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Sky TV shares slump after loss of football rights

Shares in Sky Network Television, the worst performing stock on New Zealand’s benchmark NZSX 50 today, slumped 6.2 percent after the pay-television company lost the rights to broadcast English Premier League football this season.

Sky Network shares dropped 35 cents to $5.32, crimping its gain this year to 16 percent.

Coliseum EPL Management is believed to be the new owner of rights to broadcast English football, Newstalk ZB reported.

Coliseum Sports Media is holding a media conference at 2pm in Auckland and the company is in broadcast talks with at least one phone company, the report says.

In addition to the football rights, Sky Network no longer has the Wimbledon broadcast rights and its pay-TV service faces increased competition from content delivered over other mediums such as the internet.

“The competitive environment is changing for them,” says Mark Warminger, who holds Sky Network shares among the $450 million in New Zealand equities he helps manager for Milford Asset Management.

“For a long time they have held a monopoly in this country and they have been able to secure content across the board,” he says. “This is the start of the change. They may lose a number of other sports in the future.”

Milford significantly reduced its Sky Network holding at $5.70 recently as the shares looked expensive, Mr Warminger says. The stock should trade around $5 to $5.30 today after the latest announcement. Before losing the football rights, he thought $5.40 was fair value.

“Sky TV is no longer a growth company, it is transitioning more to a dividend yield type stock.” The longer term consequences of competition should de-rate the multiple of the stock, he says.

The company’s shares have been trading at a price to earnings multiple of 16.9, and are forecast to drop to 14.6 times earnings, according to Reuters.

In March, Rupert Murdoch's News Corp sold its 44 percent stake in Sky Network for $815.3 million at $4.80 a share. Four months earlier, New Zealand’s billionaire Todd family sold its 11 percent stake for $218 million at $5.05 a share.

Lazard Asset Management’s Australian unit today said it had reduced its holding to 4.993 percent from 5.214 percent.

Two analysts rate the stock a ‘strong buy’ and three a ‘buy’, while three have a ‘hold’ recommendation and one a ‘sell’, according to a Reuters survey.


Comments and questions

New Tui billboard: "Not forking out for EPL broadcast rights allows Sky to drop its subscription price."

At last someone has challenged Sky monopoly. They, since their inception, have treated their subscribers as a captive audience. Let's hope their law unto themselves will become history. Competition will let in some sunshine, as well as Sky's fees on hold for a while and not the automatic annual increase on their questionable package choices.

The great thing about a free society you have choice. Just like Sky chose not to pay the earth for a programme that live runs between midnight and 7am, you have the right not to subscribe to Sky. You will not see TV One or any other channel in NZ taking up these rights.
Sky will continue to offer coverage to sports that matter to most NZers, and I for one will continue with my freedom of choice and keep my subscription to Sky. I see their share price is recovering. June 19, 2012, the share price was $4.97. Today at 2pm it is $5.38, close to a tax-free return of 8%, thank you Sky.

You sound like Sky's CEO. Or an employee.

JP, I think you may have not been payng attention to what sports NZers like to watch. Sky's CEO has actually stated that the EPL was the most mysky'd programme they offer, so I hardly think it doesn't matter to most NZers. All this shows is Sky continuing to dilute its sports offerings. Remember, we nearly didn't have the NRL and we've already lost the MotoGP and Wimbledon. So now we'll have to put up with yet another rerun of a boring game of rugby.

Perhaps you should read this article. TV One will have coverage, all for free too.

Perhaps read again. Sky was buying live coverage. TVNZ is delayed coverage. Match of the week. And as a mysky booking, yes, I can imagine it was due to the time slot.

It's not "free to air" if it comes from TVNZ forking out millions which came straight from our taxes...

You are right JP. I think it is great that people have freedom of choice these days. That would explain why I see so many kids running around in Man Utd, Chelsea, Arsenal and Man City shirts rather than Crusaders, Blues and Highlanders tops that kids of my generation had to wear as there was no choice. They got to see a broad range of sport and decided that football and more namely the Premier League were better to watch and support than Super Rugby. I personally think this is the future and that all sports will take back and distribute their own rights online in conjunction with an free to air partner. For me I only watch Football and Basketball so my choic is to cancel my sky sports subscription.

Serves Sky right. Karma has got them. They are so sneaky. Noticed they removed a movie channel MGM quietly. To make it even worse, they upped their charges. Roll on competition. Time for them to make the Rugby channel in existing packages, before some smart company outbids them on that as well.

Think you'll find MGM is now called Sky classics - not fewer channels from what I can see (although could be proved wrong). Your comments show you whinge if Sky has all sports and whinge if it doesn't have a sport - credability nil. I chose to have it for Rugby (the game they play in heaven) and RL. I couldn't care less about English soccer so good luck to them.

In fact, the ' new' Sky Classics movie channel which took over from MGM is showing fewer movies than under MGM.
MGM in May screened a total of 125 movies. Compare that to the pathetic 58 listings of movies this month under Sky Classics.
Sky, once again, does what it is very good at, and that is attempt to disguise downgraded offerings by claiming it is an improvement on what it offered before.
Smoke doesn't get in everyone's eyes, despite Sky's attempts.
The quicker Sky gets some real digital competition just can't come soon enough.

SKY didn't remove the MGM Channel, just named it SKY Movie Classics so they could show more than only old MGM movies.

Excellent decision not to renew / lost the rights
Will increase profits not reduce them !!!

Sky is very good value for the coverage of sport you get!

Sky TV = Fairfax
New technology taking away the 'rivers of gold'
MYVIPBOX - its all there and its free!!

Quit while you are ahead, JP!

Data caps, quotas, ISP exorbitant rates. Get real. The online deal is aimed at Australia, where these caps do not exist.

NZ football supporters with the antiquated internet services will get totally screwed by Sky losing these rights.

One game a week + highlights on TVNZ? Yeah right!

As a long-term sky subscriber who enjoys the EPL, it's a shame we heard about this through the media rather than Sky writing to us. They know where we live with the regular price increases.

Sky's content has got worse and worse in recent years. Discovery channel is now Crime channel, History channel is now crime channel, Nat Geo is now crime channel ... same four movies play 16 times a week.

This is why I watch the internet and not TV.

Ugh you are right. If I see another crime channel I think I will scream.

Sky TV has the rights to all the important sports Kiwis love to watch live, other than football now.
I used to enjoy watching F1 and V8 Supercars live and now I have no choice but to subscribe to Sky's monopolistically priced service to see those types of events live. Same goes for rugby and NRL. I like the service but don't like the fee structure or the monopoly - ripping off every Kiwi because of lack of competition.

I'm amazed that there are that many people who want to watch sport, yawn.

When I first heard this I thought "great, new online platform, etc", but no real solution past what you can do for free online anyway. For the dozen or so games I'd watch in a season Im definitely just going to watch the Sunday or stream live from offshore sites.

Sold mine months ago at a profit!

Sky TV is a monopoly raping the viewers of NZ. Have you seen their profit levels? The offering is constantly being watered down but their charges are consistently increasing! The Commerce Commission is useless and will use the loss of EPL to highlight that competition is alive and well. NZ needs a leader like Key to man up and the Commerce Commission needs to do something commercially sensible for once. NZ is stuck in the dark ages due to the two afore mentioned bodies. Despicable.