ABN AMRO has cut its EBITDA forecast for BSKyB by £25m in reponse to slower advertising growth and lower wholesale revenues, increasing predicted pre-tax losses from £158m to £188m.
Advertising forecasts have been cut £18m, or 6%, although a 14% growth is still expected, to £274m. Wholesale revenue forecasts have been cut by £8m to take into account the lower take up of Sky premium channels by ONdigital subscribers. There is currently a dispute going on between ONdigital and Sky regarding the pricing of Sky channels, and an OFT review on the matter is due this summer.
Growth in advertising is expected to be driven by the rise in the number of subscribers to Sky channels, offset by a slight decline in viewing share in these homes.
In terms of long term share prospects, ABN says that although “Sky’s fundamentals remain compelling” there are still technical issues surrounding Vivendi’s 22% stake. In addition, it believes that a recovery in share price for BSkyB will be linked to better fortunes in the wider TMT sector, which at present seems set to remain under pressure.
By 10.00am this morning, shares in BSkyB had fallen 5½p to £8.20½.
