Mixed Results for European TV Firms

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In a busy earnings period, BSkyB posted disappointing profits while IPTV providers, broadcasters in central and Eastern Europe and satellite providers saw healthy gains.

BSkyB’s share price dropped late last week after reporting profits had fallen 28% to $175 million in the quarter ending Sept. 30, despite an 11% revenue increase and continued growth in newer services, such as broadband, which passed the 1 million subscriber milestone.

Profits were hurt by a decline in subscription fees for its basic channels as a result of the ongoing carriage dispute with Virgin Media and the increased cost of its Premier League soccer contracts.

Overall, Sky added 83,000 customers in the quarter, reporting strong growth for its Sky Plus DVR offering -- up 14% from the previous quarter to 2,697,000 subscribers -- its HDTV offering, which increased 23% to 358,000; and phone product, which grew 29% to 679,000.

Meanwhile, rapid IPTV growth continued on the continent.

Dutch telco KPN reported that had 414,000 TV customers at the end of the third quarter, up by 77,000 homes in the quarter, giving it a 17% share of the digital homes in the Netherlands.

France Telecom reported that it had 1,017,000 IPTV customers at the end of September. That is up 16% from 872,000 total TV subscribers in the third quarter of 2006. The company also had 11.44 million ADSL customers.

Rapid growth in Eastern Europe and Russia boosted results for Central European Media Enterprises, CTC Media and MTG Group.

CME’s net revenue jumped 55% in the third quarter as operating income grew 437% to $35.0 million. For the first nine months, the company, which has broadcast networks in six Central and Eastern European markets, reported net revenue of $539 million, up 39%, and operating income of $120.8 million, up 81% from a year earlier.

Rapidly growing TV ad spending in Russia, boosted CTC Media’s revenue by 33% to $94.1 million, and pushed net income up 106% to $17.4 million, even though ratings at flagship CTC Network slipped.

Central and Eastern European markets were also important for MTG Group, which posted a 15% increase in net sales to $408 million and a 13% increase in operating income to $43 million.

MTG’s revenue from Central and Eastern European operations, which include broadcast stations and Baltic pay TV operations, grew 35% to $77 million and operating income from the region jumped 30% to $5 million.

Overall, MTG’s Viasat Broadcast unit, which owns broadcast stations and pay TV operations, increased its revenue 16% to $314 million. Operating income, though, fell 5% to $63 million in the quarter. Premium DTH subscribers in the Nordic regions hit 717,000, up from 673,000 in the same period in 2006.

On the satellite front, increased demand for video and broadband services helped boost overall revenue for Eutelsat Communications by 6.2% to $307.4 million. Video revenue rose 10.7% to $229.3 million.

SES also reported healthy results, with recurring revenue up 9.9% to $557 million, and a 17.1% bounce in EBITDA to $420 million.

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