Sky Deutschland, in which Rupert Murdoch’s News Corp holds a 49.9 per cent stake, is finding Germany a difficult market. The country’s largest pay-TV operator is not going to reach its key target of raising its subscriber base from 2.5m to 2.8m – 3 m. by the end of the year. As a result, there will be a bigger than expected loss in 2010 and more red ink in 2011.
Sky Deutschland, in which Rupert Murdoch’s News Corp holds a 49.9 per cent stake, is finding Germany a difficult market. The country’s largest pay-TV operator is not going to reach its key target of raising its subscriber base from 2.5m to 2.8m – 3 m. by the end of the year. As a result, there will be a bigger than expected loss in 2010 and more red ink in 2011.
In August investors were asked to put more cash into the business, the fourth capital injection since News Corp came on board in 2008. The stock lost a third of its value in the following days. A share is still worth only €0.90, valuing the whole business at just €641m.
The group was listed at €28 a share as Premiere in 2005. Soon after that it lost the rights to show German football and subscribers fled. Last year News Corp was able to restore live football. A rival pay-TV station went out of business. Service delivery problems were sorted out. Even so, in the year to the end of June only 112,000 new clients signed up. Average monthly revenue per user is just $28.62 compared with around €48 for Sky TV in the UK.
Pay-TV finds the German market difficult. There is a big choice of free-to-air stations, but this also applies to the UK where pay-TV has been much more successful. Sky Deutschland argues that its much harder to win customers in Germany, but once they sign up, they stay on board.
Or perhaps the Bundesliga is a less attractive product than the Premiership?