News Corp’s Italian pay TV service Sky Italia recorded a loss of 42,000 subscribers in its latest financial quarter as tough trading conditions led it to a US$56 million (€45 million) fall in operating income. This comes as News Corp posted a fourth-quarter net loss of $1.6 billion, compared with a profit of $683 million, last year.
“This decrease reflects the challenging economic environment in Italy as directly impacting gross subscriber additions in churn,” News Corp chief financial officer David DeVoe told investors. “Given the relatively low pay TV penetration in Italy and Sky’s strong competitive positioning, we continue to have complete confidence in the long-term growth prospects for this business. However, in the short-term, weak consumer confidence and consumption behaviour is likely to sustain the current difficult trading conditions in Italy.”
Chief operating officer Chase Carey added: “The one business that is facing real economic headwinds and will adversely impact 2013 results is Italy. We’re focused on taking steps to position Sky Italia for tough economic times, which will enable the business to resume its growth as we move towards 2014.”
News Corp’s quarterly losses came as a result of a US$2.9 billion pre-tax impairment and restructuring charge related to the company’s publishing businesses. However, losses were stemmed by a 15% rise in revenues posted by its cable networks business, which includes its US cable businesses as well as its international pay TV services. The company’s international cable channels grew earnings 31%, as a result of strong growth across its Fox International Channels and Star. Carey added that he expects Fox International Channels to be a US$1 billion business by 2015.
“We expect the business in 2015 to be – and this is excluding Star, to be a US$1 billion business. We’re at – and realistically we’re ahead of that curve today,” he said.
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