscribers as expected or it added more Neon/FanPass subscribers than expected.

If the revenue rose by a teeny fraction and the subscribers rose by a teeny fraction, the ARPU seems to be stable. The 14% drop in profit was higher costs, probbaly all content payments?

Yep, content costs up big 12% (or $35m) yoy. Broadcasting and infrastructure are up $4.8m "due to increased internet delivery costs for on demand content and OTT products (NEON, FANPASS)."

The 14% drop in profit includes $13.4m of Vodafone merger related costs. Adjusting for this profit dropped by 9.6%.

Makes sense. The higher content would have been RWC, perhaps some more or newer content. maybe Fanpass added some content costs for extra rights?

But you would have to say that the slide and doom is having not a great deal of traction. Its making a difference but not that much difference yet.

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ockel

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#1617977 26-Aug-2016 16:39

RWC plus the SANZAR rights renewal which commenced in Jan 2016. For 2017 it'll be the cost of the Olympics - again probably not insubstantial.

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#1617979 26-Aug-2016 16:53

Can we be done with long unnecessary quotes?

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#1617980 26-Aug-2016 16:55

Fortunately I don't care what happens to Sky. I have found better alternatives for everything that interests me. Maybe even they will realise that the greed model is unsustainable in the long run. There do seem to be some signs of halting efforts to accommodate their viewers a little more, however grudgingly. Or maybe they will hold out until the bitter end and just dry up and blow away. It doesn't really matter. There is demand and that means there is a market. If Sky doesn't make the necessary changes to remain relevant to that market, someone else will. Thank goodness for competition. Thank goodness for global streaming.

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ockel

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#1617992 26-Aug-2016 17:42

Rikkitic:

Fortunately I don't care what happens to Sky. I have found better alternatives for everything that interests me. Maybe even they will realise that the greed model is unsustainable in the long run. There do seem to be some signs of halting efforts to accommodate their viewers a little more, however grudgingly. Or maybe they will hold out until the bitter end and just dry up and blow away. It doesn't really matter. There is demand and that means there is a market. If Sky doesn't make the necessary changes to remain relevant to that market, someone else will. Thank goodness for competition. Thank goodness for global streaming.

And there you have it. Competition has delivered you from 2 sleepy state-owned deliverers of content to more than 80 channels across a range of ad-funded and subscription methods. Over 30 years of development and change.

And while it doesnt suit you - it clearly suits 850,000 subscribers.

It might take 10 or 20 or 30 more years to evolve to the next stage of content delivery. FTA still makes money collectively. What will happen with internet-delivered content? Will Netflix look like TVNZ or Sky as the dominant player? Will Lightbox or Neon be the new Mediaworks or Prime (marginal and unprofitable)?

Better a market that can develop by itself than one heavily regulated and protecting industries that shouldnt survive if they cant survive by themselves.

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#1617993 26-Aug-2016 17:47

Rikkitic:

Fortunately I don't care what happens to Sky. I have found better alternatives for everything that interests me. Maybe even they will realise that the greed model is unsustainable in the long run. There do seem to be some signs of halting efforts to accommodate their viewers a little more, however grudgingly. Or maybe they will hold out until the bitter end and just dry up and blow away. It doesn't really matter. There is demand and that means there is a market. If Sky doesn't make the necessary changes to remain relevant to that market, someone else will. Thank goodness for competition. Thank goodness for global streaming.

Agree. There is competition, so there really isn't an issue. Sky has made some changes, such as streaming, options for non Sky subscribers, so they are clearly relevant as they increased revenue and subscriber numbers.

If Sky has a greed mode, then so does every other company that makes a fair and standard profit based on assets employed, so thats no argument.

The way I see it, there are many players, all have customers, so there isn't a problem at all, choices for everyone.

The comments I love are those that ditched Sky and don't miss it. That makes me chuckle every time

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#1618006 26-Aug-2016 18:02

I think I have managed to convince a good friend, a sports nut, to drop Sky. And I convinced a taxi driver last week. My quest continues.

JimmyH

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#1618013 26-Aug-2016 18:07

I don't have any issue with "greed" or them trying to maximise profit. That's normal corporate behavior, and what I would expect of the Board if I was a shareholder.

I am puzzled by a number of their moves that seem to annoy subscribers for no apparent reason, and their really, really poor customer service.

Their issue now seems to be that they have a somewhat antiquated model, in a world that is rapidly changing (particularly the evolution of lower-cost streaming services and the breakdown of georestrictions), and they don't seem to know how to respond. If other providers start to snaffle a few key sports events, which at the moment is Sky's real marketplace advantage, they will be in serious trouble.

tdgeek

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#1618022 26-Aug-2016 18:18

JimmyH:

I don't have any issue with "greed" or them trying to maximise profit. That's normal corporate behavior, and what I would expect of the Board if I was a shareholder.

I am puzzled by a number of their moves that seem to annoy subscribers for no apparent reason, and their really, really poor customer service.

Their issue now seems to be that they have a somewhat antiquated model, in a world that is rapidly changing (particularly the evolution of lower-cost streaming services and the breakdown of georestrictions), and they don't seem to know how to respond. If other providers start to snaffle a few key sports events, which at the moment is Sky's real marketplace advantage, they will be in serious trouble.

Your right. But I dont have an issue with their model. Its reliable, the HD is great, no buffering. It just works, and thats a big deal to many of the masses. I use NF and LB and I find the klutzing around a bit annoying. On one of them my shows are at the bottom, as they focus on trending and such like. I dunno how the lower cost streaming ones will go. Many users will have to buy a few, as the content gets fragmented, especially if you need to buy one for one show that you love. Im surprised Sky hasn't voiced some hints of their future in streaming. But on the other hand there hands are tied for a couple of years re Optus. Despite all the gloom, and the awesome Stuff comments, you'd have to say they are doing surprisingly well. Tall Poppy Syndrome in my opinion. I drive a Hinda, but I have no desire to pick holes in Fords. Competition is here and here aplenty, thats what everyone wanted, so its sorted. Sky is just one player of many, with the same exclusives that all of them have as part of their differentiation. The only thing of any noise now, is what they will do when the satellite term comes up for renewal.

ockel

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#1618024 26-Aug-2016 18:23

JimmyH:

I don't have any issue with "greed" or them trying to maximise profit. That's normal corporate behavior, and what I would expect of the Board if I was a shareholder.

I am puzzled by a number of their moves that seem to annoy subscribers for no apparent reason, and their really, really poor customer service.

Their issue now seems to be that they have a somewhat antiquated model, in a world that is rapidly changing (particularly the evolution of lower-cost streaming services and the breakdown of georestrictions), and they don't seem to know how to respond. If other providers start to snaffle a few key sports events, which at the moment is Sky's real marketplace advantage, they will be in serious trouble.

You mean snaffle ummmm - english premier league? Or PGA golf? Or French rugby? Been there done that - killed off by Spark as unprofitable (and it has deep enough pockets dont you think?).

By the time the next key sport event rolls around the world will be different again. Or not. But for everyone having a discussion about these things that next key sports event seems like a millenium away in this fast-paced world.

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