BERLIN — Teuton TV group Sky Deutschland’s losses tripled in the third quarter to euros 87.9 million ($132 million) from $40 million a year ago on revenues that dropped 6% to $312 million, the cabler and satcaster said Thursday.
The worse-than-expected earnings report send shares of Sky, formerly known as Premiere, tumbling by more than 11% on the Frankfurt stock market, although they recovered about half of those losses later in the session to $4.38.
The company, in which Rupert Murdoch’s News Corp. holds nearly 40%, rebranded itself from Premiere to Sky Deutschland in July. It started a massive marketing campaign to win more customers. That campaign and higher program costs caused the larger Q3 losses.
Sky, which holds the live rights to Germany’s Bundesliga soccer league, said on the bright side it posted a 67,000-subscriber increase in the quarter to 2.43 million subscribers but falling revenues in other areas were the reason for the widening losses.
Sky, which also relies on Hollywood pics and pornography to attract viewers away from the 30 free channels, said it expects a cash-flow loss of between $375 million and $405 million for the full year. It said a 19% increase year-on-year in expenditures on program, sales and marketing costs in the quarter to $444 million was a key reason for the increase in losses. Sky also reaffirmed its belief that it will break-even on a monthly basis in the fourth quarter of 2010 and record a net profit year-on-year in 2011.
“The reaction of our existing subscribers has been very positive,” said Mark Williams, Sky Deutschland topper. “A lot of subscribers have switched right away to the new Sky packages. The net increase of more than 200,000 new subscribers in our first quarter show that families and sports fans in Germany as well as Austria appreciate the expanded program and the quality of Sky.”
Sky, which has said it wants to emphasis quality over quantity, has been working to phase out subscribers with discount contracts.
Sky is facing increasing competition from telco giant Deutsche Telekom, which has IPTV rights for Bundesliga soccer. The group is marketing soccer as part of a package that includes its IPTV and video-on-demand service, T-Home Entertain, as well as flat rates for telephone and Internet.
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