Online streaming service providers like Netflix are certainly a force to reckon with as they draw the world’s customers to the detriment of pay-TV companies like Sky Network Television.
The Auckland-based firm devalued its goodwill’s price from $1.43 billion (US$949.75 million) down to $1.07 billion (US$710 million).
According to the online finance dictionary, Investopedia, the term “goodwill” refers to an asset which comes when one firm buys another for a premium price.
These intangible assets are in the form of a company’s solid consumer base, outstanding customer and employee relationships, proprietary technology or patents, and its brand name.
The annual accounts of Sky Network Television for 2018, which was concluded on June 30, leads the company into an unprofitable financial situation.
The cable TV provider confirmed that it had depreciated its value by $360 million (US$239 million). This is in response to its unstoppable loss of patrons who, on the other hand, are gained by leading streaming services.
Due to this action, the pay-TV firm lost a total of $240.7 million (US$160 million) for this year. Moreover, in 2017, the company reportedly had 824,782 subscribers which plummeted to 767,727 this year.
Sky Network Television chief executive, John Fellet, however, acknowledged the fact that online streaming services are, indeed, dominant in this day and age. He accepted that more consumers would migrate from the company’s satellite service to their online offerings.
Fellet said that the largest pay-TV company in New Zealand would carry on serving its customers the best way possible, meeting their preferences, and spending power.
The pay-TV executive did not seem to be panicky but instead highlighted the adaptive capabilities of his firm. He affirmed that Sky Network Television is “well placed to transition” as the world moves towards cloud-based entertainment.
Fellet said that they are imposing a transformational tactic as they control internal spending. In addition, the company is concentrating more on content through their mobile and Internet offerings.
These remedies are parts of Sky Network Television’s agenda to retain its subscribers and be competitive against its online rivals.