SKT - Sky Network Television

[Mysterion]

MT probably happy he got out before the big market sell off last night.

I wonder if the stock will drop lower considering the biggest bull in the last 5 years has completely bailed and now is the biggest bear here!

If it goes $2.20 you gonna buy back in?

[mistaTea]

MT probably happy he got out before the big market sell off last night.

I wonder if the stock will drop lower considering the biggest bull in the last 5 years has completely bailed and now is the biggest bear here!

If it goes $2.20 you gonna buy back in?

It could fall below $2 and I would not considere buying unless the Board and CEO has changed.

[mistaTea]

Remember all those times I tried to sound cool and quote Buffet by saying my favourite holding period is forever?

[Mysterion]

Remember all those times I tried to sound cool and quote Buffet by saying my favourite holding period is forever?

Not as funny as these...

[mistaTea]

Not as funny as these...

Absolute clangers!!

[mistaTea]

Not as funny as these...

And then, despite all of my bs...everyone on ST managed to make money on Sky except for me!!!!

[Mysterion]

https://moiglobal.com/wp-content/uploads/asia21-peter-kennan.pdf




So what's the actual free cash flow figure now?

[Mysterion]

Free cash flow excluding one offs according to user Plata is $44m.

Share price according to method above should therefore be $2.80.

That's similar to most broker reports who have the price target at around mid $2's to $3.

Just a question weather Sky can execute current strategy and keep costs low and renew content at a reasonable price. Easy said then done.

Bottom line: Is it worth the risk?

[Mysterion]

I'm wondering weather Sky will be in danger of being removed form the NX50 again after the capital return.

It used to be number 50 on the list a year or so ago and it was in danger of being removed when Eroad was about to be added. But Eroad stock has now dropped and Sky stock has recovered. Sky is 39 on the list, so seems safe but after cash return it will drop to around 45-48.

I know market cap is not the only factor but it does add another "risk".

This is where I think management may have been right in looking at MediaWorks. If they're not going to be taken over they might as well buy something as they still have other cash + $150m draw down.

[LoungeLizard]

I'm wondering weather Sky will be in danger of being removed form the NX50 again after the capital return.

It used to be number 50 on the list a year or so ago and it was in danger of being removed when Eroad was about to be added. But Eroad stock has now dropped and Sky stock has recovered. Sky is 39 on the list, so seems safe but after cash return it will drop to around 45-48.



I know market cap is not the only factor but it does add another "risk".

This is where I think management may have been right in looking at MediaWorks. If they're not going to be taken over they might as well buy something as they still have other cash + $150m draw down.

Mediaworks? You are kidding I hope. Just because SKT have some money (ours) to play with, that's no reason to throw it down the drain. And believe me, if the deal had gone through SKY would have gone down the drain with it.
The Board needs to keep the money tucked away (earning interest) for when they really need it. They can barely manage one organisation let alone two.

[Plata]

https://finance.yahoo.com/news/calculating-intrinsic-value-sky-network-180552318.html

Vaguely interesting auto-generated sky valuation. Notably they reckon Sky is at fair value right now, and some of their assumptions to get that valuation look rather optimistic I must say.

[Mysterion]

Mediaworks? You are kidding I hope. Just because SKT have some money (ours) to play with, that's no reason to throw it down the drain. And believe me, if the deal had gone through SKY would have gone down the drain with it.
The Board needs to keep the money tucked away (earning interest) for when they really need it. They can barely manage one organisation let alone two.

There are good advertising and administration synergies. Just comes down to price. The $300m valuation was pre Ukraine war. Valuation now is likely $150m, could be even less next year. Worth another look IMO.

What really needs to happen is Sky needs to de-list. It's not worth the costs anymore and too much public negativity.

I think there will likely be a PE buy out after the cash return but I doubt it will be much of a premium as it will likely coincide with them pulling guidance or downgrading earnings due to the upcoming rugby/content deals and other increased costs. They are also unlikely to hit their $10m-$20m of new savings target.

I think the best way to play this would be to wait for the stock to drop a meaningful amount or wait for some bad news, then try and jump in and hope a PE takeover happens. Either that, or wait for a PE offer and then jump in on the hope another buyer emerges (like WBD/Comcast) and a bidding war happens.

It's not really about the balance sheet anymore, as it was over the last few years, it's now about earnings. And to a lesser extent costs. The removal of employee benefits just shows you how far they've scrapped the barrel and it's likely there's almost nothing left to save now. Employee morale is likely all but gone (if it hadn't already was). The 10 hour wait times of the phone support also shows you how bad things are there. Not sure how the new offices will help. The current building must be getting worn out now. Place is probably already falling apart.

The real danger in all of this is that the "inevitable takeover" may in fact end up being a "bailout", or a paltry offer/arrangement that the larger shareholders except at the expense of retail investors.

Does anyone here actually know what the interest rate will be on the $150m draw down if they choose to take it up? In the USA the 30 year residential mortgage rate is now 6%. My guess is that the NZ based banks would want at least 12% interest plus strict caveats in this environment. In other words they really only have $70m cash and another $40m cash over the next year at most. Will be hard to save up another cash to secure more exclusive rights and pay out dividend

[Hectorplains]

I think the best way to play this would be to wait for the stock to drop a meaningful amount or wait for some bad news, then try and jump in and hope a PE takeover happens. Either that, or wait for a PE offer and then jump in on the hope another buyer emerges (like WBD/Comcast) and a bidding war happens.

Wow, if this is "the best" strategy, I'm shuddering at what the also rans might be... Buying stock on the main premise of their being a potential takeover target is a fool's game.

[Mysterion]

https://www.nzherald.co.nz/business/netflix-vs-tvnz-vs-three-are-we-witnessing-the-slow-death-of-kiwi-tv/UDZ24YMBI6CQKLUASAVR3RETCE/

"In New Zealand, there are still many people who are going to continue to consume television in a very traditional sense for a very long time – either by free-to-air or by the Sky platform," he says.

"We tend to live in a different world than regional New Zealand, where people still like to watch the All Blacks on a Saturday night on Sky and then tune in to The Block on a Monday, Tuesday and Wednesday night."

Habits take time to break, and Kyne sees the future of New Zealand television being defined by two timelines: the steady decline of traditional television on the one hand and the uptick in digital viewing on the other.

Warner Bros Discovery owns HBO Max and Discovery Plus, both of which have a subscription and ad-funded tiers already operating in the international market. The technology has been tried and tested and it's only a matter of time until those services are eventually rolled out in New Zealand.

"Our operating model is about being highly diversified and having our content operating in every market segment possible," says Kyne.

"We want to be in free-to-air, we want to be in pay TV, we want to be on BVOD [broadcaster video on demand], we want to be on SVOD."

Kyne says there's been a marked shift internally at the business over the last year.

"The future of ThreeNow is where we're focused at the moment. We went from years of under-investment to heavy, aggressive investment in the past 12 months. We've focused on increasing our distribution to more connected TVs and that will continue to happen over the next couple of months."

[mistaTea]

https://www.nzherald.co.nz/business/netflix-vs-tvnz-vs-three-are-we-witnessing-the-slow-death-of-kiwi-tv/UDZ24YMBI6CQKLUASAVR3RETCE/

"In New Zealand, there are still many people who are going to continue to consume television in a very traditional sense for a very long time – either by free-to-air or by the Sky platform," he says.

"We tend to live in a different world than regional New Zealand, where people still like to watch the All Blacks on a Saturday night on Sky and then tune in to The Block on a Monday, Tuesday and Wednesday night."

Habits take time to break, and Kyne sees the future of New Zealand television being defined by two timelines: the steady decline of traditional television on the one hand and the uptick in digital viewing on the other.

Warner Bros Discovery owns HBO Max and Discovery Plus, both of which have a subscription and ad-funded tiers already operating in the international market. The technology has been tried and tested and it's only a matter of time until those services are eventually rolled out in New Zealand.

"Our operating model is about being highly diversified and having our content operating in every market segment possible," says Kyne.

"We want to be in free-to-air, we want to be in pay TV, we want to be on BVOD [broadcaster video on demand], we want to be on SVOD."

Kyne says there's been a marked shift internally at the business over the last year.

"The future of ThreeNow is where we're focused at the moment. We went from years of under-investment to heavy, aggressive investment in the past 12 months. We've focused on increasing our distribution to more connected TVs and that will continue to happen over the next couple of months."

Whichever you you try to read that...it does not bode particularly well for sky.

Sophie has pointed out the big advertising market - over $3B.

Well, Warner-discovery will go after that too and any relationship they keep with sky ongoing will be favourable to them and not Sky.

Sky have no bargaining power now and will just be lucky to get any deal to ensure neon can retain some relevance.

Not good. Not good at all.