Market responds to news of share issue, loan

Shares in Rupert Murdoch’s German paybox Sky Deutschland plunged 26% Tuesday to a record low of €1.05 ($1.39), after the company disclosed it needed a fresh injection of capital.

Germany’s only nationwide pay TV company wants to raise a minimum of $450.5 million, it revealed late Monday. It will raise the coin by offering new shares, possibly combined with a convertible bond and/or a shareholder loan from parent News Corp., which owns a 45% stake.

Sky said the proceeds would secure the company’s financial position and allow investment in key growth areas, including the expansion of HD; increased distribution of its Sky Plus personal video recorder service; further innovations and product extensions; new distribution initiatives and enhanced customer service.

Sky Deutschland topper Brian Sullivan said that while he was “happy that the business is moving in the right direction, I am not satisfied with the pace of development.

“We must further invest now in those areas that fundamentally differentiate us for customers, and that will accelerate growth in subscribers and ARPU (average revenue per user).

“We also need to shore up our financial position to enable us to focus on growth. I am confident this will allow us to achieve the necessary momentum to build a sustainable business for the future.”

Sky is battling to attract subscribers in a tough market with a large number of free-to-air channels. Its total number of subscribers reached 2.48 million in June.

It attracted 6,000 new subs between April and June — the first second-quarter subscriber growth since 2005 — compared with a subscriber loss of 7,000 in the same period last year.

The company, previously known as Premiere, remained in the red through the second quarter, but narrowed its net loss to $108.5 million from last year’s second-quarter net loss of $485 million, which included a $336 million write off of the Premiere trademark.

Revenue in the period rose 2.4% to $313 million.

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