Sky Latin ups estimate for its startup to $1 bil
Launched in Brazil in October and in Mexico in December, Sky L.A. is backed by News Corp., Televisa, Globo and TCI Intl. and is rivaled by Hughes-led satcaster Galaxy Latin America, which has talked of an estimated startup of $850 million.
Sky chief financial officer David Torkington told Daily Variety the revision owed mainly to two factors: the inclusion of financing costs not contemplated when the initial budget was sketched and greater-than-expected marketing costs.
Sky has raised long-term debt separately in Brazil and Mexico to the tune of $575 million, of which $198 million has been set aside to service and guarantee interest payments.
Long-term strategy
"We've revised our estimate using the experience gained in Mexico and Brazil. This time next year there could be a different number --- it could prove to be less expensive," Torkington said.
Indeed, depending on rates of subscriber signups and future cash flow, not all of the $198 million set aside to cover interest will necessarily be used.
Torkington added that Sky's Mexico platform (budgeted at $475 million) is more costly than Brazil's ($265 million) partly because the former figure includes Televisa's buy-out of local rival satcaster Medcom for around $80 million.
Some of the costs of startup in Mexico and Brazil will benefit rollout in the rest of Latin America, which will require an additional investment of about $250 million.
