Second Straight Profitable Quarter for News Corp.'s Sky Deutschland

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Revenues rise 16.5 percent and operating profits top $23.6 million at News Corp.'s German pay TV channel.

COLOGNE, Germany – Long-suffering Germany pay TV group Sky Deutschland posted its second straight profitable quarter, with revenues up 16.5 percent to $420 million (€331 million) and operating (EBITDA) profits at $23.6 million (€18.6 million) compared to an almost identical loss over the same period last year.

On an EBITDA basis, Sky Deutschland, which is controlled by Rupert Murdoch's News Corp., is just profitable, though the group still recorded a net loss of $131 million (€103.3 million) for the first nine months of this year.

The German pay TV group added a net 80,000 subscribers in the third quarter, a number analyst Polo Tang of UBS called “marginally disappointing” and the churn rate – the number of new customers who cancel their subscriptions, was 13.7 percent, a figure Tang called “surprisingly high.”

Overall though, the picture was positive and in line with the company's, and the market's expectations. Year-to-year subscriber numbers up 12 percent, or 188,000 to 3.2 million and the 12-month churn rate is a more respectable 11.8 percent.

Sky Deutschland CEO Brian Sullivan has made technical innovation a key part of his strategy for the German market and investments in HD and mobile services have apparently paid off. Sky's HD offering Sky Welt HD has passed the 2 million subscriber mark and the company recorded 8.2 million “customer sessions” for its mobile service Sky Go in Germany and Austria in the third quarter, compared to just 1.7 million in Q3 2011. This month, Sky will introduce dedicated children's programming for its Sky Go service to target iPad friendly families.

Investors welcomed the quarterly figures. Shares in Sky Deutschland were up nearly 4.5 percent in early trading Wednesday at €3.5 ($4.44).

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