Sky Deutschland shares soared more than 18 percent in Frankfurt, the biggest intraday gain since June 15, 2010, after the Unterfoehring, Germany-based company said its net subscribers rose 131,000 to 2.65 million in the fourth quarter with average revenue per user reaching about 30 euros ($39).
“The number of net new customers is positive as is the lower churn rate,” said Jan Christian Goehmann, an analyst at Norddeutsche Landesbank in Hannover.
Sky Deutschland, 49.9 percent owned by News Corp., has struggled to add subscribers and boost profit, failing to mirror Murdoch’s success with British Sky Broadcasting Group Plc. Its loss before interest, taxes, depreciation and amortization in 2010 was at the lower end of the forecast range of 260 million euros to 270 million euros. The company said Ebitda in 2011 will be “significantly better than 2010 but will remain negative.”
The German pay-TV market, which led to the collapse of media magnate Leo Kirch’s Kirch Holding GmbH in 2002, has resulted in reported losses of 1.21 billion euros at Sky Deutschland, formerly known as Premiere AG, since Murdoch’s initial stake purchase in January 2008.
Sky Deutschland shares rose 26 cents, or 14 percent, to 2.1 euros as of 11:20 a.m.
Funding Agreement
Sky Deutschland also said today that it reached an agreement with News Corp. to raise 60 million euros in financing on top of the 340 million euros it announced in August.
“We are taking an additional 60 million euros as part of an incremental shareholder loan because we have seen substantial improvement,” Chief Executive Officer Brian Sullivan said on a conference call today. “(It) gives us further opportunity to accelerate the growth and deliver profitability potentially sooner and potentially larger.”
The need for more funding shows that the company is not out of the woods yet, said Nord’s Goehmann.
“It’s surprising that they increased the financing,” he said. “It shows that there is still need for capital at the company, which I would consider negative.”
Sky Deutschland has raised capital six times since it was listed on the stock exchange in March 2005. Since Murdoch’s stake purchase in 2008, the company has raised 971.6 million euros.
“The shares are enjoying a positive momentum which will support the stock, but the Ebitda loss is still high,” said Goehmann, who rates the stock “sell,” with a 1 euro target price. “The company has to get back towards black at some point and for that it still lacks a sufficient subscriber base.” For the latest updates PRESS CTR + D or visit Stock Market news Today
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