Sky TV removes 'HD' fee as it prepares for loss of another 93,000 subscribers

Wednesday, 20 February 2019

Sky TV has a sweetener as it gets ready for more customers to leave.

Sky Television is dropping the hated $9.99 monthly fee that satellite customers have had to pay to access its programming in high definition, but will raise its other prices by an average of 1.9 per cent.

The changes will take effect at the start of April, from when customers who currently pay the HD charge will see a decrease in their subscription price.

All its satellite subscribers will now get its programming in HD at no extra cost. Customers have frequently complained about the fee, arguing high-definition can no longer be regarded as a premium feature.

Sky shows more than 20 channels in HD, and said that would increase to more than 30 in the next few months.

The sweetener was announced as Sky Television revealed it was preparing for the loss of a further 93,000 subscribers by June 2023 and reported a 20 per cent profit drop for the six months to the end of December.

The juggernaut that was Sky TV has lost some of its steam.

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It also came as Spark announced pricing for its rival online Spark Sport service, which will launch in March priced at $19.99 a month.

Dropping the HD fee is designed to make Sky better value, but departing chief executive John Fellet said it needed to increase the subscription price for its satellite services after holding them steady for the past three years.

The average 1.9 per cent rise would be roughly in line with inflation, he said.

Sky said its total number of subscribers – including satellite TV, Neon and Fanpass subscribers – stood at just over 750,000 at the end of the year, down by more than 28,000 over the year.

The company said its 'impairment model' had been adjusted to reflect the loss of a further 93,000 subscribers by June 2023, saying it had previously been modelling for a loss of 57,000.

Fellet said Sky was also facing delays bringing a much-vaunted new set-top box to market that is designed to provide a browsing experience more akin to Netflix, and which will recommend shows to customers based on their past viewing.

User testing showed there were issues with its performance, including speed and lag, he said.

Sky TV chief executive John Fellet says the delay to the release of its new line of set-top boxes is very disappointing.

Sky had hoped to start providing the boxes to customers in March, but Fellet said it was not going to make that date.

'It is very disappointing [but] where we have made our biggest mistakes historically has been rushing products to market that look good but where we had a couple of bugs.

'I am adamant we don't do anything unless it is something we are proud to be behind and push.'

Sky's profit fell by just under 20 per cent to $54 million for the six months ended December 31.

The company's share price fell 4 per cent to close at a new all-time low of $1.68 in the wake of the result.

'We continue to serve 43 per cent of New Zealand households, which is solid penetration by global pay TV standards,' the company said in a statement announcing its result.

'Sky earns considerably more revenue than other competing subscription video services in this market.'

Total revenue in the six months was down 8 per cent at $403m.

Competition for content rights continued to heat up, Sky said, with its programming expenses now equating to just over 40 per cent of revenue, compared to just under 38 per cent a year earlier.