Sky New Zealand reported a statutory net profit of $52.4 million for the first half of fiscal year 2026, a figure significantly bolstered by a $34.4 million gain from the $1 purchase of Three and $8.2 million in compensation from Optus following disruptions to its satellite service last year.
The financial results, released today, similarly revealed continued declines in subscriber numbers for Sky’s traditional Sky Box and Neon streaming services. Sky Box customers decreased to 435,000, down from 448,000 six months prior, and 464,000 a year earlier. Revenue from Sky Box subscriptions fell to $226 million, compared to $230 million in the previous six months and $240 million in the same period last year. Neon experienced a more substantial drop, with subscriber numbers falling 17% to 215,000.
Sky attributed the decline in Neon subscribers to a lack of compelling content driving acquisition and retention. Despite the drop in subscribers, Neon’s revenue remained stable at around $26 million, with a $1.3 million year-on-year increase attributed to price increases. Sky Sport Now, however, saw growth, increasing to 170,000 subscribers and generating $40 million in revenue for the six months.
The $8.2 million recovery from Optus relates to costs incurred due to issues with the Optus D2 satellite, which experienced signal disruptions after being placed into an inclined orbit to conserve fuel. Sky is currently migrating customers from the D2 satellite to a new satellite, aiming for completion by May 2025. According to Sky, the preferred satellite will operate in the same orbital slot as D2, minimizing the need for home visits for customers.
While the acquisition of Three has broadened Sky’s revenue base to 35% of the linear TV segment, linear advertising revenue has been “softer than expected” since the deal. Excluding the benefits of the Three acquisition, Sky’s operating revenue decreased by 1.3%.
“The first half of FY26 marks an important step forward for Sky,” said chief executive Sophie Moloney. “The combined business is already demonstrating the increased reach and revenue diversification we sought, while also maintaining strong cost control.” Moloney highlighted $3.2 million in cost savings achieved through the integration of Three, with a full-year expectation of $3 million to $5 million.
Sky announced an interim dividend of 15 cents per share and reported a significantly higher free cash flow, with a cash balance of $100 million at December 31. The company plans to review broader capital management options following the full integration of Sky Free and will provide an update at its annual results announcement in August.
Looking ahead, Sky anticipates continued challenging trading conditions. The company has narrowed its full-year revenue guidance to $820 million–$835 million and EBITDA to $145 million–$160 million, while maintaining a dividend of at least 30 cents per share. Sky expects earnings growth to continue from FY27, with a target of at least $10 million in incremental EBITDA by FY28 through synergies.
Sky also announced it has chosen not to renew its co-exclusive deal for HBO Max content on Neon, opting instead for an expanded agreement with Paramount. The company has secured renewals for rugby and Formula 1 rights for another five years.
