Sky TV shares plummet to 18-year low as Amazon looms

Hamilton Hindin Green partner Grant Williamson says Sky's long-term prospects remain uncertain

Sky Network Television shares dropped to their lowest level in more than 18 years after a report that global internet giant Amazon is making a play for New Zealand's rugby broadcasting rights, a key drawcard for the pay-TV operator.

The shares fell as low as $2.58, the lowest since January 1999 and before the merger with former cornerstone shareholder Independent Newspapers Ltd. The stock was recently down 7.5 percent, or 21 cents, to $2.59, on a day that holders lost the rights to a 12.5 cents-per-share dividend.

The Auckland-based company has been under pressure this year to address sinking subscriber numbers at a time when online streaming video offerings such as Netflix are seen as a cheaper alternative to Sky's service. One of the major pieces of value seen as protecting Sky's customer base has been its retention of rugby broadcast rights and a production team that would be hard to replicate.

The NZ Herald reported this weekend that Amazon is likely to compete for the next round of rugby broadcast rights from 2021 via its Prime Video streaming service, following earlier predictions by ForBarr and others.

"There's continuing uncertainty over the long-term prospects for Sky TV," said Grant Williamson, a director at Hamilton Hindin Greene in Christchurch. "I think analysts have almost given up on them."

The stock is rated an average 'sell' based on six analyst recommendations compiled by Reuters, with a median price target of $2.99.

While ownership of premium sporting content has been a boon for Sky it also proved an obstacle to its proposed merger with Vodafone New Zealand, a move it says is a response to the changing media environment.

The Commerce Commission eventually shot down the $3.44 billion deal on concerns that a combined group's premium sporting content could be bundled into a single mobile, landline, broadband and pay-TV offering, while the roll-out of the government-sponsored ultrafast broadband programme presented a "significant opportunity" to attract new customers with a larger bundle of services.

Sky and Vodafone had initially planned to appeal the decision, but have since given up on that and instead are looking at other ways they can leverage off each other's business, though they've yet to provide any public details.

(BusinessDesk)


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19 Comments & Questions

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Didn't com com recently come out and say these guys had a monopoly? ..Lol

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Com com are a joke. Completely out of touch with reality.

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Yep, a monopoly of a dying industry. It's similar to not allowing a company to merge which was dominating the horse a carriage industry in 1920.

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Just proves that catching a falling knife is often a fools game, even when the Chief Exec of the company is "backing up the truck"!

$152K originally bought @ $3.02, now the share price is $2.56 - a mighty return of -15% and $23,000 loss for a mere week and a half hold!

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Lucky he gets a salary as well eh Moosie

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Indeed. I see Handley is doing the same old, same old and not buying a single share.

Love the 1 thumbs down from my comment - did I hit a raw nerve at SKT?

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Don't forget rugby is growing rapidly in the US and Amazon could be eying this, as well as the British Isles market. Gaining the US market will be very very attractive for sponsors like Adidas and AIG.

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My hubby and I have been Sky subscribers since day one, and we hate rugby anyway! We get all the channels but only ever watch about four....and that includes One and Three - the rest are old junk. The only reason we don't cancel is we still hold shares in our Family Trust.

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Could you please turn the satellite off once everyone else has left?

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Maybe this is a bit too simple, but why not get rid of all those channels you don't watch and sell the Sky shares at the same time? You'll be rid of two lots of old junk that way.

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Sky is dead man walking. They have their heads in the sand and refuse to admit their business model is stuffed.

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I can't see how their business model is stuffed. Pay TV has plenty of legs left which is why Amazon is stepping into the game. Sure the industry is changing and bundled TV channels and satellite delivery is on the way out, with on demand and internet based TV appearing the way forward. However don't forget that at $15/mth with more than 100m subscribers that Netflix is forecast to lose $2b this year, whilst Sky made a profit $113m from 850k subscribers. Netflix also has no view on when it will start to make and profit and has $20b in debt. Sky has no debt, and thus the ability to raise a war chest. Both business' have challenges, but I know who'd I'd rather be CEO of. Content is king, and just consider this - HBO (other wise known as the SoHo channel in NZ) beat Netflix to the most Emmy's at the recent Primetime Emmy awards. Thus Sky actually has better content than Netflix, plus every sport under the sun. We just love to bash a tall poppy in NZ, and our share market like most share markets doesn't behave rationally, and markets hate uncertainty.

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Use rugby pass instead...

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Awesome, hadn't realised they had rights, they didnt have them last year, and only$19.99 per month - sorry Fanpass - but for $99 per month I dont need golf, and tennis, and well pretty much all of the other sport.

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All this serves to show is how much Vodafone were overpaying in their proposed merger. Fund managers with shares in SKY couldn't believe their luck when some dumb money came along to bail them out. Alas, the CC spiked the deal. Better all sell on market then...

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Sky will pay up alright - no choice in the matter. Not getting the rugby rights will inevitably lead to its demise.

Damn shame for NZ if that happens as Sky has been an excellent promoter of sports for the country - love them or hate them.

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The movement we see in Sky's share price is the involuntary twitching as it enters into the final death throes.

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Why would Amazon buy the AB's rights? The AB's v Argentina in New Plymouth on Saturday is going to pull a massive global audience - yeah right. Just because the AB's are #1 in a country with 4.5m doesn't make them globally significant. I also find it hard believe that NZ rugby as guardians of the game are going to sell the rights to their sport to a platform no one watches. Amazon are only going to want the AB's after all, and will have no interest in broadcasting Wairarapa v Poverty Bush, or even Wellington v Canterbury in the NPC (TV viewing audience normally 60,000 people). The more likely outcome than Amazon buying the AB's broadcast rights is that Amazon will just buy Sky TV. That makes more sense given the discount Sky's share price in currently trading at, it's current dividend yield of greater than 10%, and market dominant position in NZ (just look at their recent acquisition of Whole Foods). Who's pushing this Amazon AB's story anyway? The NZRU to push up rights values? It just makes no sense from an economic stand point, and if I was Amazon to hell with the rights - just buy Sky. There's plenty of legs left in the Pay TV operating model, it's just the distribution method that will change from satellite to internet making the cost of distribution cheaper.

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More details on Amazon's strategy for it's video streaming offerings here: https://www.nbcnews.com/tech/internet/amp/amazon-hungry-it-s-coming-your...

This refers to it's global ambitions and niche-interest services, which arguably could include rugby/All Blacks on a global scale, although it doesn't specifically refer to sport.

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