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- Sky Network Television (SKT) offers an improved forecast as a result of a “rigorous” cost analysis
- The broadcaster has raised the midpoint of prior earnings before interest, taxes, depreciation, and amortization (EBIDTA) and net profits after tax (NPAT) expectations
- The review has found an additional $35 million in operating cost reductions will be delivered in FY221
- EBITDA expectation has increased from $115-$130 million to $150-$160 million, while NPAT guidance has increased from $17.5-$27.5 million to $40-$48 million
- Shares in SKT last traded at $1.69 on Deceber 6
New Zealand’s Sky Network Television (SKT) has issued considerably enhanced guidance following the completion of a “rigorous” cost review.
The broadcaster has raised the midpoint of prior earnings before interest, taxes, depreciation, and amortization (EBIDTA) and net profits after tax (NPAT) expectations for the FY22 fiscal year by 27 per cent and 96 per cent, respectively.
Sky management, led by Sky Chief Executive Sophie Moloney, has implemented a review of every cost and capex line throughout the business.
The review found an additional $35 million in operating cost reductions will be delivered in FY221, with the full-year impact of recurring annualised cost savings expected to deliver an additional $40 million to $45 million per year.
As a consequence, EBITDA guidance has increased from $115-$130 million to $150-$160 million, while expected NPAT increased from $17.5-$27.5 million to $40-$48 million.
Sky said the current fiscal year represents a turning point for the company, with forecasts released during its annual results presentation in August indicating a return to revenue growth following several years of decline.
Despite the impact of new COVID-19 limits on commercial income, Sky said a steady increase in core subscriber revenue has given it the confidence to narrow the prior target range.
Sky said longer-term transformation activities are expected to provide further recurrent savings in FY23 and beyond.
The sale of Sky’s Mt Wellington properties is reportedly progressing, but it has not yet been finalised, therefore it is not included in the guidance.
“We’ve sought to uncover opportunities that are starting to reset Sky’s cost base, leveraging the learnings from operating in a Covid-impacted environment as well as challenging the way we operate our business across every area of spend,” Ms Moloney said.
“The identified cost savings in FY22 are focused on areas of third party spend across the business, including our vendors and contractors, our rights, how we produce and market our content, and our capex profile.”
The board is now assessing the company’s capital structure and has recruited external financial, legal, and tax consultants to assist in selecting the most effective capital management approach, including the future dividend policy.
Shares in SKT last traded at $1.69 on December 6.
