Sky Italia records US$25 million earnings boost

Chase Carey

Sky Italia recorded a US$25 million (€18.4 million) uptick in EBITDA profit in the quarter ending December 31, thanks to lower marketing and operating costs.

21st Century Fox revealed the figures in its fiscal third quarter earnings, claiming that Sky Italia had a subscriber base of 4.8 million for the three and six months ended December 31, 2013, consistent with the corresponding periods of fiscal 2013, while customer churn was down.

Sky Italia’s average revenue per subscriber (ARPU) remained consistent at roughly €42. However, overall EBITDA for Fox’s ‘DBS segment’, which includes Sky Italia’s profit alongside that of Sky Deutschland was US$30 million – down compared with US$55 million in the corresponding period a year earlier.

The company said the decrease was caused by incorporating Sky Deutschland’s results, including of the cost of Budesliga football rights, into the division.

Elsewhere, poor X Factor ratings, extra programming costs and currency issues in several international markets weighed on 21st Century Fox’s latest results.

Internationally, Fox said that weak currencies in some its emerging markets will impact the results at its channels unit and the company said it now anticipates an adverse impact of US$50-US$75 million more than previously forecast.

Longer term, the company said its new six-strong bouquet of Star Sports channels in India will be one its largest growth drivers over the next five-to-ten years.

Currency issues and the cost of launching new channels including FXX and Fox Sports 1 meant a modest 2% increase in revenues of US$1 billion at the cable networks division. The company noted international affiliate fees increased 22%.

At the Fox US broadcast network the company said it was continuing to grow retransmission revenues and enjoyed the success that came with broadcasting the most-watched Super Bowl ever and the success of some of its new scripted series.

However, company president Chase Carey told analysts that broadcast had underperformed. “While we had success with new series, Sleepy Hollow and Golden Globe winner, Brooklyn Nine-Nine, the combination of disappointing ratings from X Factor, larger programming write-ups than planned and a bit of extra programming and marketing costs leave us well behind our goal.”

Fox also said American Idol “will deliver results below our targets”.

Carey noted a new strategy for the network is starting to evolve and cited new shows, including 24, Cosmos and Heiroglyph and said that Fox is experimenting with new formats and production models – namely largely cutting back on expensive drama pilots in favour of straight-to-series orders.

He added that digital and SVOD is a key growth area, noting a new exclusive deal with Amazon for FX series The Americans and other library fare.

Overall company revenue was US$8.2 billion compared with US$7.1 billion a year earlier. Overall guidance was revised downward.

Carey said: “I’d like to be clear that I’m not minimising our disappointment in the adjusted guidance. However, that disappointment does not distract from the momentum that exists across our company and the confidence in our ability to achieve the overall three-year goals we outlined last August.”