Sky Italia weighs on News Corp.’s pay TV numbers

News Corp. reported profit and revenue increases in its most recent quarter, but a loss at its satellite pay TV division as Sky Italia continued to shed subscribers.

News’ satellite segment reported a quarterly loss of US$11 million, with the company blaming the first time consolidation of Sky Deutschland and a lower contribution from Sky Italia.

Sky D added 320,000 subs year-on-year taking the total to 3.41 million. News’ executive director David Devoe told analysts: “We are highly confident with the local management’s plan to continue to grow this business with a strong content and service offering and an underpenetrated premium pay-TV market in Germany.”

However, Sky Italia continued to struggle as a result, News Corp. said, of the wider economic environment. It shed 51,000 subs in the third quarter taking the total to 4.78 million. It had lost 28,000 customers in the previous quarter. “Local currency revenues were down 2% compared to the third quarter a year ago with a slight increase in ARPU being offset by the reduced subscriber base,” Devoe said.

News Corp. also divested a 44% stake in Sky New Zealand for about US$675 million in the quarter and reduced its ownership of Asian channel operator Phoenix. It recorded a US$56 million restructuring charges in the reporting period.

On the international channels side of the business James Murdoch said that the previously stated goal of generating US$1 billion of profit from Fox International Channels is on track. “Even though there’s ups and downs in different markets, I think the team is pretty confident about that [goal],” he said.

News reported overall third quarter revenues of US$9.5 billion compared with US$8.4 billion in the same period a year earlier. Revenues for the nine months to end-March were US$27.1 billion compared with US$25.3 billion a year earlier.