Sky Network Television Ltd · NZX:SKT
Sky Network Television — FY2008 Earnings Presentation
43 slides from Sky Network Television's earnings presentation, Oct 21, 2008
Slide 1: Sky Network Television Annual Results 2008
SKY NETWORK TELEVISION ANNUAL RESULTS 2008
Slide 2: John Fellet, CEO
SKY JOHN FELLET CEO
Slide 3: Subscribers
Subscribers 750,000 700,000 650,000 600,000 550,000 500,000 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 Jun-91 Jun-92 Jun-93 Jun-94 Jun-95 Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 UHF Satellite Wholesale MY SKY
Slide 4: Subscriber Growth
Subscriber Growth ‘000 2007 2008 % Change UHF Residential 53.7 31.1 (42.1%) DBS (Satellite) Residential 529.8 578.0 9.1% DBS Wholesale 114.0 120.2 5.4% Commercial/Other 13.7 19.3 40.9% Total Subscribers 711.2 748.6 5.3%
Slide 5: Subscribers Total Net Gain
Total Net Gain 50,000 45,000 48,102 Subscribers 40,000 43,941 42,566 35,000 39,642 37,365 30,000 33,711 25,000 20,000 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08
Slide 6: Moving Annual Churn
Jun-08 Dec-07 Jun-07 Dec-06 Jun-06 Moving Annual Churn Dec-05 Jun-05 Dec-04 Jun-04 Dec-03 Jun-03 Dec-02 Jun-02 Dec-01 Jun-01 Dec-00 Jun-00 Dec-99 Jun-99 Dec-98 Jun-98 32% 30% 28% 26% 24% 22% 20% 18% 16% 14% 12% 10%
Slide 7: 2008 Monthly Churn Split
2008 Monthly Churn Split 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% DBS (Satellite) UHF My Sky
Slide 8: Total Revenue
Total Revenue $700 $600 $500 $NZ millions $400 $659 $300 $619 $549 $441 $492 $200 $391 $100 $0 2003 2004 2005 2006 2007 2008 Year End 30 June
Slide 9: Total ARPU
Total ARPU $63.00 $62.00 $61.00 $60.00 $59.00 $62.10 $58.00 $57.00 $56.00 $60.50 $58.30 $NZ $55.00 $54.00 $53.00 $56.86 $52.00 $51.00 $50.00 $54.55 $49.00 $51.83 $48.00 $47.00 2003 2004 2005 2006 2007 2008
Slide 10: ARPU
ARPU $70.00 $66.12 $60.00 $64.88 $63.13 $50.00 $52.15 $50.88 $NZ $62.49 $48.39 $40.00 $46.27 $38.83 $39.68 $30.00 $39.51 $39.42 $20.00 Satellite UHF Wholesale 2005 2006 2007 2008
Slide 11: Additional Outlets
Additional Outlets 100,000 84,770 73,751 75,000 58,309 49,669 47,355 41,598 $NZ 50,000 25,000 0 2003 2004 2005 2006 2007 2008 UHF Satellte
Slide 12: Big Mac Index
Big Mac Index 32 24 BIG MAC's 16 8 0 Foxtel Sky TV (NZ) DIRECTV (US) BSkyB (UK) (Australia) 2004 2005 2006 2007 2008
Slide 13: 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 35 30 % Share of All NZ TV Viewing 25 20 15 10 5 0 Month Source: Nielsen TV Ratings, All New Zealanders 5+
Slide 14: Prime's Share
Prime’s Share 7.00% 6.50% 6.00% 5.50% 5.00% 4.50% 4.00% 3.50% 3.00% Aug Apr May Sep Jan Jun Jul Feb Oct Mar Nov Dec 2005/06 2006/07 2007/08 Source: Nielsen TV Ratings, All New Zealanders 25-54 Peak
Slide 15: Advertising Revenue
Advertising Revenue $70 $60 $27 $23 $50 $NZ millions $7 $40 $30 $40 $41 $20 $36 $40 $27 $10 $20 $0 2003 2004 2005 2006 2007 2008 Year End 30 June SKY PRIME
Slide 16: Viewerhours generated by Subscriber per annum
200 400 600 800 0 1000 1200 Dec-02 1400 Feb-03 Apr-03 Jun-03 Aug-03 Oct-03 Dec-03 Feb-04 Apr-04 Viewerhours Jun-04 Aug-04 Sport Oct-04 Dec-04 Feb-05 Apr-05 Jun-05 Aug-05 Oct-05 Movies Dec-05 Source: Nielsen TV Ratings, All New Zealanders 5+/SKY TV Feb-06 Apr-06 Jun-06 Aug-06 Oct-06 Dec-06 Feb-07 Apr
Slide 17: Programming Costs % Revenue
Programming Costs % Revenue 52% 50% 48% 46% 44% 42% 40% 38% 36% 34% 32% 43% 40% 30% 28% 34% 26% 32% 33% 32% 24% 22% 20% 2003 2004 2005 2006 2007 2008 Year End 30 June
Slide 18: EBITDA
EBITDA $300.0 $250.0 $200.0 $NZ millions $266.6 $150.0 $249.4 $247.7 $100.0 $219.9 $187.2 $150.8 $50.0 $0.0 2003 2004 2005 2006 2007 2008 Year End 30 June
Slide 19: Satellite Impact
Satellite Impact Finance Lease 2007 2008 Interest 0.8 0 Depreciation 5.1 0 5.9 0 Operating lease (9 months in 2007) 18.8 24.6
Slide 20: Net Profit/(Loss)
Net Profit/(Loss) $100.0 $90.0 $80.0 $70.0 $NZ millions $60.0 $97.7 $50.0 $77.9 $60.2 $40.0 $74.5 $30.0 $35.3 $20.0 $10.0 $0.0 $0.7 2003 2004 2005 2006 2007 2008 Year End 30 June
Slide 21: Dividend
DIVIDEND 14 12 10 8 cents 6 4 2 0 2006 2007 2008 Dividend CPS
Slide 22: Dividend
DIVIDEND The SKY Board has declared a fully imputed final dividend of 7.0 cps. Record date is 5 September 2008. Payment date is 12 September 2008. Total dividend for the year is 14.0 cps
Slide 23: Jason Hollingworth, CFO
SKY JASON HOLLINGWORTH CFO
Slide 24: Capital Expenditure
Capital Expenditure $120 $100 $NZ millions $80 $60 $119.5 $40 $86.1 $86.8 $81.4 $76.0 $57.4 $20 $0 2003 2004 2005 2006 2007 2008 Year End 30 June (excluding transponders and Prime assets)
Slide 25: Capital Expenditure Analysis
Capital Expenditure Analysis $ NZ million 2007 2008 %Change Subscriber Equipment 62.0 62.6 1.0% Studio Upgrade 12.3 42.6 246.3% Building 2.2 2.7 22.7% Other 4.9 11.6 136.7% Total Capital Expenditure 81.4 119.5 46.8%
Slide 26: DBS (Satellite) Install Costs
DBS (Satellite) Install Costs $900 $800 $719 $700 $512 $487 $454 $506 $600 $439 $500 $NZ $400 $300 $200 $100 $0 2003 2004 2005 2006 2007 2008 Decoder Material/Labour
Slide 27: Results Summary
Results Summary $NZ Million 2007 2008 % Change Revenue 618.5 658.8 6.5% Operating Expenses 369.2 392.2 6.2% EBITDA 249.3 266.6 6.9% Depn & Amort 85.0 78.0 (8.2%) EBIT 164.3 188.6 14.8% Interest 46.4 44.3 (4.5%) Tax 39.9 46.4 16.3% Other 0.2 0.2 0% Net Profit after Tax 77.8 97.7 25.6%
Slide 28: Revenue Analysis
Revenue Analysis $NZ million 2007 2008 % Change Residential satellite subscriptions 433.4 476.3 9.9% Other subscriptions 88.1 85.9 (2.5%) Installation 20.9 16.1 (23%) Advertising 63.4 66.5 4.9% Other income 12.6 14.1 11.9% Total Revenue 618.5 658.8 6.5%
Slide 29: Expense Analysis
Expense Analysis $million 2007 2008 % Change Programme rights 166.6 169.5 1.7% Programme operations 38.0 40.2 5.8% Subscriber management 41.7 45.1 8.2% Sales and marketing 37.4 39.8 6.4% Advertising 18.7 19.8 5.9% Broadcasting and infrastructure 51.4 61.5 19.6% Depreciation and amortisation 84.9 78.
Slide 30: Cash Flow Analysis
Cash Flow Analysis $NZ Million 2007 2008 Capex 83 108 30% Debt reduction 79 30 (62%) Dividend 39 52 33% Cash inc/(dec) (26) 2 (108%) Operating Cash Flow 175 192 10%
Slide 31: Prime Financials
Prime Financials $NZ Million 2007 2008 Revenue 23.0 27.0 Rights 10.5 11.8 Operations 5.2 4.4 Program Costs 15.7 16.2 Margin 7.3 10.8
Slide 32: Foreign Currency Hedging
Foreign Currency Hedging • Sky’s hedging positions at 30 June 2008 • 94% hedged for 0 -12 months $US exposures @ .6769 • 56% hedged for 13-24 months $US exposures @ .6672 • 49% hedged for 25-36 months $US exposures @ .6715 • 94% hedged for 0 -12 months $A exposures @ .8612 • 74% hedged for 13-24 mon
Slide 33: MYSKY HDi Financial Assumptions
MYSKY HDi Financial Assumptions Our working assumptions for FY 08/09 are: • Monthly box rental $15 or one-off $599 • HD ticket $10/month • Multiroom $25/month (including free HD ticket) • Target 80,000 new MYSKY HDi boxes • 15% upfront, 85% pay monthly • 10% to new subscribers, 90% to existing subsc
Slide 34: Pro forma Impact
Pro forma Impact FY09 FY10 Capex $million $million Decoder Capex 40 43 MySKY HDi Installs 12 13 Depreciation Base depreciation 71 75 MySKY HDi 7 19 78 94 P&L Impact MySKY HDi revenues 17 31 Incremental Opex 8 10 EBITDA 9 21 Depreciation 7 19 EBIT 2 2
Slide 35: MY SKY
MY SKY MY SKY MY SKY HD Access MY SKY HDi & HDi Ticket Multiroom Installed 25,137 4,517 35% 92% Pending 135 8,597 46% 93% Total 25,272 13,114 42% 93%
Slide 36: John Fellet, CEO
SKY JOHN FELLET CEO
Slide 37: Slide 37
Slide 38: Guidance
GUIDANCE
Slide 39: How appropriate is the level of gearing?
How appropriate is the level of gearing? Ratio Too Ratio just Right Ratio Too Low High Sky Network Ross Carmichael Singer (NZ) Pty Limited, April 2008
Slide 40: SKY Highlights
SKY Highlights 1. 6 new channels Crime & Investigation Vibe CNBC SKY Movies Greats SKY Sport Highlights Fashion TV 2. SKY Online launched 3. SKY Sport Magazine 4. Netball World Champs Nov 2007 5. Inaugural ANZ Championship 6. Screen Enterprises (Fatso, DVD Unlimited,Movieshack) 7. MYSKY
Slide 41: SKY Online
SKY Online Live streaming and content download via broadband internet Available now: •35 top Movies SKY Movies, MGM, Rialto •Cartoon Network •Discovery Channel •The Box •Air New Zealand Cup •200 sporting downloads Netball, Cricket, Rugby
Slide 42: 2008 Key Messages
2008 Key Messages • Net profit of $97.7m, up 26% • Subscriber numbers up 5.3% to 748.6 • ARPU up 2.6% to $62.10, DBS ARPU up 1.9% to $66.12 • Churn increased from 13.4% to 14.9% • SKY share of total television viewing up from 25% to 28%
Slide 43: Sky Network Television Annual Results 2008
SKY NETWORK TELEVISION ANNUAL RESULTS 2008
Sky Network Television — FY2008 Earnings Presentation on 6ix