Munich, 21 December 2009. The Management Board of Sky Deutschland AG, Unterföhring, (ISIN DE000SKYD000) has agreed, with the consent of the Supervisory Board, to increase the share capital of the company by up to € 49,014,714 million against contributions in cash by issuing up to 49,014,714 million new registered shares without subscription rights.
Sky Deutschland expects to receive proceeds of between € 110 million and € 120 million. News Adelaide Holdings B.V., a fully owned indirect subsidiary of News Corporation, has agreed to subscribe for the shares at the higher of € 2.25 per new share and the volume-weighted average price on XETRA over the five days prior to the resolution of the capital increase. News Adelaide Holdings B.V. has commited to a maximum investment of € 120 million. News Adelaide Holding’s commitment is subject to certain conditions like the absence of a material adverse change in Sky Deutschland’s business. As a result, News Corporation’s stake in Sky Deutschland will increase from the current level of 39.96 percent up to a maximum of 45.4 percent.
The total number of Sky Deutschland’s registered shares will increase from 490,147,144 shares up to a maximum of 539,161,858 shares.
Sky has asked its bank syndicate to consent to a waiver of a mandatory prepayment from equity proceeds and to adjust the existing financial covenants to reflect the additional investments. The two largest lenders to Sky Deutschland already consented to the waiver and the amendments of the facilities. The formal consent of the full lender group is expected in January 2010 and will then be followed by the resolution of the capital increase.
Proceeds for further growth
The proceeds will increase financial flexibility and will be invested in further initiatives to support sustained subscriber growth. These include:
• additional investments to intensify marketing and sales initiatives including an increase in direct marketing activities to drive subscription volumes.
• additional investments to accelerate the roll-out of Sky Deutschland’s HD service. With seven HD channels currently, Sky Deutschland’s HD offering is the most comprehensive in the German-speaking market. The company plans to expand the service, starting with an additional four channels in mid 2010.
• additional investments in programming to provide a greater choice and quality of content on Sky Deutschland’s premium service and new channels.
Mark Williams, Chief Executive Officer of Sky Deutschland: “The proceeds from the capital raising will enable us to make significant investments in sales and marketing as well as in our programming and the roll-out of HD. From all we have seen, I am confident that this is the right time to invest in the future growth of this company. I am pleased that News Corporation supports this view.”
“The positive reaction that consumers have had to the new Sky service demonstrates that Germans and Austrians value the greater choice, quality and innovation that our new pay TV service offers. More than 350,000 new customers have decided to subscribe to the service since launch. We are excited about the new products and programming that we have coming down the line and believe that customers have much more to look forward to in 2010.”
Trading update
Sky Deutschland expects EBITDA for full-year 2009 to be in the range of negative € 255 to negative € 265 million with total subscribers of between 2.47 to 2.50 million at year-end. For Q4 Sky Deutschland expects gross additions in the range of 150k to 175k and net additions of between 40k and 65k subscribers. The average program revenue per user (ARPU) is projected to continue its strong growth to approximately € 27 for Q4 2009 and approximaltely € 29.50 for Q1 2010. The rolling churn rate is expected to decline to approximately 21.3 percent in Q4 2009 from 23.3 percent in Q3 2009. For the end of 2009, Sky Deutschland projects a net debt of approximately € 150 million to €160 million (excluding proceeds from the capital increase).
On 2 December 2009, Sky Deutschland obtained tax rulings from the Munich tax authorities that the tax loss carry forwards are not forfeited because of the past acquisitions of Sky Deutschland shares by News Corporation. Sky Deutschland's estimated tax loss carry forwards at end of the third quarter are € 1,752 million.
On 11 December 2009 the District Court of Munich delivered a judgement and has fully rejected the first damage claim by a shareholder with regard to the alleged wrong public information about the company's subscriber numbers.
Outlook for 2010 and following years
For full-year 2010, EBITDA is expected to be in a range between negative € 130 million to negative € 170 million. The additional investments in 2010 will result in EBITDA and operating cash flow break-even on a monthly basis during Q1 2011 at a subscriber level of 2.8 to 3.0 million. Full year 2011 is projected to be significantly EBITDA positive.
This press release is available on the Internet at info.sky.de.
Contact for press:
Dr. Hans-Jürgen Croissant
Senior Vice President Corporate Communications
Tel.: +49 89/99 58-63 97
hans-juergen.croissant@sky.de
Contact for investors and analysts:
Christine Scheil
Vice President Investor Relations
Tel.: +49 89/99 58-10 10
christine.scheil@sky.de
This press release contains statements regarding future developments that have been based on current evaluations and have been made to best of the knowledge of the management of Sky Deutschland AG. Such statements with regard to future developments are subject to known and unknown risks, uncertainties and other factors that could cause the profit situation, profitability, value development or the performance of Sky Deutschland AG or the success of the media industry to diverge from those profit situations, profitability, value development or performance results that are assumed expressly or implied or described in these statements regarding the future. Considering these risks, uncertainties and well as other factors, readers of these documents should not rely in an incommensurate manner on these statements dealing with future developments. Sky Deutschland AG has no obligation to behave in keeping with such statements regarding future developments or to alter its behavior to accommodate future events and developments.
