Sky Network Television Limited Analysis

Overview

The company was formed in 2005 to facilitate the merger of listed companies Sky Network Television Ltd and Independent Newspapers Ltd (which held 78.4% of Sky). Under the merger scheme, MergeCo was to acquire all of the shares in INL and all of the Sky minority shares. INL and Sky would then be amalgamated into MergeCo to create a single listed entity for the Sky business. MergeCo then would be renamed "Sky Network Television Ltd" and conduct Sky's existing and ongoing business. For each Sky share, holders received one ordinary share in MergeCo and $1.28 cash. For each INL share, holders received 0.8360 of an ordinary share in MergeCo and $1.78 cash.

SKT dervies the majority of its revenue through residential satellite subscriptions with other revenue coming from UHF subscriptions, other types of SKY subscription, installation and advertising.

Performance

The following information was extracted from Sky Network Television Limited's half year results, released 21 February 2025

Sky’s first half result includes several one-off items that mask a more positive underlying performance of the business. They include satellite migration (largely cash neutral by FY26), accelerated content amortisation and lease modification (both non-cash), and organisational transformation. It is therefore appropriate to discuss the underlying numbers when assessing Sky’s first half performance against H1 FY24.

Revenue at $385 million is 2% lower against a particularly strong comparator. While churn levels of Sky Box customers have reduced compared with H2 FY24, some softness in Sky Box revenues has continued into H1 FY25, with a partial revenue offset from growth in Streaming, Broadband, and Advertising (which delivered 6% growth YOY), and a solid contribution from Commercial.

Underlying Expenses (excluding the impact of one-off items) were heavily weighted to the first half at $325.6 million (Reported $347.9m), due to the timing of events such as the Paris Olympics. This situation will reverse in the second half, and Sky expects to report close to previous run-rates for the full year.

On an Underlying basis, EBITDA was $60.7 million (Reported $43.2m) with Net Profit After Tax of $10.9 million (Reported -$1.7m), largely reflecting the weighting of costs to the first half. Free Cash Flow was $7.5 million, slightly ahead of last year.

Sophie Moloney commented: “At a high level, while the first half revenue miss is inconsistent with our strategic plan, driving improved margins through returning to a growth footing and continuing to manage the cost base remains firmly in focus.”