SKT - Sky Network Television

[Shareguy]

More good news.  No surprise

https://www.nzx.com/announcements/400206

[Mysterion]

More good news.  No surprise

https://www.nzx.com/announcements/400206

-Pay USD$30m for something
-Give it away for free
-good news

[mistaTea]

-Pay USD$30m for something
-Give it away for free
-good news

Yep, I am scratching my head on that one too.

Sky have effectively been given a modest discount to the expensive rights by handing over a service they overpaid for.

[LoungeLizard]

Yep, I am scratching my head on that one too.

Sky have effectively been given a modest discount to the expensive rights by handing over a service they overpaid for.

Do we know what the discount is? I haven't seen any details so it may be that rugbypass might finally have repaid some of the cost back by negotiating a reasonable deal.

[mistaTea]

Do we know what the discount is? I haven't seen any details so it may be that rugbypass might finally have repaid some of the cost back by negotiating a reasonable deal.

They won't release that kind of info.

Market does not seem particularly enthusiastic about it.

[Mysterion]

Do we know what the discount is? I haven't seen any details so it may be that rugbypass might finally have repaid some of the cost back by negotiating a reasonable deal.

-Add 40% (foxtel figure) from pre covid price that Spark paid.
-Multiply by number of world cups
-Subtract Rugby pass $10m book value.
-Answer

[LoungeLizard]

-Add 40% (foxtel figure) from pre covid price that Spark paid.
-Multiply by number of world cups
-Subtract Rugby pass $10m book value.
-Answer

So, they didn't give RugbyPass away for free then....

The market is a bit flat all round today. I wonder what the reaction would have been if SKY had announced that they had failed to get the rugby right?

[Mysterion]

So, they didn't give RugbyPass away for free then....

The market is a bit flat all round today. I wonder what the reaction would have been if SKY had announced that they had failed to get the rugby right?

[mistaTea]

If Spark Sport aren't planning to throw in the towel...it will be interesting to see what their next play is.

Waiting patiently to see if they get a crack at NZR negotiations next year?

Whoever wins the rights, NZR are going to be paid an absolute fortune. The amount Sky paid last time was desribed as "eye watering". Fairly safe to assume it will only be more expensive next time.

[mistaTea]

https://www.nbr.co.nz/investment/rwc-rugbypass-world-rugby-ink-deal/

The cost of the deal was not disclosed, but an industry insider expected it to sit between US$25 million to US$30m though it was not clear to them what was the cash component and what was the value of RugbyPass.

Ouch. So NZ$44M - NZ$53M? Let's be super generous and say Sky negotiated 'hard' and got NZ$15M for RugbyPass (it was probably $10M if they were lucky, but let's be optimistic!).

So you end up NZ$34 - NZ$43M. Wowzers if that is true!

Two RWC cycles, so NZ$17M - NZ$21.5M a piece! Probably right since the last one was reported to cost Spark $13M...and Sky have locked World Rugby in until the end of the decade.

Would be totally worth if if it translated to more subs that stick around for longer than a month at a time (each torunament is usually only a few weeks long).

Anyway, it is fantastic for existing Sky Sport fans that the RWC tournaments will be back on Sky - in one convenient place for them, no need to buy an additional sub from Spark.

Good for SKT shareholders too? Well it won't be good for FCF I can be confident about that!

[LoungeLizard]

Fees for watching live sport will go up, as they are everywhere around the world. That's the nature of the market - you pass on increasing costs to the consumer, where possible. SKY will do that and I expect most people who want to watch sport to understand that and cough up another $5-$10 a month without much of a grumble.I mean to say, everything is going up so why should sporting rights/content and coverage by any different?

[mistaTea]

Fees for watching live sport will go up, as they are everywhere around the world. That's the nature of the market - you pass on increasing costs to the consumer, where possible. SKY will do that and I expect most people who want to watch sport to understand that and cough up another $5-$10 a month without much of a grumble.I mean to say, everything is going up so why should sporting rights/content and coverage by any different?

BECAUSE everything else is going up it makes it harder for sky to pass on the full cost to consumers.

Sky is discretionary spend. Many will want to keep sky because they are cutting back on other spending and staying home more...

But if they jack up the pricing too high it makes people feel they are getting a bum deal and so churn starts to creep up again.

Otherwise sky could just pay 'whatever' for all content and not worry about it because the punters will just accept higher monthly fees.

I don't think so.

You are right that sky will do price increases at some point. But those price increases are unlikely to fully offset the increase in costs.

And they are scraping the bottom of the barrel for OPEX costs to save now given they are going after staff benefits.

[Mysterion]

The cost of the deal was not disclosed, but an industry insider expected it to sit between US$25 million to US$30m though it was not clear to them what was the cash component and what was the value of RugbyPass.

[Perky]

Yes agree lizard. Mistatea is blinkered by his disdain for his previous moneymaker.
Sky has now got the rights and whatever they have paid will have some commercial model behind that figure. I wouldn't necessarily assume the sky business model will stay the way it has always been. Maybe instead of giving access to all sports for the monthly subscription fee they might package up some of these tournaments and you have to buy them as an extra on top of a normal subcription ...like a pay per view.

Paying $29.95 to watch all rugby World Cup games in your living room...still cheaper than travelling to the other side of the world for a long black and almond croissant on the champs élysées

[Plata]

The problem with this company is that every reporting event has a high probability of showing a trend that will devastate shareholder value. As an example, think of the stock price if satellite subscribers declined 10% this year, or FCF was reduced even more for years from an expensive rights deal.

Holders have been moaning about the executive team for years, and yet trust this apparently inept management team to keep this increasingly precariously positioned company going. The old thesis for owning this, dreams of fat dividends from ridiculous cashflows is dead, we already know FCF is going to be under $60 million a year and I don't know about you but looking at the outlook I don't see this number climbing in future years.

I think even now the post capital return market cap of $300 million is high. Poor growth outlook, good cash generation but hardly any of it makes it back to holders, questionable future. It is kind of like a mansion on a cliff, but the cliff is eroding and the house is teetering on the edge. Sure the house might be cheap, but there is a good chance it is going over that cliff. I like to live on firm ground.

Disc: Sold out at ~$2.50