Sky TV, Telecom back in bed with three-year deal

Sky TV has announced a three-year marketing deal with Telecom.

As first reported by NBR, Sky TV and Telecom have been in talks since November - a poke in the eye for Telecom's existing content platform partner, TiVo (controlled in Australasia by Hybrid TV, one-third owned by TVNZ).

The two companies parted ways in June 2009, when Sky TV launched a marketing partnership with Vodafone (Vodafone also features a number of Sky TV channels to its mobile TV service) A spokesman for Vodafone said its Sky TV deal, which includes single billing and discounted MySky HDi installation, remains in place). Mr Fellet added, "We are willing to work with anybody".

Keeping on TiVo
Telecom has yet to comment on the deal. 

According to Sky TV's market announcement, Telecom will remain a TiVo reseller.

iSky on hold
Telecom Broadband is one of the few ISPs that does not offer unmetered access to Sky TV's iSky content-over-broadband service (that is, not counting any downloaded movies or TV shows toward a monthly data cap).

NBR understands the complications of Telecom Retail's relationship with Telecom Wholesale (which much offer competitors all the same services it offers the company's inhouse ISP) have delayed iSky support - or at least until after the Telecom's split, expected to happened before the end of the year under the terms of the company's Crown fibre deal with the government.

Telecom shares (NZX: TEL) were up 0.84% to $2.39 in midday trading; Sky TV (NZX: SKT) shares were up 0.89% to $5.67; the broader market up 0.23%.

Lower earnings forecast
On May 25, Forsyth Barr downgraded its earnings estimate for Sky TV, trimming its 2011 ebitda forecast by $9.9 million to $324 million; and its 2012 forecast by $1.9 million to $349.4 million.

The downgrade was pinned on the impact from the Christchurch earthquake, lower growth in advertising, and - germane to today's Telecom announcement - lower share of revenue recorded by Sky TV from MySky subscribers activated by Vodafone. 

Forsyth Barr maintained its accumulate rating, and DCF valuation of $6.36. Pay TV remained a hot sector worldwide. Sky TV would still achieve double digit growth and was expected to increase its dividend payout before its 2011 earnings announcement.

Today, For-Barr's Rob Mercer said the Telecom-Sky TV reseller deal was "long overdue", but did not alter his company's Sky TV forecast.

Mr Mercer said the development was positive forTelecom, which "clearly it needed to respond to Vodafone’s triple-play offering. Vodafone has been very successful in connecting almost 30,000 Sky subscribers."

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1 Comment & Question

Commenter icon key: Subscriber Verified

OH well.. SKY and telecom are all history SOON What s the BIG DEAL>>>>

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