UPDATE 1-Sky Deutschland sees boost in 2014 new subscribers

Thu Feb 6, 2014 3:52am EST

* Sees 2014 subscriber net growth of 400,000-450,000

* Says sees less cancellations due to long-term contracts

* Shares rise 7 percent to top of midcap index

FRANKFURT, Feb 6 (Reuters) - German pay-TV operator Sky Deutschland said on Thursday it expected fewer customers to cancel in 2014 after locking them into longer-term contracts.

Sky Deutschland said it expected to add between 400,000 and 450,000 new subscribers in 2014. Last year it added 304,000 new subscribers.

New subscribers are a key measure for investors to estimate when the broadcaster will make a net profit.

Chief Executive Brian Sullivan said he expected cancellations to slow as a result of the 2-year contracts to which Sky Deutschland has signing up its subscribers.

Sky Deutschland shares were up 7 percent in early trade at the top of the German midcap index.

Sky Deutschland management is typically conservative in its forward looking statements and so the 400,000-450,000 net adds forecast for 2014 is very encouraging," analysts at Morgan Stanley said

The company, which is majority-owned by Rupert Murdoch's entertainment company 21st Century Fox, expects 2014 earnings before interest, tax, depreciation and amortisation (EBITDA) of 70-90 million euros ($95-$122 million).

That is below the average analysts' expectation for 113 million euros in a Reuters poll from last week.

Analysts have been cutting their estimates in recent days by about a fifth, according to Thomson Reuters StarMine, which gives more weight to analysts with a better track record of accuracy.

Analysts fear a new internet-based subscription service "Snap by Sky", which was launched in December, would weigh on results.

EBITDA estimates for 2014 tracked by StarMine range from 80-108 million euros. Sky Deutschland posted 2013 EBITDA of 34.8 million euros, its first full-year positive EBITDA.

"This is an important milestone for Sky," Sullivan said, adding he expected a strong increase in both revenue and EBITDA.

He declined to say when the company would make a net profit.

Customers were also subscribing to more products from Sky's portfolio beyond the traditional sports and soccer packages, Sky said. As a result average revenue per user rose to 34.56 euros in the fourth quarter, up from 32.77 euros in the previous year.

It signed up 138,000 new subscribers during the fourth quarter, which was below the most pessimistic view in poll with an average expectation for 153,000 new subscribers.

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