Sky TV chief executive John Fellet has told staff it is not the only media company facing "head winds".

Sky Television will increase the price of its Sky Basic pay-television service by 69 cents a month and Sky Sports by $1.61 a month.

The broadcaster has found itself caught between a rock and a hard place as more customers switch off its satellite television service for internet-based rivals, which are also bidding up the cost of content.

Sky forecast this month that it would shed about 45,000 satellite television customers in the year to the end of June, prompting analyst Morningstar to suggest a price cut to keep customers loyal.

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But Sky chief executive John Fellet said its content costs would rise by about $30 million this year.

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The price rise would only cover half that extra cost, he said.

It is understood a new deal Sky signed last year to retain its rugby broadcasting rights will further increase Sky's costs in future years.

Spokeswoman Kirsty Way said details were confidential but Sky had to pay an "eye watering number" and an "eye watering increase".

The rugby deal is good news for top rugby players, who are tipped to be in line for substantial pay rises.

Sky has so far declined to strike a deal for the New Zealand rights to the English premier league, with a source putting the asking price for those at more than $4m a year.

But it has agreed to pay more for cricket rights.

The forecast drop in Sky satellite subscribers means Sky will have fewer customers over which to spread those rising content costs.

That has raised the prospect of a vicious cycle that has seen more than $500m wiped of the value of Sky on the NZX during the past two weeks as its shares fell by a quarter.

Way said the company was "not in panic mode".

The company was aware people had more choices and that the market was transitioning to internet-delivered content, but satellite television remained the only reliable way of getting HD content to the whole of New Zealand, she said.

"We are just in that difficult situation of more-expensive-than-ever costs and we want to hang on to key content for our customers.

"A result of competition is often bidding of prices for things upwards. You would expect at some point in time there might be a market correction, but that is what we are living with right now."

Sky usually changes its prices in April or May but held off a decision a little longer this year. Way said the rise was also lower than usual. The price rise will take effect on June 25.

The company planned to provide "more value" for customers, for example by providing better search and "recommendation" features to discover new programmes.

"Companion apps" were also in the wings that would let people use their smartphones to delve deeper into shows and events as they were being broadcast on television, she said.

While Sky is forecasting a loss of 45,000 satellite subscribers, it expects a 25,000 rise in the number of customers who use its FanPass and Neon internet television services.

Fellet said in an email to staff that customers often said they only wanted to pay for the channels they watched.

That seemed logical "until you gain a good understanding of how the TV business works", he said.

"Some pay TV operators have tried to introduce smaller bundles.

"In reality most customers end up paying more or less the same as what they were paying before, once they've subscribed to the bundles with all their favourite channels. All they have to show for it is that now they have fewer channels."

Sky was not the only "media company" facing head winds, he told staff.

"The two major newspaper chains in New Zealand look like they will merge in order to survive," he said, referring to a possible merger of publishers Fairfax Media New Zealand and NZME.

"Radio and television advertising is down. Even global giants like the Disney Corporation, Apple and Netflix are at three-year lows. TVNZ sees advertising going backwards and let's not even talk about MediaWorks."

Price changes