Sky Deutschland books massive losses in Q2

But CEO predicts fully profitable year for 2011

Sky Deutschland, the German pay TV group in which News Corp. controls just under 40%, booked a massive €365.8 million ($520 million) net loss in Q2.

A good portion of that red ink was due to Sky's scrapping its old Premiere brand name in a much-publicized relaunch last month. Dumping the Premiere trademark wiped €253.9 million ($361 million) off the company's accounts.

Revenues for the quarter were down some €20 million to €230.6m ($327 million), while operating costs jumped €54 million to €294 million ($418 million).

Sky shelled out more for local soccer rights in the past quarter compared to the same period in 2008 and the cost of the splashy relaunch also cut into its bottom line. In Q2 Last year, the company also got a revenue bump from pre-selling rights to the 2010 soccer World Cup.

Operating cash flow in Q2 was negative to the tune of €38.4 million ($54.6 million). Sky expects to keep burning through money this year as it rebuilds its business. For the full year, negative cash flow is forecast to be between €250 million - €275 million ($355 million - $390 million).

Subscriber figures took a dip, falling by 7,000 compared with Q1 to 2.36 million. Churn rate at Sky remains at more than 22%.

In a conference call with journalists, Sky CEO Mark Williams said it was "too early" to make any predictions about subscriber growth this year. But he is sticking to his long-term recovery plan for Sky, forecasting a breakeven in Q4, 2010 with 3 million –3.4 million subscribers and a fully profitable year in 2011.

Shares in Sky were down 1.6% to €3.59 ($5.11) by mid-afternoon Thursday.