Murdoch Says Sky Italia Will Turn Profit by June

News Corp. Chairman Rupert Murdoch said the company’s Italian satellite-television business will report an operating profit by June and ultimately could have earnings comparable to the BSkyB satellite-television service in Britain, in which New York-based News Corp. holds a 36.3 percent stake.

Murdoch said DirecTV Group of Los Angeles, the biggest U.S. satellite-television broadcaster, also is headed toward profitability. But he said DirecTV Group likely never will be as profitable as News Corp.’s 100 percent-owned Sky Italia or British Sky Broadcasting (BSkyB). DirecTV is 33.9 percent owned by News Corp.

Sky Italia reported an operating loss of $21 million on revenues of $624 million for the three months ending March 31. DirecTV Group reported an operating loss of $54 million on revenues of $3.14 billion for the same period. News Corp.’s pro rata share of BSkyB’s operating profit was $107 million for the three months.

Murdoch said the cost of securing and keeping new customers for satellite television will continue to rise as DirecTV, BSkyB and Sky Italia offer more sophisticated hardware to customers in return for longer-term subscription commitments. But the average monthly revenue per subscriber also is rising, he said during a May 4 conference call on the company’s earnings.

Profitability at DirecTV, while on the way, will be modest compared to the European businesses. “This is a much, much more competitive market,” Murdoch said of the United States. “We’ve got [DirecTV satellite-television competitor] EchoStar leading the way with tremendously discounted offers, but also some of the cable companies,” he said. “Indications are that we will become very profitable indeed at DirecTV, but nothing like as profitable, on a per-subscriber basis, as we are in Britain, or with Sky Italia [although] we’re not there yet in Sky Italia.”

Early Anik F2 Sales Help Boost Telesat Revenues

Satellite-fleet operator Telesat Canada reported increased revenues and operating earnings for the first quarter of 2005, with the January purchase of a satellite-services company and initial sales of Ka-band broadband satellite capacity cited as contributing factors, Telesat owner Bell Canada Enterprises Inc. said May 4.

Telesat revenues for the three months ending March 31 were 108 million Canadian dollars ($85.8 million), an increase of 28.6 percent over the same period a year earlier. Operating income, at 37 million Canadian dollars, was up 19.7 percent.

Bell Canada said Telesat’s January purchase of The SpaceConnection Inc., a satellite services provider, and initial Ka-band services from the Anik F2 satellite, helped boost revenues, as did the lease of capacity on Telesat’s Nimiq 3 satellite by direct-to-home satellite television broadcaster ExpressVu.

Telesat’s Anik F1R satellite, under construction at EADS Astrium of Europe, is scheduled for launch this summer aboard an International Launch Services Proton-M rocket. Service should begin by the end of the year, Bell Canada said, adding that Telesat has secured full insurance coverage for the launch of the satellite and the first year of in-orbit operation.

The Anik F3 satellite, also being built by EADS Astrium, is scheduled for launch in late 2006.

Gilat Reduces Losses, But Sales Also Drop

Satellite terminal manufacturer Gilat Satellite Networks reported reduced losses, but also lower sales, for the three months ending March 31.

The Petah Tikva, Israel, maker of very small aperture terminals (VSATs) on May 3 reported a loss of $1.1 million on sales of $53 million for the period, compared to a loss, after writeoffs, of $4.5 million on sales of $57.4 million a year earlier.

Gilat Chairman Shlomo Rodav also said in a statement that Erez Antebi had been appointed chief executive officer of Gilat Network Systems, which alongside Spacenet Inc. is one of the company’s two business units.

Gilat announced that during the period it won orders for a total of 360 Spacenet Connexstar VSAT terminals to be installed at Wendy’s and Arby’s restaurants in the United States.