SKT - Sky Network Television

[LoungeLizard]

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.

Hmmm. They have said that there are further cost savings to come, so make of that what you will.

I agree that there is a pain point for everyone but when it comes to sport but an increase in price in the region of a couple of flat whites a month - that just isn't going to bite, except for those who are really feeling the squeeze ( and they would have jettisoned SKY before now).

I'm no fan of this Board generally but in this case they are damned if they do and damned if they don't. They HAD to secure the rights as sport is their core business. They have plenty of cash, no debt, reasonably profitable (for now) and I would expect, as pointed out, that they will have modelled the impact of paying X amount against not acquiring the rights at all. Just as they did with NZ cricket, which they were happy (and correct) to let go.

The rollercoaster rumbles on...

[mistaTea]

Hmmm. They have said that there are further cost savings to come, so make of that what you will.

I agree that there is a pain point for everyone but when it comes to sport but an increase in price in the region of a couple of flat whites a month - that just isn't going to bite, except for those who are really feeling the squeeze ( and they would have jettisoned SKY before now).

I'm no fan of this Board generally but in this case they are damned if they do and damned if they don't. They HAD to secure the rights as sport is their core business. They have plenty of cash, no debt, reasonably profitable (for now) and I would expect, as pointed out, that they will have modelled the impact of paying X amount against not acquiring the rights at all. Just as they did with NZ cricket, which they were happy (and correct) to let go.

The rollercoaster rumbles on...

Yes and that is my whole point...they really ARE damned if they do and damned if they don't.

They have no fantastic options right now and are trying to pick (what they feel) is the least bad.

[mistaTea]

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

ROFL. If Sky are charging existing sport subs $75/month (starter + sport + MySky)...and then ask them for another thirty bucks to watch a rugby tournament...there will be riots on the street mate.

[LoungeLizard]

SKY is and was always a speculative investment. It's not a steady as you go stock so not really relevant to wish it so. If you bought in at 15 or 16c as I did, things are fine. If you invested a lot further back, as some here have, then you got burnt and your views are coloured accordingly.

Moving forward, the financial of SKY actiullay looks goodlooks good - low PE, high EPS, no debt, returning to net growth. Things have stabilised. Even if FCF is around $60m then a low 50% payout would mean 20cps dividend on the reduced number of shares after the buyback.

All financials indicate to me that SKY is undervalued, but it's the risk of a bigger player coming in and upsetting the apple cart that keeps the SP low. Risk v reward. But even there I reckon there's more chance of SKY being taken overdue to its low cap and client base.

Each to their own. I'm waiting for the cap return and will re-assess things after that.

[steak and cheese]

ROFL. If Sky are charging existing sport subs $75/month (starter + sport + MySky)...and then ask them for another thirty bucks to watch a rugby tournament...there will be riots on the street mate.

$30 for the biggest rugby tournament is a bargain. People will moan but still pay it. The same people probably spend $40/$50 on 1 PPV boxing/UFC event.

[LoungeLizard]

ROFL. If Sky are charging existing sport subs $75/month (starter + sport + MySky)...and then ask them for another thirty bucks to watch a rugby tournament...there will be riots on the street mate.

When have kiwis ever rioted on the streets MistaTea? There would be more chance of a riot on the street if the rugby wasn't shown live.
And do you really think the price would be any cheaper if Silver Lake decided to get in on the act? A US private equity firm being concerned about the cost of living for the average kiwi - there's a laugh.

[mistaTea]

When have kiwis ever rioted on the streets MistaTea? There would be more chance of a riot on the street if the rugby wasn't shown live.
And do you really think the price would be any cheaper if Silver Lake decided to get in on the act? A US private equity firm being concerned about the cost of living for the average kiwi - there's a laugh.

When indeed?

I seem to remember sky losing about 300K satellite subs...the majority of those left in a two year period or so...

[Perky]

But up until today that is exactly what subscribers have been paying ...$75 for sport or (SSN for $40) including NO RWC as they didn't have the rights.

Under your model they now get all the new confirmed rugby content for no additional cost?

Ya dreaming mate

They will be recovering those extra costs somewhere going forward

[mistaTea]

$30 for the biggest rugby tournament is a bargain. People will moan but still pay it. The same people probably spend $40/$50 on 1 PPV boxing/UFC event.

Well which model are we predicting they will go for? A general price increase or PPV tournament?

Remember a lot of the games are mandated to be FTA... so people will balk at a $30 charge on top of their normal fee. I am sure many will still pay it...but they will be unhappy, and aren't we all about 'the customer' now?

Or perhaps they will do a general fee increase AND PPV for the tournaments? chr***, I shudder to think.

With the PPV...if you isolate just the mens RWC as one of the most popular tournaments they have the rights to...by the time you add in all the operational costs Sky incur, including marketing and commentating etc...the total cost to sky of that tournament could still be around $15M... at $29.99 a pop, you would need to get 500K subs to break even.

Let's say I am wrong and the total cost is only $10M to Sky. That is still 333K subs.

Ok, let's be fair and take into account the extra ad revenue. Not sure how to quantify that but you can probably still show that sky would need to get 300K - 400K subs to pay the fee (most will already be paying sky for a regular sub).

And I say that will be a Herculean task to get that many. They only have around 400K sports subs as it is.

When Spark did the mens RWC they had to give it away for 'free' to their broadband and mobile customers to get the subs up. Even then they didn't get nearly as many as they had hoped for.

They charged a tournament fee for it like you propose...so why didn't they have hundreds of thousands of people lining up to pay for it?

[mistaTea]

But up until today that is exactly what subscribers have been paying ...$75 for sport or (SSN for $40) including NO RWC as they didn't have the rights.

Under your model they now get all the new confirmed rugby content for no additional cost?

Ya dreaming mate

They will be recovering those extra costs somewhere going forward

You have to have pricing power to do that...

[Perky]

I'm no expert mistatea but the revenue opportunities will be wider than just charging more for subs

I would guess they will include


1.Increase sports subs for satelite and streaming

2. Large increase in advertising revenue .these big tournaments have global brands like Dhl Heineken, emirates etc and they will want to spend in the markets they operate to leverage their sponsorship.
Then their are all the local companies who aren't tournament sponsors but are rugby  associated ie air nz, Bunnings, itm etc who will still want to keep their brand connected to rugby viewing customers
3. Recovery of some investment cost from free to air partners
4. Surcharges to commercial venues using tournament to attract customers ie pubs
5. pay per view packages to tournament only viewers

Then there will be a general amortisation of the costs across other parts of sky business

Global sports rights are crazy expensive but maybe sky have made this investment so they have something meaningful to offer potential suitors between now and 2029

[mistaTea]

I'm no expert mistatea

'nuff said.

[Mysterion]

25 million new shares issued
=
25 million in accumulated losses

[Mysterion]

Just lol if they're paying $25m for it!!

[Mysterion]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SKT/400468/381069.pdf

CEO on market purchase = no secret takeover happening!!