UPDATE:Sky Television 1st Half Down, Keeps Fiscal Year Guidance At Low End

Sky Network Television Ltd. (SKT.NZ) on Friday said that its net profit fell in the first half ended Dec. 31 on increased investment and weaker advertising revenue, but reiterated its full-year guidance, although it said it would now be at the low end of the range.

The New Zealand-based company, half-owned by News Corp. (NWS), reported net profit for the six months of NZ$42.6 million, down from NZ$51.2 million a year earlier. News Corp. owns Dow Jones, publisher of this newswire.

"The downturn in net income during this period is more the result of our significant investment in a new high-definition platform rather than prevailing economic conditions," chief executive John Fellet said in a release.

He added, however, that the recession has had an impact on advertising revenue, particularly in Prime Television, the company's free-to-air channel.

Sky Television said its net profit in the 12-months to June 30, 2009, would fall toward the low end of the NZ$90 million to NZ$100 million forecast in November. The company made a NZ$98 million profit in the previous fiscal year.

It said revenue would be NZ$695 million to NZ$705 million compared with NZ$659 million a year earlier.

The stock came under some pressure after the announcement, falling 2.2% to NZ$4.10 at 2245 GMT but volume was light.

ASB Securities broker Stephen Wright said there may be some initial disappointment but the result was "solid enough" in the current environment.

He pointed to strong subscriber numbers but said the result was impacted as "the costs of getting those subscribers were up."

Sky Television's total revenue rose 5.4% to NZ$346.3 million "reflecting solid subscriber numbers and an increase in the average monthly revenue per subscriber," the company said. Its average revenue per user, or ARPU, rose 2.5% to NZ$63.49

The company said its subscriber base increased by 38,150 in the 12-month period ended Dec. 31, bringing it to a record high. In the latest six-month period, it gained 10,493 additional subscribers.

Among other things, it said its "MY SKY HDi," a high-definition personal video recorder, has been extremely successful in attracting subscribers.

Meanwhile, churn, a measure of subscribers who disconnect their service, remained "relatively low" despite the recession in New Zealand. Gross churn rose slightly to 14.8% compared with 13.9% in the same period a year ago.

"Subscribers tend to go out less, cancel holiday plans and maybe get one more year out of the car and they tend to watch TV more than ever," Fellet said in a release.

Sky TV said it will pay an interim dividend of 7 cents a share, unchanged from the previous year.

Sky TV is the dominant player in New Zealand's pay-television market.

 
   -By Rebecca Howard, Dow Jones Newswires; 64-4-471-5990; [e-mail]