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SKY NETWORK TELEVISIONANNUAL RESULTS 2008
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JOHN FELLET CEO
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Subscribers
050,000
100,000150,000200,000250,000300,000350,000400,000450,000500,000550,000600,000650,000700,000750,000
Jun-9
1
Jun-9
2
Jun-9
3
Jun-9
4
Jun-9
5
Jun-9
6
Jun-9
7
Jun-9
8
Jun-9
9
Jun-0
0
Jun-0
1
Jun-0
2
Jun-0
3
Jun-0
4
Jun-0
5
Jun-0
6
Jun-0
7
Jun-0
8
UHF Satellite Wholesale MY SKY
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Subscriber Growth
711.2
13.7
114.0
529.8
53.7
2007
(42.1%)31.1UHF Residential
Total Subscribers
Commercial/Other
DBS Wholesale
DBS (Satellite) Residential
‘000
5.3%748.6
40.9%19.3
5.4%120.2
9.1%578.0
% Change2008
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Total Net Gain
39,642
33,711
42,566
48,102
43,941
37,365
20,000
25,000
30,000
35,000
40,000
45,000
50,000
Subsc
riber
s
Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08
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10%
12%
14%
16%
18%
20%
22%
24%
26%
28%
30%
32%
Jun-9
8
Dec-9
8
Jun-9
9
Dec-9
9
Jun-0
0
Dec-0
0
Jun-0
1
Dec-0
1
Jun-0
2
Dec-0
2
Jun-0
3
Dec-0
3
Jun-0
4
Dec-0
4
Jun-0
5
Dec-0
5
Jun-0
6
Dec-0
6
Jun-0
7
Dec-0
7
Jun-0
8
Moving Annual Churn
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0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
DBS (Satellite) UHF My Sky
2008 Monthly Churn Split
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$391$441 $492
$549$619
$659
$0
$100
$200
$300
$400
$500
$600
$700
$N
Z m
illio
ns
2003 2004 2005 2006 2007 2008Year End 30 June
Total Revenue
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$51.83
$54.55
$56.86
$58.30$60.50
$62.10
$47.00$48.00$49.00$50.00$51.00$52.00$53.00$54.00$55.00$56.00$57.00$58.00$59.00$60.00$61.00$62.00$63.00
$NZ
2003 2004 2005 2006 2007 2008
Total ARPU
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$62.49
$63.13
$64.88
$66.12
$39.42
$39.51$39.68
$38.83$46.27
$48.39$50.88
$52.15
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$NZ
Satellite UHF Wholesale
2005 2006 2007 2008
ARPU
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41,598
47,35549,669
58,309
73,751
84,770
0
25,000
50,000
75,000
100,000
$N
Z
2003 2004 2005 2006 2007 2008
UHF Satellte
Additional Outlets
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0
8
16
24
32
BIG
MA
C's
Foxtel(Australia)
Sky TV (NZ) DIRECTV (US) BSkyB (UK)
2004 2005 2006 2007 2008
Big Mac Index
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Sky’s Share of All Television Viewing is Growing.
0
5
10
15
20
25
30
35
Month
% S
hare
of A
ll N
Z T
V V
iew
ing
All Sky TV 12 Month Moving Average
% Share of viewing in all NZ Homes
Source: Nielsen TV Ratings, All New Zealanders 5+
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Prime’s Share
Source: Nielsen TV Ratings, All New Zealanders 25-54 Peak
3.00%
3.50%4.00%
4.50%5.00%
5.50%
6.00%6.50%
7.00%Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
2005/06 2006/07 2007/08
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$20$27
$36 $40
$7
$41
$23
$40
$27
$0
$10
$20
$30
$40
$50
$60
$70
$NZ m
illio
ns
2003 2004 2005 2006 2007 2008
Year End 30 June
SKY PRIME
Advertising Revenue
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Viewerhours generated by Subscriber per annum
Source: Nielsen TV Ratings, All New Zealanders 5+/SKY TV
0
200
400
600
800
1000
1200
1400Dec
-02
Feb
-03
Apr-03
Jun-0
3
Aug-0
3
Oct
-03
Dec
-03
Feb
-04
Apr-04
Jun-0
4
Aug-0
4
Oct
-04
Dec
-04
Feb
-05
Apr-05
Jun-0
5
Aug-0
5
Oct
-05
Dec
-05
Feb
-06
Apr-06
Jun-0
6
Aug-0
6
Oct
-06
Dec
-06
Feb
-07
Apr-07
Jun-0
7
Aug-0
7
Oct
-07
Dec
-07
Feb
-08
Apr-08
Jun-0
8
Sport Movies Pass Thru
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Programming Costs % Revenue
43% 40%
34% 32% 33% 32%
20%22%24%26%28%30%32%34%36%38%40%42%44%46%48%50%52%
2003 2004 2005 2006 2007 2008
Year End 30 June
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$150.8$187.2
$219.9$247.7
$249.4$266.6
$0.0
$50.0
$100.0
$150.0
$200.0
$250.0
$300.0
$NZ
mill
ions
2003 2004 2005 2006 2007 2008
Year End 30 June
EBITDA
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Satellite ImpactFinance Lease 2007 2008
Interest
0.8 0
Depreciation
5.1 0
5.9 0
Operating lease(9 months in 2007) 18.8 24.6
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$0.7
$35.3
$74.5 $60.2 $77.9
$97.7
$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
$80.0
$90.0
$100.0
$NZ
mill
ions
2003 2004 2005 2006 2007 2008
Year End 30 June
Net Profit/(Loss)
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DIVIDEND
0
2
4
6
8
10
12
14
cents
2006 2007 2008
Dividend CPS
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DIVIDENDThe SKY Board has declared a fully imputed final dividend of 7.0 cps.
Record date is 5 September 2008.
Payment date is 12 September 2008.
Total dividend for the year is 14.0 cps
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JASON HOLLINGWORTH
CFO
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$86.1
$57.4$76.0
$86.8 $81.4
$119.5
$0
$20
$40
$60
$80
$100
$120
$N
Z m
illio
ns
2003 2004 2005 2006 2007 2008Year End 30 June
Capital Expenditure
(excluding transponders and Prime assets)
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Capital Expenditure Analysis
$ NZ million 2007 2008 %Change
Subscriber Equipment 62.0 62.6 1.0%
Studio Upgrade 12.3 42.6 246.3%
Building 2.2 2.7 22.7%
Other 4.9 11.6 136.7%
Total Capital Expenditure 81.4 119.5 46.8%
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$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$N
Z
2003 2004 2005 2006 2007 2008
Decoder Material/Labour
DBS (Satellite) Install Costs
$512
$719
$487 $454 $506$439
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Results Summary$NZ Million 2007 2008 % Change
Revenue 618.5 658.8 6.5%
Operating Expenses 369.2 392.2 6.2%
EBITDA 249.3 266.6 6.9%
Depn & Amort 85.0 78.0 (8.2%)
EBIT 164.3 188.6 14.8%
Interest 46.4 44.3 (4.5%)
Tax 39.9 46.4 16.3%
Other 0.2 0.2 0%
Net Profit after Tax 77.8 97.7 25.6%
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Revenue Analysis
618.5
12.6
63.4
20.9
88.1
433.4
2007
9.9%476.3Residential satellite subscriptions
Total Revenue
Other income
Advertising
Installation
Other subscriptions
$NZ million
6.5%658.8
11.9%14.1
4.9%66.5
(23%)16.1
(2.5%)85.9
% Change2008
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Expense Analysis$million 2007 2008 % Change
Programme rights 166.6 169.5 1.7%
Programme operations 38.0 40.2 5.8%
Subscriber management 41.7 45.1 8.2%
Sales and marketing 37.4 39.8 6.4%
Advertising 18.7 19.8 5.9%
Broadcasting and infrastructure 51.4 61.5 19.6%
Depreciation and amortisation 84.9 78.0 (8.1%)
Other administrative 15.4 16.2 5.2%
Total Operating Expenses 454.1 470.1 3.5%
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Cash Flow Analysis
$NZ Million 2007 2008
Capex 83 108 30%
Debt reduction 79 30 (62%)
Dividend 39 52 33%
Cash inc/(dec) (26) 2 (108%)
Operating Cash Flow 175 192 10%
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Prime Financials
$NZ Million 2007 2008
Revenue 23.0 27.0
Rights 10.5 11.8
Operations 5.2 4.4
Program Costs 15.7 16.2
Margin 7.3 10.8
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Foreign Currency Hedging• Sky’s hedging positions at 30 June 2008
• 94% hedged for 0 -12 months $US exposures @ .6769• 56% hedged for 13-24 months $US exposures @ .6672• 49% hedged for 25-36 months $US exposures @ .6715• 94% hedged for 0 -12 months $A exposures @ .8612• 74% hedged for 13-24 months $A exposures @ .8648• 70% hedged for 25-36 months $A exposures @ .8540
• average $US payment rate » for opex for year to June 08 = 69.0c
June 07 = 63.5c
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MYSKY HDi Financial Assumptions
Our working assumptions for FY 08/09 are:
• Monthly box rental $15 or one-off $599• HD ticket $10/month• Multiroom $25/month (including free HD ticket)• Target 80,000 new MYSKY HDi boxes• 15% upfront, 85% pay monthly• 10% to new subscribers, 90% to existing subscribers• 45% of MYSKY HDi take multiroom (to 103,000 boxes)• 15% buy HD ticket (and no multiroom)• MYSKY HDi gross churn rate of 7.4%• MYSKY HDi cost is US$330 (vs standard decoder of US$122)• MYSKY HDi ARPU $81 (vs $62 FY07)
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Pro forma ImpactFY09 FY10
Capex $million $million
Decoder Capex 40 43
MySKY HDi Installs 12 13
Depreciation
Base depreciation 71 75
MySKY HDi 7 19
78 94
P&L Impact
MySKY HDi revenues 17 31
Incremental Opex 8 10
EBITDA 9 21
Depreciation 7 19
EBIT 2 2
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MY SKYMY SKY
MY SKY HDi
MY SKY HDi &
Multiroom
HD Access Ticket
Installed 25,137 4,517 35% 92%
Pending 135 8,597 46% 93%
Total 25,272 13,114 42% 93%
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JOHN FELLET CEO
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GUIDANCE
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Ratio Too Low
Ratio Too High
Ratio just Right
Sky Network
How appropriate is the level of gearing?
Ross Carmichael Singer (NZ) Pty Limited, April 2008
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SKY Highlights1. 6 new channels
Crime & Investigation Vibe CNBC SKY Movies Greats SKY Sport Highlights Fashion TV
2. SKY Online launched3. SKY Sport Magazine4. Netball World Champs Nov 20075. Inaugural ANZ Championship 6. Screen Enterprises (Fatso, DVD Unlimited,Movieshack)7. MYSKY HDi launch
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Available now:
•35 top Movies
SKY Movies, MGM, Rialto
•Cartoon Network
•Discovery Channel
•The Box
•Air New Zealand Cup
•200 sporting downloads
Netball, Cricket, Rugby
Live streaming and content download via broadband internet
SKY Online
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• Net profit of $97.7m, up 26%• Subscriber numbers up 5.3% to 748.6• ARPU up 2.6% to $62.10, DBS ARPU up 1.9% to $66.12• Churn increased from 13.4% to 14.9%• SKY share of total television viewing up from 25% to 28%
2008 Key Messages
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SKY NETWORK TELEVISIONANNUAL RESULTS 2008