Sky Television, New Zealand’s pay-TV monopoly, has been forced to lift the cost of its basic general and sports package to offset higher sports rights and a sharp fall in subscriber numbers. Tens of thousands of subscribers quit its basic pay-TV services by June 30 for internet-based streaming services. The “cord cutting” has come at a time when Sky has been forced to pay more for NRL (rugby league), rugby union and cricket rights. The update earlier this month had the shares fall 13% in a day, which took the loss for the past year to more than 36%.
The company forecast it would have 830,000 subscribers at the end of its financial year on June 30. Subscriber numbers dropped 1.5% last financial year to 851,561. It expects to lose 45,000 core residential pay-TV subscribers this year (to June 30) and gain about 25,000 subscribers for its online services such as Neon and FanPass, which have a lower monthly cost and generate less revenue per subscriber. In reaction, Sky yesterday lifted the cost of its Sky Basic pay-television service by 69 NZ cents a month and Sky Sports by NZ$1.61 a month. This is an attempt to recover higher content costs of NZ$30 million a year.
But Sky’s problems are not peculiar to it. Fairfax and APN are talking about merging their NZ newspaper interests into one group once APN has spun off its operations (including its Kiwi radio interests) by the end of June. TVNZ says the outlook for advertising growth is weak and MediaWorks, which operates a free-to-air TV commercial channel, is struggling.
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