Financial Results Released By Trinity And BSkyB
Two major UK media groups, BSkyB and Trinity Mirror released financial results today, but while BSkyB exceeded expectations with its full year results, Trinity Mirror remained cautious in its predictions for the future.
BSkyB’s full-year financial results beat analysts’ expectations, with 214,000 subscribers added in Q4, taking the total to 6.1 million.
This is around 40,000 customers more than consensus growth estimates. The customer growth figures imply a strong customer uptake from the failed ITV Digital business, according to analysts at ABN Amro.
Average revenue per user rose by 11% to £347, whilst churn – the proportion of people leaving the service – remained stable at 10.5%. This churn level is described by ABN as an ‘industry-leading rate’ and is particularly impressive given that it occurs at a time when 75% of subscribers are outside their initial 12 month contract and ARPU is increasing.
Revenues came in at £2.8 billion, up 20%, whilst earnings before interest, tax, depreciation and amortisation (EBITDA) were £273 million, around £20 million ahead of consensus predictions. Advertising revenues were down by 7% to £251 million, reflecting the broader downturn in the advertising market.
BSkyB is now cash-flow positive and is showing rapidly improving operating margins says ABN Amro. It looks set to easily exceed its 2001-set ARPU target of £400.
However, the Office of Fair Trading (OFT) is currently investigating Sky’s wholesale pricing policy, the results of which could impact the broadcaster’s programming sales policy and in turn impact financials. The results of the OFT enquiry are expected in autumn this year.
Trinity Mirror, the UK’s largest newspaper publisher released half year results. It has noted signs of improvement in advertising conditions but stops short of forecasting an imminent recovery.
The company’s pre-tax profits fell to £78.4 million in the first six months of 2002, compared with £80.6 million for the same period last year. Like-for-like turnover was also down by 3.7% to £559.6 million. These figures were actually at the upper end of analysts estimates but were only made possible by cost reduction measures throughout the organisation.
Trinity Mirror claims to have ploughed £7.6 million into new strategies for its UK and Scottish national titles. On first inspection, this investment would seem to have had minimal effect. Circulation revenues for the national titles were down 3% to £134.6 million and there was an 8.4% decline in advertising revenues.
However, the entire sector has suffered during the advertising recession and although Trinity’s UK national titles experienced a decline of 15.3% in revenues for the first four months of the year, this was partially offset by a decline of only 1.1% in May and growth of 1.5% in June.
Advertising revenues at the group’s regional titles were more stable with an overall decline of 2.2% to £202.9 million. This was largely attributed to the malaise in recruitment advertising and falling revenues in London and the South East. Regional circulation revenue was almost unchanged at £41.2 million as cover price increases offset volume declines.
The interim results are in line with full year forecasts although stronger than expected regional advertising is set to compensate for softer national revenues. Despite some seeds of encouragement, Trinity Mirror does not foresee an advertising revival before the end of 2002.
Nonetheless, strategies such as the rebranding and editorial repositioning of the Daily Mirror have long term aims and analysts within and outside the organisation will be reluctant to make snap predictions based on today’s figures.
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