Sky Network Television Ltd · NZX:SKT
Sky Network Television — FY2004 Earnings Presentation
35 slides from Sky Network Television's earnings presentation, 2004
Slide 1: Sky Network Television Annual Results 2004
SKY NETWORK TELEVISION ANNUAL RESULTS 2004
Slide 2: Subscribers
Jun-04 Jun-03 Wholesale Jun-02 Jun-01 Jun-00 Jun-99 Jun-98 DBS (Satellite) Jun-97 Jun-96 Jun-95 Jun-94 Jun-93 UHF Jun-92 Subscribers Jun-91 0 500,000 400,000 300,000 200,000 100,000
Slide 3: Subscriber Growth
Subscriber Growth ‘000 2003 2004 % Change UHF Residential 117.7 91.3 (22.4%) DBS (Satellite) Residential 340.3 394.2 15.8% DBS Wholesale 78.0 83.9 7.6% Commercial 6.9 7.2 4.3% Total Subscribers 542.9 576.6 6.2%
Slide 4: Moving Annual Churn
Jun-04 Feb-04 Oct-03 Jun-03 Feb-03 Oct-02 Jun-02 Feb-02 Oct-01 Jun-01 Feb-01 Oct-00 Moving Annual Churn Jun-00 Feb-00 Oct-99 Jun-99 Feb-99 Oct-98 Jun-98 32% 30% 28% 26% 24% 22% 20% 18% 16% 14% 12% 10%
Slide 5: Monthly Churn
Monthly Churn 2.50% 2.00% 1.50% 1.00% ec ct n r b n v ug ar p ay l Ju Ap No Fe Se Ja Ju O M D M A 2002 2003 2004 2005
Slide 6: 2004 Monthly Churn Split
2004 Monthly Churn Split 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% ec ct n r b n v ug ar p ay l Ju Ap No Fe Se Ja Ju O M D M A DBS (Sa te llite ) UHF
Slide 7: Subscriber Viewer Hours per Day
Subscriber Viewer Hours per Day 4.50 4.00 3.50 3.00 2.50 2.00 c ct n r b n v g ar p ay l Ju Ap De No Fe Se Ja Ju Au O M M 2003 2004
Slide 8: Sky's Share of All Television Viewing is Growing
Sky’s Share of All Television Viewing is Growing. % Share of viewing in all NZ Homes All Sky TV 12 Month Moving Average 25 % Share of All NZ TV 20 Viewing 15 10 5 0 00 01 02 03 04 9 0 1 2 3 -9 l-0 l-0 l-0 l-0 n- n- n- n- n- l Ju Ju Ju Ju Ju Ja Ja Ja Ja Ja Month Source: Nielsen TV Ratings/TVMap, All
Slide 9: Sky now attracts more viewing than TV3 in all NZ homes
Sky now attracts more viewing than TV3 in all NZ homes % Share of viewing in all NZ Homes 35 30 % Share of all NZ TV Viewing ALLSKY 25 C4 20 PRIME 15 TV1 TV2 10 TV3 5 0 Ja 03 Fe 04 M -04 D 03 M 04 A 04 04 Se 03 Ju 04 N -03 O 03 A -03 - b- - n- - - p- n- - ec ct ov pr ug ar ay l Ju 12 Month Moving Av
Slide 10: Sky's average audience has increased by 36%
Sky’s average audience has increased by 36% in the last 12 months at the expense of TVNZ & Canwest % Change in average audience on base year Jul 02 – Jun 03 40% 30% % Change on Base Year 20% ALLSKY 10% C4 PRIME 0% TV1 -10% TV2 -20% TV3 -30% -40% Ja 03 Fe 04 M -04 D 03 M 04 A 04 04 Se 03 Ju 04 N -03
Slide 11: Viewer hours generated per subscriber
Viewer hours generated per subscriber 850 Sport 800 Movies 750 Pass Through 700 650 600 550 500 450 400 350 Fe 2 Fe 3 Ju 3 Ju 4 A 02 A 3 A 03 A 4 04 O 2 D 2 O 3 D 3 -0 -0 0 0 -0 -0 -0 -0 -0 -0 - b- n- b- n- ec ec ct ct pr pr n ug ug Ju Source: Nielsen/TVMap , 12 month moving average, Digital Subs &
Slide 12: Monthly Net Gain Comparison
Monthly Net Gain Comparison 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 -1,000 -2,000 c ct n r b n ov ug ar p ay l Ju Ap De Fe Se Ja Ju O M M N A 2003 2004
Slide 13: Total Revenue
Total Revenue $450 $400 $350 $NZ millions $300 $250 $441 $200 $391 $345 $150 $262 $300 $236 $100 $50 $0 1999 2000 2001 2002 2003 2004 Year End 30 June
Slide 14: Total ARPU
Total ARPU $55.00 $54.00 $53.00 $54.55 $52.00 $NZ $51.00 $50.00 $49.00 $51.83 $48.00 $50.14 $47.00 2002 2003 2004
Slide 15: ARPU
ARPU $60.00 $61.33 $59.35 $50.00 $56.56 $NZ $40.00 $41.86 $40.68 $36.94 $30.00 $42.06 $40.36 $36.09 $20.00 Satellite UHF Wholesale 2002 2003 2004
Slide 16: Big Mac Index
Big Mac Index 32 24 BIG MAC's 16 8 0 Foxtel Sky NZ Direct TV BSkyB 2003 2004
Slide 17: Advertising Revenue
Advertising Revenue $30 $25 $NZ millions $20 $15 $26.6 $16.5 $19.6 $10 $11.6 $12.6 $10.7 $5 $0 1999 2000 2001 2002 2003 2004 Year End 30 June
Slide 18: Programming Costs % Revenue
Programming Costs % Revenue 52% 50% 48% 46% 44% 50% 47% 48% 42% 44% 43% 40% 40% 38% 1999 2000 2001 2002 2003 2004 Year End 30 June
Slide 19: EBITDA
EBITDA $200.0 $180.0 $160.0 $140.0 $NZ m illions $120.0 $100.0 $187.2 $150.8 $80.0 $60.0 $108.2 $40.0 $73.7 $74.1 $75.7 $20.0 $0.0 1999 2000 2001 2002 2003 2004 Year End 30 June
Slide 20: Capital Expenditure
Capital Expenditure $160 $140 $120 $NZ millions $100 $80 $153.3 $60 $114.7 $103.3 $105.9 $40 $86.1 $57.4 $20 $0 1999 2000 2001 2002 2003 2004 Year End 30 June (excluding transponders)
Slide 21: Net Profit/(Loss)
Net Profit/(Loss) $40.0 $30.0 $20.0 $35.3 $NZ m illions $10.0 $0.0 $4.5 $0.7 -$10.0 -$27.0 -$30.2 -$20.0 -$42.3 -$30.0 -$40.0 -$50.0 1999 2000 2001 2002 2003 2004 Year End 30 June
Slide 22: Results Summary
Results Summary $NZ million 2003 2004 % Change Revenue 391.3 440.6 12.6% Operating Expenses 240.5 253.4 5.4% EBITDA 150.8 187.2 24.1% Depn & Amort 124.1 128.1 3.2% EBIT 26.7 59.1 121.3% Interest 28.0 22.2 (20.7%) Other (2.0) 1.6 (180.0%) Net Profit after Tax 0.7 35.3 4942.9%
Slide 23: Free Cash Flow
Free Cash Flow $NZ million 2003 2004 % Change Net Operating Cash Flow 128.0 170.7 33.4% Net Investing Cash Flows (96.0) (52.9) (44.9%) Free Cash Flow 32.0 117.8 268.1%
Slide 24: Revenue Analysis
Revenue Analysis $NZ million 2003 2004 % Change Residential 309.1 346.7 12.2% Commercial 22.3 25.4 13.9% Sky Watch 6.8 8.1 19.1% Advertising 19.6 26.6 35.7% Installation, programming sales & 33.5 33.8 0.9% other Total Revenue 391.3 440.6 12.6%
Slide 25: Expense Analysis
Expense Analysis $ million 2003 2004 % Change Programming 168.1 175.8 4.6% Subscriber Management 13.7 17.6 28.5% Transmission 7.0 7.0 0% Selling, General & Administration 49.7 54.7 10.1% Depreciation & Amortisation 124.1 128.1 3.2% Total Operating Expenses 362.6 383.2 5.7%
Slide 26: Programming Expense Analysis
Programming Expense Analysis $ millions 2003 2004 %Change Rights 134.4 137.4 2.2% Production 16.3 20.9 28.2% Other 17.4 17.5 0.6% Total 168.1 175.8 4.6%
Slide 27: Programming Expense Analysis
Programming Expense Analysis 2004 NZ$ % US$ % First Half 67.7 49.3% 27.9 49.8% Second Half 69.7 50.7% 28.1 50.2% Total Rights Cost 137.4 56.0 2003 NZ$ % US$ % First Half 63.4 47.2% 25.2 48.4% Second Half 71.0 52.8% 26.9 51.6% Total Rights Cost 134.4 52.1
Slide 28: Foreign Currency Hedging
Foreign Currency Hedging Q Sky’s hedging positions at 30 June 2004 • 91% hedged for 0 -12 months $US exposures @ .550 • 48% hedged for 13-24 months $US exposures @ .559 • 29% hedged for 25-36 months $US exposures @ .584 • 94% hedged for 0 -12 months $A exposures @ .892 • 69% hedged for 13-24 months
Slide 29: Tax
Tax • Tax Assets of NZ$42.6m not recognised - timing 7.2 - losses carried forward 1.8 - INL offset 33.6 $42.6 • Sky to utilise INL offset in 2005, will fund Sky provisional tax payments. • Sky will receive imputation credits for payment recognition of INL receipts, will offset tax expense in 2005 DR
Slide 30: Capital Expenditure Analysis
Capital Expenditure Analysis $ million 2003 2004 % Change Transponder Lease 19.7 0.0 (100%) Subscriber Equipment 74.4 52.7 (29.2%) Digital Expansion 1.5 2.2 46.7% Interactive Applications 0.7 0.2 (71.4%) Right of renewal 7.6 0.0 (100%) Other 1.9 2.3 21.1% Total Capital Expenditure 105.8 57.4 (45.7%)
Slide 31: DBS (Satellite) Decoder Stock
DBS (Satellite) Decoder Stock Opening decoders 50,224 (including 25,748 broken) Add purchases 48,902 Less written off (3,083) Less installed at customer (68,012) Net movement for the year (22,193) Closing decoders 28,031 (including 11,604 broken)
Slide 32: DBS (Satellite) Install Costs
DBS (Satellite) Install Costs $803 $719 $900 $512 $800 $700 $452 $600 $500 $NZ $400 $300 $200 $100 $0 2002 2003 2004 2005 Forecast Decoder Material/Labour
Slide 33: 2004 Key Messages
2004 Key Messages • Net profit of $35.3m, a $34.6m improvement • Operating cash flow up 34% to $171m • Free cash flow improved by $86m to $118m • Subscriber numbers up 6.2% to 576,602. • ARPU up 5.2% to $54.55, DBS ARPU up 3.3% to $61.33 • Churn down 2.9% to 17.1%
Slide 34: Subscription DVD Service
Subscription DVD Service A web based DVD rental service that ensures customers have the ability to watch unlimited movies each month with no due dates, no late fees and no delivery or return fees. How it works.. Sign up and Receive DVD’s Keep DVD’s as Return order films by mail – free long as you DV
Slide 35: Sky Network Television Annual Results 2004
SKY NETWORK TELEVISION ANNUAL RESULTS 2004
Sky Network Television — FY2004 Earnings Presentation on 6ix