Sky Television Reports 2006 Half Year Results

Media Release: 17 February 2006

Sky Television Reports 2006 Half Year Results

SKY Television announced today a net profit after tax of $29.7 million for the six months to 31 December 2005, a decrease of $6.2 million on the comparative interim period. The decrease in profits is a result of the additional interest costs incurred on the $500 million of new debt that was raised for the merger of SKY and its parent company, Independent Newspapers Limited on 1 July 2005.

Total revenue increased by 10.8% to $266.1 million compared to the same period last year. The average monthly revenue per subscriber (ARPU) increased by 3.0% and advertising revenue increased 21% to $19.8 million over the same period.

Operating costs increased by 4.6% to $197 million and programming costs as a percentage of revenue fell to an all time low of 32.1% down from 34.3% in the comparative period.

Operating cash flow for the six months decreased to $87.8 million compared to $94.6 million in the comparative period, due to increased interest costs.

Operating profit before interest and tax was $69.1 million, up 33% on the $52.0 million reported in the comparative period.

SKY’s subscriber base continued to grow, with an increase of 17,118 subscribers since 30 June, 2005. This is an increase on the 11,979 net gain in subscribers reported in the comparative period.

Churn, a measure of subscribers who disconnect their service, remained low, with gross churn reducing to 13.9% from the comparative period of 16.4%.

The amount of time subscribers spend watching SKY channels has continued to increase with most of the increase in viewing occurring on SKY’s basic channels.

Since 31 December 2005 subscriber growth has continued to improve. As of yesterday, the subscriber count reached a new high of 640,521.

The SKY Board has resolved to pay a fully imputed interim dividend of 4.0 cents per share. A supplementary dividend of 0.706 cents per share will be paid to non-resident shareholders. The record date for payment of the dividend will be 10 March 2006 and the payment will be made on 17 March 2006.

New initiatives during the interim period were the launch of two new basic channels, Food TV on 1 November 2005 and Playhouse Disney on 24 December 2005 and the acquisition of the rights to Formula One motor racing and the FIA World Rally Championship.

Another major event in SKY’s development was the launch of MY SKY, on 5 December 2005, a new generation hard drive decoder, enabling subscribers to customize their viewing experience increasing the value of their relationship with SKY.

On 8 February 2006, SKY completed the purchase of the New Zealand television business of Prime Television Ltd. The acquisition of a free-to-air channel will give SKY the opportunity to showcase its channels and programmes whilst ensuring that New Zealand consumers can view delayed free-to-air sports programmes such as rugby, rugby league and cricket in primetime, allowing SKY to diversify its revenue base, providing increased advertising revenue.

ENDS

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