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.