SKY TV has seen its annual profit drop 14 percent as its customers opt for online offerings over satellite TV.
On Friday the company reported a $146.7 million profit for the year to June 30, with revenue up just 0.1 percent.
SKY's losing subscribers for its satellite TV service, but has made a net gain of 1000 customers thanks to more paying customers for its online offerings FanPass and Neon - however they don't bring in as much money.
Half of its drop in profits was down to costs involved in its planned merger with Vodafone, which is still to be approved by the Commerce Commission.
The other major source of additional cost during the year was for programming, chief executive John Fellet said in a letter to shareholders released with financial statements to the NZX.
"In a lot of industries, competition normally results in a price war," he said. "In the content industry, it becomes an arms race."
Revenues were flat at $928.2m, a 0.1 per cent increase on the previous year.
The company declared a final dividend of 15 cents per share.
Mr Fellet acknowledged that "the launch of numerous new business models" for broadcast content has "challenged incumbent players both in New Zealand and around the world".
The shares last traded at $4.69, up 2.2 percent so far this year.
NZN / Newshub.