German financial watchdog highlights mistakes
The share price of Sky Deutschland plunged more than 7% on Tuesday after Germany’s financial watchdog ruled News Corp.’s pay TV operator had misstated risks, subscriber numbers and earnings in at least five reports.The Munich-based company, which had seen its share price climb in the last six weeks after it hit an all-time low of less than €1 ($1.35) in October, said it would appeal the ruling by the BaFin financial watchdog. Its price on Tuesday on the Frankfurt Stock Exchange was $1.96. The company, which posted its one and only full-year profit five years ago, said in a statement that the charges could lead to fines and claims for damages. The country’s only paybox admitted in 2008 that it had only about half of the 4 million subscribers it said it had in Germany. In its reports for 2007 and the first half of 2008, Sky Deutschland overstated the number of its subscribers by more than 600,000, BaFin said. Sky Deutschland said that if the BaFin ruling is upheld, it may have to correct all its reports since 2007 but added that would not affect its balance sheet. Sky Deutschland has struggled for years, in part because local TV viewers have about 30 free TV channels to pick from. It has also faced increasing competition from Deutsch Telekom, which offers fast-growing IPTV and video-on-demand services. Earlier this month, Sky Deutschland said that despite a 16.6% revenue increase to $334.18 million, and solid subscriber growth, it remained in the red in the third quarter. It narrowed its net loss by 23.5% to $122.4 million.