SKT - Sky Network Television

[Mysterion]

Let's think it through...

• So Sky have ~550K MYSKY subs.
• There are ~100K VTV customers and the vast majority of those just use the box for freeview + apps (no SKY sub)
• If you add up all the other boxes like AppleTV, Smartvu - if you were super generous you might say there is another 100K. I would be surprised if it was even half that, but let's use the big number for now

So you have maybe 750K households that might be interested in a STB. At least 75% of those already have MySKY...and the majority of those have been with Sky for 5+ years (and, one would imagine, reasonably happy with the current STB).

33% of NZ households interested in a STB, and Sky already has most of them...of the others who are using AppleTV to stream content from apps or one of the freeview boxes to do that and watch/record freeview channels...how many of those are going to be tempted to pay Sky $200 for the new box (even if there are some decent features) AND start paying a monthly sub anywhere between $50-$100 per month depending on packages selected? Very few I would say!

Most of the 550K MySKY subs would have kept paying their subs month in and month out anyway. So even if you managed to convert all of them, what have you actually gained? A massive expense with no increase in earnings. Possibly there could be a long term gain if the new box is really awesome and it means more of the 5-years-or-less subs stick around longer. But we are not talking about big numbers here.

Then you have the 67% of households who are comfortably streaming on SmartTV, Chromecast, VPN, Torrenting and/or using PLEX. The PLEX app is really quite advanced now in terms of how it curates OnDemand content. In theory you are only supposed to connect it to a library of content you have legitimately purchased. But most people just connect to a mates server where they have auto downloads of stolen content.

Between those legally streaming and stealing...how many of these 'new customers' are Sky going to attract with the new box? Zilch?

On one hand, I think the new box does have some good features and they should have it as an option for customers. On the other hand, because the box is so damn late now (4 years late if you consider the Infinite Video Platform that was going to be released in 2018) that consumers have quite likely moved on.

But let's say I am wrong about all of that...and the new STB is so good in terms of features and performance that it could become incredibly popular. Not only do exist mySKY subs scramble to get their hands on one, but a decent segment of consumers who have never had a traditional Sky sub in their life could be tempted...

Well, none of that is likely to happen with a $200 fee to borrow the box (not own, borrow) as well as an ongoing rental fee each month.

Cyclical technology upgrades should be factored into their overall pricing. If they want to keep the MySky fee model (a mistake I think) then the launch should be simple:

• You contact existing STB subs and let them know they can keep the old box if they want or swap out for the new one. No extra fee, they just keep paying what they are paying in terms of packages + rental fee but get a new box if they want it
• You offer it to new customers right away, just as you currently offer MySky. You let them know they have the option of the new box, you select their packages and add the rental fee if they want to record and you get them set up exactly how you currently set up MySky customers. The idea being that there is an upfront cost to Sky to set the customer up but if Sky look aftet the customer and provide value they will renew their sub and Sky will recoup the set up costs

What they are trying to do is downright cheeky actually, and because none of these guys really know what they are doing...they increase the odds significantly that this ends up being an expensive exercise for the owners with minimal return.

Here is Foxtel pricing sheet.

https://www.foxtel.com.au/content/dam/foxtel/shared/pdf/foxtel-price-guide-tv-apr-2022.pdf

Looks like they're charging $199 for the latest box.

I think Sky will drop the price of the current box to $99 next year and then bring out a newer model with more storage. 4k should be rolled out with the new optus satellite so storage will get used up faster. New box is only 1TB.

I think overtime you will see customers using different platforms to suit their needs.

It will be at least 12 months before the benefit is know with this new box because of the supply issues and teething problems.

They are some interesting things they can do with the new box in terms of advertising and targeting customers and creating custom profiles etc.

I wouldn't put too much emphasize on the price. People will pay the $200 fee when they are ready to upgrade. There will be lots of discounts etc. Price doesn't matter.

It all comes down to rights re-newel. As we've seen over in Aussie, Foxtel renewed the Aussie rules football over a long term deal. So it does seem plausible that Sky has a chance to renew again in 2025.

The only question mark is weather WBD renew again. But even if they don't and Sky still holds the major sports rights, then it might not be so bad. They're are lots of other content out there to buy.

As an investment tho, Sky is being squeezed on all sides, so it doesn't look good for the dividend payout etc. Which is your reason for selling. I still think however, a takeover will come and the price will jump. Just a question of timing.

[mistaTea]

Here is Foxtel pricing sheet.

https://www.foxtel.com.au/content/dam/foxtel/shared/pdf/foxtel-price-guide-tv-apr-2022.pdf

Looks like they're charging $199 for the latest box.

I think Sky will drop the price of the current box to $99 next year and then bring out a newer model with more storage. 4k should be rolled out with the new optus satellite so storage will get used up faster. New box is only 1TB.

I think overtime you will see customers using different platforms to suit their needs.

It will be at least 12 months before the benefit is know with this new box because of the supply issues and teething problems.

They are some interesting things they can do with the new box in terms of advertising and targeting customers and creating custom profiles etc.

I wouldn't put too much emphasize on the price. People will pay the $200 fee when they are ready to upgrade. There will be lots of discounts etc. Price doesn't matter.

It all comes down to rights re-newel. As we've seen over in Aussie, Foxtel renewed the Aussie rules football over a long term deal. So it does seem plausible that Sky has a chance to renew again in 2025.

The only question mark is weather WBD renew again. But even if they don't and Sky still holds the major sports rights, then it might not be so bad. They're are lots of other content out there to buy.

As an investment tho, Sky is being squeezed on all sides, so it doesn't look good for the dividend payout etc. Which is your reason for selling. I still think however, a takeover will come and the price will jump. Just a question of timing.

Too many 'ifs', 'maybes' and 'I thinks'...

I would be shocked if Sky didn't keep the rugby, but it will remain very expensive.

I would be shocked if Sky locked up a long term exclusive deal with WMD. Once again, I think it would be a pyyric victory if they do because if Warner-Disco are going to go against their international strategy to roll out OTT and make an exception for NZ...well that won't come cheap.

More likely Warner will have their cake and eat it by expanding the co-exclusive Disco deal to encompass Warner content. An option Sky can afford, but it will put some pressure on NEON subs? How much pressure? chr*** only knows.

For the STB...I actually think pricing does matter. Your existing subs are not going to be clogging up the phone lines with equiries about upgrading if they have to pay a $200 fee and then keep paying the same monthly sub price (rental fee and all). Yes, they will have to do some 'very special' deals with existing subs to get their interest...like give it for free...and that will put more pressure on cashflows.

But the existing MySky subs aren't even the issue anyway. Most of them were going to keep paying Sky for MySky anyway...

This box is being touted as a 'game changer' (that is what Vodafone said about VTV btw and the box was clunky as Hell with major bugs. Even when they sent the box out for 'free' to their broadband customers many didn't even bother to plug it in given they only had ~100K users in the end, most not taking the Sky content. That box did have some cool features though (3 day channel timeshift, aggregated linear TV with apps etc) and it was unpopular. Hence Voda sh1tcanning it after only a few years).

The market wants to understand the growth story for Sky. And if the new STB is a big part of that growth story (i.e. attracting a decent portion of consumers who do not already have MySky) then I think the market and shareholders are probably going to be disappointed.

People who don't currently have a box don't need one. They sure as Hell aren't going to pay $200 for it...as well as then have to take a Sky package that will cost them $40 minimum (Starter + rental) to $120 per month for the whole shebang.

Take ARPU of ~$80/month. Do you think that the average person who is not currently a Sky customer is going to want to pay $1160 in total to Sky to have a bunch of channels they don't even want on a box they don't really need? I am struggling to see how this is a big growth lever. Might help some with churn, but growth? Hard to see it.

Even more suprised that the SP is still as high as it is.

[Mysterion]

Too many 'ifs', 'maybes' and 'I thinks'...

I would be shocked if Sky didn't keep the rugby, but it will remain very expensive.

I would be shocked if Sky locked up a long term exclusive deal with WMD. Once again, I think it would be a pyyric victory if they do because if Warner-Disco are going to go against their international strategy to roll out OTT and make an exception for NZ...well that won't come cheap.

More likely Warner will have their cake and eat it by expanding the co-exclusive Disco deal to encompass Warner content. An option Sky can afford, but it will put some pressure on NEON subs? How much pressure? chr*** only knows.

For the STB...I actually think pricing does matter. Your existing subs are not going to be clogging up the phone lines with equiries about upgrading if they have to pay a $200 fee and then keep paying the same monthly sub price (rental fee and all). Yes, they will have to do some 'very special' deals with existing subs to get their interest...like give it for free...and that will put more pressure on cashflows.

But the existing MySky subs aren't even the issue anyway. Most of them were going to keep paying Sky for MySky anyway...

This box is being touted as a 'game changer' (that is what Vodafone said about VTV btw and the box was clunky as Hell with major bugs. Even when they sent the box out for 'free' to their broadband customers many didn't even bother to plug it in given they only had ~100K users in the end, most not taking the Sky content. That box did have some cool features though (3 day channel timeshift, aggregated linear TV with apps etc) and it was unpopular. Hence Voda sh1tcanning it after only a few years).

The market wants to understand the growth story for Sky. And if the new STB is a big part of that growth story (i.e. attracting a decent portion of consumers who do not already have MySky) then I think the market and shareholders are probably going to be disappointed.

People don't currently have a box don't need one. They sure as Hell aren't going to pay $200 for it...as well as then have to take a Sky package that will cost them $40 minimum (Starter + rental) to $120 per month for the whole shebang.

Take ARPU of ~$80/month. Do you think that the average person who is not currently a Sky customer is going to want to pay $1160 in total to Sky to have a bunch of channels they don't even want on a box they don't really need? I am struggling to see how this is a growth lever.

Even more suprised that the SP is still as high as it is.

Bro, we all know the box is sh*t. It's a gimmick, like broadband. But it is important in that it consolidates the market position.

Sky as a stand only investment = SH*T

Sky as a takeover target = DEM GAINZ!

Things that got my attention lately:

1. Directors haven't bought any shares on market
2. Employees got benefits cut (no free sky)
3. Rugbypass/Rugby deal taking very, very long time.
4. Court order stock return (ie no buyback or extra divdy)
5. Low NZD
6. Media speculation about takeover
7. Discovery NZ restructuring
8. Large shareholders not selling (no SPH lately.)

ME = SERIOSULY THINKING A TAEKOVER IS (MIGHT BE) HAPPENING SOON!!!

[mistaTea]

Bro, we all know the box is sh*t. It's a gimmick, like broadband. But it is important in that it consolidates the market position.

Sky as a stand only investment = SH*T

Sky as a takeover target = DEM GAINZ!

Things that got my attention lately:

1. Directors haven't bought any shares on market
2. Employees got benefits cut (no free sky)
3. Rugbypass/Rugby deal taking very, very long time.
4. Court order stock return (ie no buyback or extra divdy)
5. Low NZD
6. Media speculation about takeover
7. Discovery NZ restructuring
8. Large shareholders not selling (no SPH lately.)

ME = SERIOSULY THINKING A TAEKOVER IS (MIGHT BE) HAPPENING SOON!!!

Directors and management aren't buying shares because Sky is not cheap now, regardless of what they might say to the contrary publicly.

But hey, I have no idea.

If you are convinced that there is someone out there willing to pay ~$400M to purchase Sky then you best jump in and buy some shares now to get 'dem gainz'.

For someone to buy Sky, you would think they would think the purchase price was at least 50% off 'intrinsic value'. So if you think there are players out there that think Sky is ultimately worth ~$800M then good luck!

[Mysterion]

Directors and management aren't buying shares because Sky is not cheap now, regardless of what they might say to the contrary publicly.

But hey, I have no idea.

If you are convinced that there is someone out there willing to pay ~$400M to purchase Sky then you best jump in and buy some shares now to get 'dem gainz'.

For someone to buy Sky, you would think they would think the purchase price was at least 50% off 'intrinsic value'. So if you think there are players out there that think Sky is ultimately worth ~$800M then good luck!

Yeah bro!

My big wet dream = Discovery ANZ buying both Foxtel and Sky NZ in a mega deal and combining both entities under a single corporation HQ in Singapore

[Mysterion]

https://www.newstalkzb.co.nz/on-air/mike-hosking-breakfast/audio/sophie-maloney-sky-television-ceo-after-announcement-of-new-200-box/

Holly Sh*t, Mike just ripped Sophie apart in this interview!

[Mysterion]

@3:25

"New price packing in the new year"

[Mysterion]

Quotes:

-Box is transformative
-We have been slow
-We are "discretionary spending"
-People dip in-between streaming services
-It's a google card box
-Sophie using new box in Nelson

[Mysterion]

https://www.reddit.com/r/newzealand/comments/xd3myo/sky_bosses_tell_staff_no_more_free_tv/

[Mysterion]

https://www.reddit.com/r/newzealand/comments/xkjsm7/sky_tv_reveals_new_200_sky_box_plus_cheaper_sky/



"horribly laggy"

[mistaTea]

https://www.newstalkzb.co.nz/on-air/mike-hosking-breakfast/audio/sophie-maloney-sky-television-ceo-after-announcement-of-new-200-box/

Holly Sh*t, Mike just ripped Sophie apart in this interview!

See...SM was banging on about how the new box is a reward for EXISTING customers.

So zero revenue growth.

She didn't even try to claim that anybody who doesn't already have sky would be remotely interested in the new box.

Expensive project and no growth.

People would be more likely to sub to a sky app. That was Martin's original plan - ditch the hardware and just go streaming only. I suspect the board got cold feet and made him reverse that decision.

He knew it was going to be crap so left before he could get nailed. Smart man.

[mistaTea]

8. Large shareholders not selling (no SPH lately.)

Trading volumes so low and SP under pressure. Big holders like PK trapped.

[Plata]

I'm wondering where all the capex is going. This box deal probably won't be a hot selling. Those that do buy it (I imagine to be few) will be paying for it up front so in theory this might not consume too much cash flow at all. Only caveat is if they start offering it for free/cut price OR if they buy a bulk order of them up front. What other major capex projects do they have? Where is all the FCF "investment for growth" going?

[Mysterion]

2.19

OK...Either a takeover needs to happen now or the board/management need to start buying on market as this is starting to become an absolute sh*t show if it wasn't already.

[Mysterion]

2.15