Sogecable wins tough first half

Results positive despite merger challenges

MADRID — Biting multiple bullets in a tough first half for its newly merged digital platform Digital Plus, Spain’s main pay TV platform Sogecable posted in-line to slightly better than expected results for the first half of 2004.

First-half revenues stood at €721 million ($890.1 million), while earnings before interest, taxes, depreciation and amortization (EBITDA) were an upbeat $172.1 million, yield was a healthy EBITDA margin (EBITDA/revenues) of 19.3%.

Sogecable announced $101. 2 million in first-half net losses. That can largely be put down to the result of extraordinary one-off merger costs, such as the write-offs against churning clients to Via Digital, which merged with Sogecable last July, and the can-cellation of contracts with former channel suppliers to Via Digital.

Net subscriber loss for the second quarter of 2004 stood at 94,000, slightly lower than analysts’ expectations.

“Some 120,000 old subscribers still had cut price contracts with Via Digital in the first quarter and had to decide whether to leave Digital Plus or upgrade to its prices. Less cancelled than expected and the loss of many won’t be regretted too much since they were on monthly contracts at around $7.5 to $15,” said Enrique Jimenez, an analyst at Ibersecurities.

Sogecable shares rose 3% in early morning trading after the publication of results.

Encouraging the market endorsement were three further factors. Some analysts expected Sogecable to postpone its one-off amor-tizations until 3Q or 4Q 2004, but the pay TV operator has brought them forward in a bullish move.

Sogecable has also shown it has a road map for second-phase consolidation after the merger.

On Wednesday it unveiled a new cheaper premuim package, Canal Plus Familiar, tabbed at $27, to lower entry access to Digital Plus premium offers. Sogecable director of contents Fernando Bovaira also announced an overhaul from September of Sogeca-ble’s movie channels, which is expected to bulwark the pay TV operator’s strong offer of U.S. studio blockbusters with a hiked quality and depth in indie product.

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