SKT Sky Network Television Limited.

[mistaTea]

Why is SKT not in a trading halt on NZX while this is going on ?

Obviously it may materially affect Share Price and value of the company

In other markets like OZ this sort of thing may well trigger a halt

Probably a good question to be directed to the NZX.

Talks are said to be 'advanced' and 'exclusive'...so very far down the track despite them saying the outcome is still uncertain. Given talks have gotten this far it is fair to say that it is more likely to end in a deal than not (unless the negative media and shareholder backlash - both in terms of online forums and the fact the SP has crashed below where it was sitting even before the takeover chatter - causes the Board to make Sophie kill the deal).

But given SM is probably going to present some sort of a deal to shareholders soon...it is interesting that the shares are still allowed to trade now that you mention it.

People are dumping shares without material information being made available. And Sky can't release the terms and price until they have signed a deal with MW. So a trading halt would have certainly calmed things down and given some time for the market to digest the news, get the terms of the deal and then resume trading with a clearer head).

[winner69]

Outdoor advertising signs are pretty intelligent these days

There’s one that says ‘xxx electric vehicles have passed this spot today’ ….getting you to buy a EV

Apparently there’s a camera that can read numbers plates built in and connected to a database somewhere and so can count the number of EVs

Wonder what other stuff they can do

Cool eh

[winner69]

No need for a trading halt when this happens

[nztx]

Outdoor advertising signs are pretty intelligent these days

There’s one that says ‘xxx electric vehicles have passed this spot today’ ….getting you to buy a EV

Apparently there’s a camera that can read numbers plates built in and connected to a database somewhere and so can count the number of EVs

Wonder what other stuff they can do

Cool eh


Probably count ones visits to whatever supermarket & what your favourite Warehouse store is ? :)

may even be able to read your shopping list too ..

[mistaTea]

"under the current proposed transaction structure if an acquisition of Mediaworks proceeds, itwould not require Sky to raise new equity but would require approval of an ordinary resolutionby shareholders at an Extraordinary Shareholder Meeting."

transaction 'structure'...

This is my prediction...Sky will want to work this in a way that still allows them to pay out a dividend (in other words, allow The Board to keep their promise).

But how can you do that as well as make a significant purchase when you only have ~$150M cash (and require some of that as working capital)?

Well, given the wording in the notice...I think SM will announce a deal that includes part cash payment and part issuance of SKT shares. 'Transaction structure' certainly sounds more complicated than just a cash payment - and given the kind of money MW seem to be expecting, we can't afford to buy them with all available cash (even if we were happy to forgo the dividend - which we aren't).

[nztx]

As I see it:

PE sees Markets in Freefall and badly wants out of MW

Message to Sophie - Screw PE down harder than hard as .. worse than putting them through the wringer ;)

They know there is punishment on the way ;)

Take them captive for a ride if it must be - in form of some ongoing SKT stake - not a major one,
but enough to keep them alert, assuming that taking a Lemon on board is even feasible..

PE have few if any other viable options on where to turn to avoid wearing market carnage ..
they know that MW will likely bleed bucket fulls of Red going ahead if they stay in there as is
if MW doesn't capsize along the way.. for want of further support needing to be thrown in

[mistaTea]

As I see it:

PE sees Markets in Freefall and badly wants out of MW

Message to Sophie - Screw PE down harder than hard as .. worse than putting them through the wringer ;)

They know there is punishment on the way ;)

Take them captive for a ride if it must be - in form of some ongoing SKT stake - not a major one,
but enough to keep them alert, assuming that taking a Lemon on board is even feasible..

PE have few if any other viable options on where to turn to avoid wearing market carnage ..
they know that MW will likely bleed bucket fulls of Red going ahead if they stay in there as is
if MW doesn't capsize along the way.. for want of further support needing to be thrown in

Sure, but let's say SM did amazingly well and beat them down to $130M (considering their independent valuaiton seems to point to $150M, and they may want more)...

Well, if they want to do a dividend, lets say they go $80M cash payment and $50M equity. At the current low SP that would mean we give them 10% of the business as payment.

Not great given our low SP...and especially not now that Sophie and The Board have managed to drive our shares down even lower.

[nztx]

Sure, but let's say SM did amazingly well and beat them down to $130M (considering their independent valuaiton seems to point to $150M, and they may want more)...

Well, if they want to do a dividend, lets say they go $80M cash payment and $50M equity. At the current low SP that would mean we give them 10% of the business as payment.

Not great given our low SP...and especially not now that Sophie and The Board have managed to drive our shares down even lower.



I would say PE have 100 million reasons to want to navigate out of potential tight spot going forward

Most would be wanting considerably better than $20 mil to even start looking for an olive leaf, otherwise
leave then to traverse their destiny in the coming storm ahead ;)

SKT has successfully pulled off it's own righting of the ship more or less

PE need to recognise that doing the same for their MW wont come cheap or with any free gifts
in fact hopefully with massive discounts on all the china in the cupboard - close to a liquidators sale :)

[mistaTea]

I would say PE have 100 million reasons to want to navigate out of potential tight spot going forward

Most would be wanting considerably better than $20 mil to even start looking for an olive leaf, otherwise
leave then to traverse their destiny in the coming storm ahead ;)

Yeah, the other part I forgot to mention is The Board will probably want to retire a big chunk of the debt. Let's say $50M.

So even if SM could beat them down to $100M (still not a great deal imo given it is an EV of $200M)...



$50M cash payment
10% of our business
$50M debt payment
$30M FY dividend

[nztx]

Yeah, the other part I forgot to mention is The Board will probably want to retire a big chunk of the debt. Let's say $50M.

So even if SM could beat them down to $100M (still not a great deal imo given it is an EV of $200M)...



$50M cash payment
10% of our business
$50M debt payment
$30M FY dividend



Going forward a Lender's Debt remission in order of $25-$30m wouldn't be a lot to look for ?

So net debt assumed $25m - $30m ?

Things could pan out considerably worse & no reminders of past history needed :)

[mistaTea]

I would say PE have 100 million reasons to want to navigate out of potential tight spot going forward

Most would be wanting considerably better than $20 mil to even start looking for an olive leaf, otherwise
leave then to traverse their destiny in the coming storm ahead ;)

SKT has successfully pulled off it's own righting of the ship more or less

PE need to recognise that doing the same for their MW wont come cheap or with any free gifts
in fact hopefully with massive discounts on all the china in the cupboard - close to a liquidators sale :)

And don't forget, the very fact that they need to take this deal to a shareholder vote implies a $200M+ price tag.

Now, who in their right mind would pay $200M+ (EV $300M+) for MW? It would be insane.

When we bought RP there was no shareholder vote, because the purchase price was below the threshold. So the fact we need to vote should be very alarming (and clearly is given the crash in SP).

[nztx]

And don't forget, the very fact that they need to take this deal to a shareholder vote implies a $200M+ price tag.

Now, who in their right mind would pay $200M+ (EV $300M+) for MW? It would be insane.

When we bought RP there was no shareholder vote, because the purchase price was below the threshold. So the fact we need to vote should be very alarming (and clearly is given the crash in SP).


MW isn't quite the sort of kettle of golden fish that could be floated off on NZX tomorrow easily or any number of days ahead

Lenders must be shown to recognise that, as must PE realise :)

[LoungeLizzard]

We seem to lurched back to bad old days when everyone was baffled/frustrated/ angered by an incompetent Board who seemed to have the Midas touch in reverse where everything they touch turned to lead. And we all hoped and prayed that someone would come along and takeover SKT and put us out of our misery. That period near damn broke poor Ogg. Maybe he was right after all in selling up when he did and move on and get psychiatric counselling. I am tempted to do the same :scared:

[mistaTea]

We seem to lurched back to bad old days when everyone was baffled/frustrated/ angered by an incompetent Board who seemed to have the Midas touch in reverse where everything they touch turned to lead. And we all hoped and prayed that someone would come along and takeover SKT and put us out of our misery. That period near damn broke poor Ogg. Maybe he was right after all in selling up when he did and move on and get psychiatric counselling. I am tempted to do the same :scared:

Yes, Ogg's decision to sell when he did looked a little shaky at the time...but he must be relieved now after watching this circus.

[nztx]

Yes, Ogg's decision to sell when he did looked a little shaky at the time...but he must be relieved now after watching this circus.

I heard a rumour that he bought a nice bundle of Woodside & is now smiling from ear to ear :)

[Monarch]

holding sky feels like I have a golden goose in a cage and rather than laying eggs all it wants to do is pluck out its own feathers... what to do what to do... If this goes up for a vote I'm out at any price. Not sure I can bear anymore suffering from this absolute train wreck of a company.

[RTM]

holding sky feels like I have a golden goose in a cage and rather than laying eggs all it wants to do is pluck out its own feathers... what to do what to do... If this goes up for a vote I'm out at any price. Not sure I can bear anymore suffering from this absolute train wreck of a company.

Bit late for the Woodside therapy.

[JohnnyTheHorse]

And don't forget, the very fact that they need to take this deal to a shareholder vote implies a $200M+ price tag.

Now, who in their right mind would pay $200M+ (EV $300M+) for MW? It would be insane.

When we bought RP there was no shareholder vote, because the purchase price was below the threshold. So the fact we need to vote should be very alarming (and clearly is given the crash in SP).

They specifically said it would be by ordinary resolution, which indicates it is not classified as a major transaction.

[mistaTea]

They specifically said it would be by ordinary resolution, which indicates it is not classified as a major transaction.

So why the vote then? Why vote at all?

[JohnnyTheHorse]

So why the vote then? Why vote at all?

Potential issuance of shares (can't recall limits requiring votes) or absolving directors of liability?

[LoungeLizzard]

Beginning of April SKT shares were at $2.93 on the prospect of a return of capital. If SKT had honoured that promise shares would be over $3 now and there would be a real buzz surrounding the business.
Flash forward 2 short months and SP is $2.34 and continuing to fall, with the real prospect of crashing well below $2 if the deal goes through in whatever form. And SKT has lost $70m in market capitalisation, in the process making it vulnerable to lowball takeover offers. All of this self-inflicted by a Board that just couldn't seem to resist playing with fire. It could have honoured it's commitment to shareholders whilst still having enough cash in hand to grow the business in an orderly, sustainable manner.
But no, it got it's head by turned by self-serving brokers and PE vultures throwing them a few bones. Yep, Ogg will be glad he got out when he did.

[flyer]

I agree with you mistaTea, should of been put into a TH with a potential purchase pending, we are all losing with price going down while waiting for an announcement.

[LaserEyeKiwi]

I think another possibility behind the motivation for this deal is that the planned growth drivers for Sky may not be performing as expected. Streaming services around the wall have all recently hit a bit of a brick wall in terms of user growth - its possible Sky is also experiencing this with NEON & SkySportNow. Add the other big hope - Sky Broadband - into the mix, and that also might be doing less stellar than expected as it struggles to compete with the stickiness of the big players mobile/Broadband bundle deals, especially with a newly resurgent 2 degrees.

In other words: Desperation. Desperation for revenue growth might be driving this deal.

[Joshuatree]

Beginning of April SKT shares were at $2.93 on the prospect of a return of capital. If SKT had honoured that promise shares would be over $3 now and there would be a real buzz surrounding the business.
Flash forward 2 short months and SP is $2.34 and continuing to fall, with the real prospect of crashing well below $2 if the deal goes through in whatever form. And SKT has lost $70m in market capitalisation, in the process making it vulnerable to lowball takeover offers. All of this self-inflicted by a Board that just couldn't seem to resist playing with fire. It could have honoured it's commitment to shareholders whilst still having enough cash in hand to grow the business in an orderly, sustainable manner.
But no, it got it's head by turned by self-serving brokers and PE vultures throwing them a few bones. Yep, Ogg will be glad he got out when he did.

Conviently forgetting ,the markets in a big downtrend here and globally.
What a bunch of downramping sadsacksyou all soundlike.
How bout selling off your shares and crisping up your "insider" egos on a stick with marshmallows on a fire using up some $100 bills from the share proceeds.

I'm sticking with the company and supporting management at the very least until they share with us the plans of this company (to grow and prosper ) thatI ive chosen to invest in.

[LoungeLizzard]

Conviently forgetting ,the markets in a big downtrend here and globally.
What a bunch of downramping sadsacksyou all soundlike.
How bout selling off your shares and crisping up your "insider" egos on a stick with marshmallows on a fire using up some $100 bills from the share proceeds.

I'm sticking with the company and supporting management at the very least until they share with us the plans of this company (to grow and prosper ) thatI ive chosen to invest in.

You have a strange view on "growing and prospering." You're very much a lone voice but yeah, if your rose-tinted glasses work that well then keep wearing them. ignorance is bliss.

[mistaTea]

Conviently forgetting ,the markets in a big downtrend here and globally.
What a bunch of downramping sadsacksyou all soundlike.
How bout selling off your shares and crisping up your "insider" egos on a stick with marshmallows on a fire using up some $100 bills from the share proceeds.

I'm sticking with the company and supporting management at the very least until they share with us the plans of this company (to grow and prosper ) thatI ive chosen to invest in.

Well, nobody is going to disagree that the final verdict will be in when we have the details of the deal (assuming it goes ahead).

But your position doesn’t seem to be that you actually see any merit in the deal (you certainly haven’t mentioned what you think could be the big upside here? Unless I missed that?).

So you want to sit tight and just believe management is doing the right thing unless and until they prove otherwise.

Nothing wrong with that at all.

But sorry, you don’t get to just throw grenades at the rest of us who have serious questions about the strategic soundness of investing in an asset like MW (regardless of price). We are actually allowed to discuss the possibilities, and express angst where we don’t see a deal making sense.

If that doesn’t suit you feel free to avoid the forum.

[snigmac]

This is quite stressful for all shareholders. As Cindy says, let's be kind to each other :). We all want Sky to do well... My understanding is that the bulk of investment houses are generally adverse to the transaction or see it as something that is negative.

[jimdog31]

This is quite stressful for all shareholders. As Cindy says, let's be kind to each other :). We all want Sky to do well... My understanding is that the bulk of investment houses are generally adverse to the transaction or see it as something that is negative.

with the noticeable absence of jarden of course

[nztx]

Who is going to be collecting advisory fees paid for from SKT for glowing reports on this miracle addition of undetermined untold barrels full of hidden prosperity arising from walking on troubled waters, at a time the market splutters & coughs ? ;)

Will the disclaimers & provisos in the reports be longer than the Wall of China ? :)

[Balance]

Chill, folks.

MW is not a done deal and if it gets done, directors of SKT need to come up with a very very very convincing case of why it is a good deal.

Until then, SKT’s track record since the recapitalisation has been pretty good imo.

There are several big boys in the stock and they are looking for a profitable exit and/or a great ongoing story. The volumes traded suggest they are watching and waiting.

[Joshuatree]

Chill, folks.

MW is not a done deal and if it gets done, directors of SKT need to come up with a very very very convincing case of why it is a good deal.

Until then, SKT’s track record since the recapitalisation has been pretty good imo.

There are several big boys in the stock and they are looking for a profitable exit and/or a great ongoing story. The volumes traded suggest they are watching and waiting.

A voice of reason yay.

[winner69]

Things not too bad ….Herald market update

Sky Network Television was down most of the day before rising 3.8 per cent to $2.84, picking up some ground it lost yesterday with its surprise announcement that the network wasn't looking to be acquired – but to be the acquirer.

[LoungeLizzard]

Chill, folks.

MW is not a done deal and if it gets done, directors of SKT need to come up with a very very very convincing case of why it is a good deal.

Until then, SKT’s track record since the recapitalisation has been pretty good imo.

There are several big boys in the stock and they are looking for a profitable exit and/or a great ongoing story. The volumes traded suggest they are watching and waiting.

No, it isn't a done deal but even if it doesn't go through, no matter how you look at it, SKT have inflicted unnecessary reputational and financial damage to their company. If they turn the deal down and announce some capital return to shareholders, they might recoup some of the losses, but they still wouldn't have covered themselves in glory.

And, heaven forbid, if the deal goes through - even at a rock bottom price - I remain firmly convinced that many people and institutions will exit their positions. I predict $2 per share if they proceed with the deal. We'll see how many holders remain chilled if that occurs.

[JohnnyTheHorse]

Chill, folks.

MW is not a done deal and if it gets done, directors of SKT need to come up with a very very very convincing case of why it is a good deal.

Until then, SKT’s track record since the recapitalisation has been pretty good imo.

There are several big boys in the stock and they are looking for a profitable exit and/or a great ongoing story. The volumes traded suggest they are watching and waiting.

Hence why I have added to my position. Any deal will need approval by major holders, so it's only ever going ahead if it's a good deal.

[mistaTea]

Hence why I have added to my position. Any deal will need approval by major holders, so it's only ever going ahead if it's a good deal.

Yeah that is very true.

If Sophie gets the deal for a ‘bargain’ at, say, $50M (plus inherit the debt) it would be interesting to know why it goes to a vote.

Ass covering by the board?

Doesn’t really instil confidence if the board sign off on a deal but then want to make sure there is no blow back on them if it turns to sh1t.

[LoungeLizzard]

Hence why I have added to my position. Any deal will need approval by major holders, so it's only ever going ahead if it's a good deal.

Well, good luck with that. History is littered with companies overreaching and their "good deal" turning very quickly into albatross's around their necks. I'm not saying that will happen, but SKT Board haven't yet done enough to earn confidence of shareholders in their decision making ability. Allowing their Chairman of the Board to not even live in the country is a case in point.

[LoungeLizzard]

deletedelete

[LoungeLizzard]

deletedelete

[LoungeLizzard]

deletedelete

[LoungeLizzard]

deletedelete

[LoungeLizzard]

And we're back.

Another day another 5c off the SP - all in a days work for our much valued Board.

I was remembering that the loss making) TV arm of MW was sold to Discovery for $20m and one can argue that that was the pick of the bunch, given that it included several entertainment channels, a streaming service and news/current affairs NewsHub. And from memory I don't think Discovery took on any debt with the deal - that was left for some other sucker to take on board. Enter Sky and talks of spending anything from $50-100m for for leftover radio and billboards. Plus $100m in debt.

I am increasingly of the opinion that if this is to go ahead it would have to come for virtually nothing upfront (ie 100m incl debt). Rather like the $1 paid to purchase STUFF News.

[mistaTea]

And we're back.

Another day another 5c off the SP - all in a days work for our much valued Board.

I was remembering that the loss making) TV arm of MW was sold to Discovery for $20m and one can argue that that was the pick of the bunch, given that it included several entertainment channels, a streaming service and news/current affairs NewsHub. And from memory I don't think Discovery took on any debt with the deal - that was left for some other sucker to take on board. Enter Sky and talks of spending anything from $50-100m for for leftover radio and billboards. Plus $100m in debt.

I am increasingly of the opinion that if this is to go ahead it would have to come for virtually nothing upfront (ie 100m incl debt). Rather like the $1 paid to purchase STUFF News.

Yes even getting MW for ‘nothing’ and inherit the debt makes the mind boggle really.

Even paying $100M (the debt inherited) for an asset that doesn’t currently earn anything and has minor synergies at best…is a stretch to the imagination.

The only way I could swallow this would be if the Oaktree gave MW to us for free and went halves on the debt.

Even then, when I think about the opportunity cost of ruling out a NZME merger in the future…probably also ruling out being purchased by 2D… I would still think the deal is shortsighted.

I think the odds of shareholders voting for such a deal is very low, if not zero.

[Entrep]

I think the odds of shareholders voting for such a deal is very low, if not zero.

Really? Surely they canvas larger shareholders so as not to be embarrassed at the vote.

This board, and its absent chairman, are, without a doubt, the worst of any company I've ever held.

https://media.giphy.com/media/QGzPdYCcBbbZm/giphy-downsized.gif

[mistaTea]

Really? Surely they canvas larger shareholders so as not to be embarrassed at the vote.

This board, and its absent chairman, are, without a doubt, the worst of any company I've ever held.

They will have canvassed some opinion form big shareholders to test the temperature on a deal in principle.

I know of one large insto that has spoken to sky…but that insto does not have any info that we don’t have about MW (sky have to stay tight lipped with everyone).

This insto has said that they will keep an open mind, but that is as far as it goes. Obviously everyone needs to see the terms of the deal, and get a feel for MW’s latest earnings, as well as understand what kind of projections these guys have more for future earnings…

But this particular insto is more interested in getting sky to honour their divvy commitment and pay top end guidance.

[airedale]

Reading this story reminds me of that guy.....maybe 30 or 40 years ago who was so in love with Channel 3 when it was listed that he bought up 7 million shares just before it was de-listed from the NZX. He finished up with nothing of course. I try not to think about him before I go to sleep.:ohmy:

[bottomfeeder]

Nothing like a prospective takeover to show their hand when the target company wants to spend its cash and buy a losing business. Perhaps its just a ploy to prompt the interested parties in making an offer for SKT, before they buy MW and become unbuyable. Heres hoping anyway, bought some more today. Those selling may soon regret they sold out at a low price.

[Baa_Baa]

I wonder whether SKT reflect on their announcement, prompted only by media speculation rather than proactively being up front with shareholders, which cost us 15% loss of market cap just this week. Something for the insider shareholders to ponder as well. Giant step backwards, pause for thought one would hope, after things were going so well.

Stick to the strategy which is working, and the return to dividends and maybe even share buybacks with FCF to increase eps, that's what people bought into. Not some fanciful off-piste acquisition or being acquired. Sadly these things can take time to recover from, time better spent staying on course. Very disappointed in SKT, they've handled this very poorly imo.

[Moneyman]

The lower SP makes a buyback more attractive. What if they can acquire MW, do a $30m buyback and resume an annual dividend of $30m I suspect that would keep everyone happy and be seen as very positive for the SP.

[mistaTea]

The lower SP makes a buyback more attractive. What if they can acquire MW, do a $30m buyback and resume an annual dividend of $30m I suspect that would keep everyone happy and be seen as very positive for the SP.

Best case scenario, they see sense and kill the deal.

Return $100M to shareholders via capital return/buyback and divvy.

Still leaves around $50M in the bank for smaller value-add projects like speeding up the roll out of the new STB (which is already quite late I might add). Could even explore wholesale mobile with 2D, Voda and Spark. I am sure all would want the sky business and would give competitive rates to win it.

No empire building. Just commonsense use of shareholder money.

[LoungeLizzard]

The lower SP makes a buyback more attractive. What if they can acquire MW, do a $30m buyback and resume an annual dividend of $30m I suspect that would keep everyone happy and be seen as very positive for the SP.

Whilst that would seem attractive given the mess that SKT has created for itself, I still think SKT needs to have a longer period of consolidation and to keep it's powder dry for the real growth opportunities in mobile and streaming and retaining sports rights and content. Acquiring MW even at a bargain price will divert funds, focus and strategic direction into areas that ultimately I don't think will bear fruit. And any thought of a big takeover payday, which I don't think was just wishful thinking, will be gone forever.

It makes my head hurt to think how market sentiment towards the SKT and the Board has gone from being so positive to where's-my-gun? in the space of a week.

[mistaTea]

https://www.stuff.co.nz/business/opinion-analysis/128879691/why-investors-would-prefer-the-quick-win-of-a-takeover-for-sky-tv

[winner69]

I think another possibility behind the motivation for this deal is that the planned growth drivers for Sky may not be performing as expected. Streaming services around the wall have all recently hit a bit of a brick wall in terms of user growth - its possible Sky is also experiencing this with NEON & SkySportNow. Add the other big hope - Sky Broadband - into the mix, and that also might be doing less stellar than expected as it struggles to compete with the stickiness of the big players mobile/Broadband bundle deals, especially with a newly resurgent 2 degrees.

In other words: Desperation. Desperation for revenue growth might be driving this deal.

You will be right here LEK

After 5 years or more of declining revenues they finally reported growth in H1 this year ….albeit a small 4%

And guidance has H2 growth somewhere between slightly negative and 5% - hardly outstanding

Does one half and hopefully a full year growth say the long term decline is over ….maybe flat at best and if so only a small setback stuffs that growth

Bit sad if what you think is true …..reasonable assumption ……and where do we go if true.

[mistaTea]

You will be right here LEK

After 5 years or more of declining revenues they finally reported growth in H1 this year ….albeit a small 4%

Does one half and hopefully a full year growth say the long term decline is over ….maybe not

Bit sad if what you think is true …..reasonable assumption ……and where do we go if true.

Sky needs to be taken over by someone like Comcast or Warner-discover…for vertical integration…

Or someone like 2D to become a telco.

In the long run, sky either need to own the content or the network. Remaining a content aggregator in its current form does not have a bright future in the long run.

And they have the means to change - but going after rubbish ‘assets’ like MW is completely the wrong direction.

I don’t see Foxtel rushing around looking for a radio station to buy.

[Moneyman]

What’s your view of an annual dividend? 20 cents per share? $35m annually?

[mistaTea]

What’s your view of an annual dividend? 20 cents per share? $35m annually?

I think they should pay more this year - $100M total.

Return the $55M from the property sale (31.5c/share). As a tax free payment or buyback.

Then a $45M dividend (25c/share).

Should be able to pay $25M divvy the year after comfortably.

And that would still give them plenty of money to enter areas that actually do have value (I.e more telco services like mobile).

Also gives them money to upgrade systems so we can bundle broadband with neon and SSN.

Just nuts that after all this time we can still only offer broadband to STB customers.

[RTM]

Was nice to see Sophie at the netball final yesterday.
Very nice.

[mistaTea]

Was nice to see Sophie at the netball final yesterday.
Very nice.

Sky SP now $395M.

Real nice, Sophie.

[LoungeLizzard]

Sky SP now $395M.

Real nice, Sophie.

This is really getting beyond a joke. Sophie and the Board need to bring this fiasco to an end asap - they surely can't be obvious to the amount of damage they have done to shareholder wealth and the value of the business.

[mistaTea]

This is really getting beyond a joke. Sophie and the Board need to bring this fiasco to an end asap - they surely can't be obvious to the amount of damage they have done to shareholder wealth and the value of the business.

Yep.

Obviously the dips in the last coupld of trading days is more to dow the the general fall in indexes etc.

But having the market grapple with a questionable purchase of MW at the same time has made for a perfect storm.

Buyback and divvy looking much better.

[sb9]

Yep.

Obviously the dips in the last coupld of trading days is more to dow the the general fall in indexes etc.

But having the market grapple with a questionable purchase of MW at the same time has made for a perfect storm.

Buyback and divvy looking much better.

They have absolutely killed nice price momentum leading into $3 range. If anything they should take a leaf off NZM's strategy over last year or so. Absolute shambles the latest activity!!!

[mistaTea]

They have absolutely killed nice price momentum leading into $3 range. If anything they should take a leaf off NZM's strategy over last year or so. Absolute shambles the latest activity!!!

Yep, recent drop in NZM SP actually good for long term holders as it means Michael Boggs is able to buy back even more stock.

But for us? Just more uncertainty and questions.

Meanwhile the low SP makes it difficult to imagine us getting a great price if a takeover does emerge.

[jimdog31]

another day, another 4% drop in shareholder value.

Sophie, if you truly cared about us long suffering shareholders you would end this speculation

Declare a fricken dividend already.

Sent an email to investor relations 6 days ago.

[Stranger_Danger]

another day, another 4% drop in shareholder value.

Sophie, if you truly cared about us long suffering shareholders you would end this speculation

Declare a fricken dividend already.

Sent an email to investor relations 6 days ago.

Did you get a reply? I didn't.

[chicomendes]

no reply for me either pooman@sky.co.nz must think he's on to a good deal

[Sideshow Bob]

Did you get a reply? I didn't.

Never a good look with a company being so sloppy. Even if it was a "we'll come back to you later".

But has shareholder relations ever been their strong suit??

[LoungeLizzard]

Yep.

Obviously the dips in the last coupld of trading days is more to dow the the general fall in indexes etc.

But having the market grapple with a questionable purchase of MW at the same time has made for a perfect storm.

Buyback and divvy looking much better.

Yep, the timing - with an on-rushing recession - is appalling. Inflationary pressures on household budgets mean that discretionary spending such as streaming and Sky subscriptions is likely to fall. Business's like SKY should be circling the wagons, continuing to cut overheads, and offering good deals to retain subscribers and perhaps even tempt people away from multiple (and costly) providers.

It's all the more baffling - to say the least - why SKY should at this time be considering venturing into an area of business that is going to be under its own pressure to maintain revenue. Marketing and advertising is one of the first things business's cut during a recession.

Anyone have any idea how long due diligence of this type takes? If it has anything to do with competence, we could be waiting for a while.

[mistaTea]

Reading an interesting old book by Thomas Phelps called "100 to 1 in the stock market".

In one chapter he talks about the ego, and a topic he refers to as 'egonomics'. Quite interesting.

At one point he wrote something that hit home very hard given the asolute shambles we see at Sky right now.

He writes: "The corporate egonomist thinks more of making his company bigger than of making it profitable. He spends the stock holders' money to make himself loom larger in the industry, rather than to increase the company's earning power".

[LoungeLizzard]

Reading an interesting old book by Thomas Phelps called "100 to 1 in the stock market".

In one chapter he talks about the ego, and a topic he refers to as 'egonomics'. Quite interesting.

At one point he wrote something that hit home very hard given the asolute shambles we see at Sky right now.

He writes: "The corporate egonomist thinks more of making his company bigger than of making it profitable. He spend sthe stock holders' money to make himself loom larger in the industry, rather than to increase the company's earning power".

That does sound like SKY's mission statement I have to say ;)

[Moneyman]

Has anyone assessed how SKY profitability was impacted by GFC?

[Perky]

A bit of a segue from the deal making
Ive been a long time sky tv customer…love my sport and sky sports was/is a good product but I can’t wait to sell my shares I bought for a speculative punt @.13 cents

Heres why this company sucks. My real life experience unfolding over last week.
I want to close my satellite account and open sky sports now as upgraded to smart tv withal, the streaming apps I need. I can open sky sport now online today but can’t cancel satellite online so forced to ring customer service. I ring …it says there’s a 1 hr delay on phone but leave your number and we will ring you back. No one rung back. Called again next day…repeat…no one calls back. Go online and log a request..get an instant reply with a case number…and a message…we’re busy it might take up to 10 days to get back to you. So why did the phone message say it was a 1 hr delay…quite a big difference between 1 hr and 10 days.

I hoped sky sports might kill off spark sport and get all sport (lookin at you cricket nz) back under 1 roof… but my best result would be spark buys sky. I would rather sell my sky shares and invest in spark purely based on the f**ked customer service sky has had for a long time.

It doesn’t matter what deal they do if you can’t bring your customer service into the 21st century your doomed.
GLTH…

[winner69]

Has anyone assessed how SKY profitability was impacted by GFC?

Revenues and profit grew steadily from 2006 to 2010

[sb9]

The good thing out of this last few days fiasco (if we were to call that) is that Board are clearly made aware of what market and share holders think of the MW proposal. That will surely has put them on spot and they won't doing anything silly imo.

[airedale]

I followed my post on here with post to Sky web site feed back page. I got an automated reply to say that it could take up to 10 DAYS to get a reply. 10 DAYS! I rest my grumpy case


A bit of a segue from the deal making
Ive been a long time sky tv customer…love my sport and sky sports was/is a good product but I can’t wait to sell my shares I bought for a speculative punt @.13 cents

Heres why this company sucks. My real life experience unfolding over last week.
I want to close my satellite account and open sky sports now as upgraded to smart tv withal, the streaming apps I need. I can open sky sport now online today but can’t cancel satellite online so forced to ring customer service. I ring …it says there’s a 1 hr delay on phone but leave your number and we will ring you back. No one rung back. Called again next day…repeat…no one calls back. Go online and log a request..get an instant reply with a case number…and a message…we’re busy it might take up to 10 days to get back to you. So why did the phone message say it was a 1 hr delay…quite a big difference between 1 hr and 10 days.

I hoped sky sports might kill off spark sport and get all sport (lookin at you cricket nz) back under 1 roof… but my best result would be spark buys sky. I would rather sell my sky shares and invest in spark purely based on the f**ked customer service sky has had for a long time.

It doesn’t matter what deal they do if you can’t bring your customer service into the 21st century your doomed.
GLTH…
The phone system/service is abysmal and like you I am expected to wait up to 10 days for an answer.

[airedale]

I followed my post on here with post to Sky web site feed back page. I got an automated reply to say that it could take up to 10 DAYS to get a reply. 10 DAYS! I rest my grumpy case


The good thing out of this last few days fiasco (if we were to call that) is that Board are clearly made aware of what market and share holders think of the MW proposal. That will surely has put them on spot and they won't doing anything silly imo.
"Anything silly" has already been done.

[nztx]

Sky SP now $395M.

Real nice, Sophie.


Maybe just what PE or their mates want - perhaps their cousins want into SKT on the cheap or cheaper ? :)

Of course the Board & Top Brass may well be blinded by the BS while things drift south further

Who are they working for again ? Any stakeholders see benefits coming out of this ? :)

[snigmac]

I'm hopeful that the board will fall on their sword and go back to pitching a dividend and capital return before the end of the month.

[mistaTea]

EV to dip below $200M soon?

[bottomfeeder]

MW value heading to the toilet. They will be paying us at this rate. With the falls on the NZX, ASX, and Dow, only a fool would buy into MW. Announcement coming soon, I bet. Deal off, SKT share price will hit $2.70.

[mistaTea]

Announcement coming soon, I bet. Deal off, SKT share price will hit $2.70.

I am going to hold you to that!

[jimdog31]

MW value heading to the toilet. They will be paying us at this rate. With the falls on the NZX, ASX, and Dow, only a fool would buy into MW. Announcement coming soon, I bet. Deal off, SKT share price will hit $2.70.

Will it though? That was before when we thought we had competent management.

[Poet]

Will it though? That was before when we thought we had competent management.

Exactly, JimDog - now we know that our money is burning a hole in the pockets of this bunch of (insert your own $$*), we know that one way or another they are going to find a way to blow it for their own aims. I'll be out on any reasonable bounce in SP

[mistaTea]

Exactly, JimDog - now we know that our money is burning a hole in the pockets of this bunch of (insert your own $$*), we know that one way or another they are going to find a way to blow it for their own aims. I'll be out on any reasonable bounce in SP

Yep, that sums it up.

I have just recently heard from a very reliable source that Osmium aren't very happy about the MW development.

[Entrep]

MW value heading to the toilet. They will be paying us at this rate. With the falls on the NZX, ASX, and Dow, only a fool would buy into MW. Announcement coming soon, I bet. Deal off, SKT share price will hit $2.70.

I have no doubt the SKY bottomfeeders will push this through.

[LoungeLizzard]

The Board will have to undertake serious damage control, if and when (hopefully when!) they bin the MW deal. Damage control of their reputation and in steadying a ship that was sailing along quite nicely until they decided to send it towards to the rocks ( I like my sailing metaphors). If this has been the reaction of the market at even the prospect of a deal ( general market downturn notwithstanding) then all bets are off as to where Sp/co.value will end up if they are stupid enough to actually proceed. I thought $2 would be on the cards but now I think we'll be back to the post consolidation price of around $1.60.

[JohnnyTheHorse]

I would expect the board to commence a buy back at these levels. Get some investor goodwill, support the price and pick up stock for extremely good value. They'd be hard pressed to acquire another business on better metrics than simply buying back their own stock.

I would expect this will be the message from Osmium too...

[winner69]

I'm becoming more convinced than ever that Sophie is out of her depth - always had my doubts

And a weak Chair doesn't help

Does Sophie still commute to work from Nelson?

[mistaTea]

I'm becoming more convinced than ever that Sophie is out of her depth - always had my doubts

And a weak Chair doesn't help

Does Sophie still commute to work from Nelson?

mistaTea for CEO?

[jimdog31]

mistaTea for CEO?

Where can i vote?

[mistaTea]

Where can i vote?

Mind you, what could I really hope to achieve with such an arsehole Board?

I would need to be Chairman, CEO & largest shareholder to get it done.

[Entrep]

mistaTea for CEO?

You have my votes sir.

[Mel]

On a different note, if you don't have Sky Sport, you can see the All Whites game for $5:
https://www.skysportnow.co.nz/packages?type=0#packagesSection

[RTM]

On a different note, if you don't have Sky Sport, you can see the All Whites game for $5:
https://www.skysportnow.co.nz/packages?type=0#packagesSection

That's a brilliant offer...did they promote it at all ? Good way to hook people onto the product. If not...they missed a trick.
If I didn't already have SkySportNow I would definitely go for it.

On a different note....I am even more sure that the picture quality of sport via the net is not as good as that delivered via satellite.
But it is good enough for most things.

[mistaTea]

https://www.nbr.co.nz/inst-investors-perplexed-fuming-about-sky-bid-for-mediaworks/

Stinging rebuke from some institutional inecstors in relation to the MW deal.

I am just shocked that the Board have allowed this fiasco to continue as long as they have.

And the lies...about Sky being in 'early' stages of discussion. What a joke. You don't get to the point of having exclusive talks with a seller if the CEO's are just sitting down to have coffee.

Let's not forget, It was on 20 May (about 4 weeks ago) that Sky updated investors saying they were deferring capital allocationd decisions (https://www.nzx.com/announcements/392387). And by that stage talks would have been going on for a while.

[Habits]

https://www.nbr.co.nz/inst-investors-perplexed-fuming-about-sky-bid-for-mediaworks/

Stinging rebuke from some institutional inecstors in relation to the MW deal.

I am just shocked that the Board have allowed this fiasco to continue as long as they have.

And the lies...about Sky being in 'early' stages of discussion. What a joke. You don't get to the point of having exclusive talks with a seller if the CEO's are just sitting down to have coffee.

Let's not forget, It was on 20 May (about 4 weeks ago) that Sky updated investors saying they were deferring capital allocationd decisions (https://www.nzx.com/announcements/392387). And by that stage talks would have been going on for a while.

Mmm .... BOD treating shds like mushrooms, keep them in the dark and feed them bs. Had it not been for the MW ruckus we could have easily gone through the latest selloff unaffected

[mistaTea]

https://www.nbr.co.nz/inst-investors-perplexed-fuming-about-sky-bid-for-mediaworks/

Stinging rebuke from some institutional inecstors in relation to the MW deal.

I am just shocked that the Board have allowed this fiasco to continue as long as they have.

And the lies...about Sky being in 'early' stages of discussion. What a joke. You don't get to the point of having exclusive talks with a seller if the CEO's are just sitting down to have coffee.

Let's not forget, It was on 20 May (about 4 weeks ago) that Sky updated investors saying they were deferring capital allocationd decisions (https://www.nzx.com/announcements/392387). And by that stage talks would have been going on for a while.


Some of my favourite comments from the instos in this article include:

“That’s its second point of call; its first point call … is to run the business, try and turn it around, to get churn down, to get cost out and to grow its broadband offering, because, really, where does Sky go? It probably makes most sense that it goes to Vocus [Two Degrees].”

**********************************************

“To think we've got a famous distressed debt/junk bond vulture investor in Oaktree … they’ve been a classic private equity player, cutting and bleeding every asset dry.. they’ve sold everything they can, they’ve done sale and leaseback on the broadcasting equipment – they’ve stripped every ounce of cash out of this thing. They’re $100m in debt, levered to the eyeballs and they haven’t been able to sell it.
"We're going probably to a recessionary environment... So, you know, they're now trying to get rid of a cyclical advertising business to some mugs."
***************************************

From Osmium:

“We’re perplexed by the idea. We don’t know any other shareholders we have talked to who have said ‘that’s a great idea’."

[sb9]

https://www.nbr.co.nz/inst-investors-perplexed-fuming-about-sky-bid-for-mediaworks/

Stinging rebuke from some institutional inecstors in relation to the MW deal.

I am just shocked that the Board have allowed this fiasco to continue as long as they have.

And the lies...about Sky being in 'early' stages of discussion. What a joke. You don't get to the point of having exclusive talks with a seller if the CEO's are just sitting down to have coffee.

Let's not forget, It was on 20 May (about 4 weeks ago) that Sky updated investors saying they were deferring capital allocationd decisions (https://www.nzx.com/announcements/392387). And by that stage talks would have been going on for a while.

The message is loud and clear for the Board, don't massacre the good work being done over past year and bit by some silly acquisition ideas that doesn't augur well for shareholders incl big boys.

[jimdog31]

The message is loud and clear for the Board, don't massacre the good work being done over past year and bit by some silly acquisition ideas that doesn't augur well for shareholders incl big boys.
'
Sophie clearly wants to be on the cover of time magazine. "change agent" "how a blonde in a boys club turned 2 sexist cultures around"

Sadly, that doth butter no parsnips.

[Shareguy]

NBR says today

When MediaWorks sold its TV assets to Discovery Inc in December 2020, it is understood to have offered Sky its radio stations and billboards for $100m plus its $100m debt.

[mistaTea]

NBR says today

When MediaWorks sold its TV assets to Discovery Inc in December 2020, it is understood to have offered Sky its radio stations and billboards for $100m plus its $100m debt.

Yep.

But even if they have dropped their asking price now by a whopping 50%...

Who in their right mind would pay $50M for such a questionable business that comes with $100M debt? Who would think that MW is worth $150M?

[Balance]

Sounds like the SKT board Is now backtracking and it will now be a miracle for them to get shareholders’ approval.

[LaserEyeKiwi]

The only distressed asset Sky should be seriously looking at buying is its own shares.

[sb9]

NBR says today

When MediaWorks sold its TV assets to Discovery Inc in December 2020, it is understood to have offered Sky its radio stations and billboards for $100m plus its $100m debt.

Silly isn't it, why would they want to get loaded with debt under current economic environment when you're debt free already and have nice cash pile. Just focus on growing core business, return the cash that belongs to shareholders in some form. Don't be stupid and doing anything silly as it will never be forgiven by market.

[JohnnyTheHorse]

The deal is very clearly dead with that institutional feedback. Onwards and upwards.

[mistaTea]

The only distressed asset Sky should be seriously looking at buying is its own shares.

Damn right.

[mistaTea]

The deal is very clearly dead with that institutional feedback. Onwards and upwards.

Yes, deal has no chance of proceeding now.

But this Board and Management only understand the boot and the lash.

So they will continue to face harsh criticism until they give more clarity with a plan for shareholder money that is desireable.

[Entrep]

Yes, deal has no chance of proceeding now.

But this Board and Management only understand the boot and the lash.

So they will continue to face harsh criticism until they give more clarity with a plan for shareholder money that is desireable.

I wouldn't be so sure. Never underestimate SKY board ability to disappoint.

[airedale]

I wouldn't be so sure. Never underestimate SKY board ability to disappoint.
Hi Entrep, that could be the quote of the year.

[LoungeLizzard]

The only distressed asset Sky should be seriously looking at buying is its own shares.

Good one:p

My worry is that the Board don't seem to have seen the writing on the wall, and come out saying they won't be proceeding any further. The fact that they have remained silent seems to indicate that they are still going through the due diligence as if this is a good idea. Strategically it doesn't make any sense and the market, shareholders, business analysts all say "are you out of your mind?" so no matter what the numbers say, why go any further?

[mistaTea]

Good one:p

My worry is that the Board don't seem to have seen the writing on the wall, and come out saying they won't be proceeding any further. The fact that they have remained silent seems to indicate that they are still going through the due diligence as if this is a good idea. Strategically it doesn't make any sense and the market, shareholders, business analysts all say "are you out of your mind?" so no matter what the numbers say, why go any further?

Pooman being half a world away doesn't help with fast decisions either...

[ba9]

Finally. Its here ..

https://hotcopper.com.au/threads/ann-sky-not-proceeding-with-mediaworks-acquisition.6795571/?source=email

[sb9]

Finally. Its here ..

https://hotcopper.com.au/threads/ann-sky-not-proceeding-with-mediaworks-acquisition.6795571/?source=email

Was inevitable, wasn’t it. Sanity prevails, onwards and upwards from hereon. No more silly plays by the Board.
Just announce buyback or dividend and reward the shareholders.

[winner69]

Well that was an exciting few days

How much have we lost in the process?

[LaserEyeKiwi]

Finally. Its here ..

https://hotcopper.com.au/threads/ann-sky-not-proceeding-with-mediaworks-acquisition.6795571/?source=email

Weird there is no release on the NZX or on the sky investor site.

[sb9]

Probably recoup all the lost ground by Fri, I think.

[sb9]

Weird there is no release on the NZX or on the sky investor site.

Released on ASX after market close.

[mistaTea]

Thank God we can put this sorry chapter being us.

[Balance]

I have a healthy suspicion that Sophie was behind the leak about MW.

[LoungeLizzard]

Well, thank God for that!! I think though that if the Sky Board were in a mood to throw money around, why aren't they announcing a return to dividends / capital return now? The more they fudge, the more I worry that they'll come up with another hare-brained idea in the meantime and we'll be off on another roller-coaster ride again.

Anyways, here's hoping the SP recovers quickly - the SKY Boards reputation is going to take a lot longer.

[snigmac]

Good to see that the MW deal is dead and that dividends and etc are back on the table.

Im not sure of what to make of Sky saying they will "accelerate
organic investment in the business to drive further growth" with the board and managements track record.

Anyone got any ideas? Is it hoarding cash for rights or? It's something I would say if I have plans already but want to keep the communication super vague.

I agree that Sky's got abit more to do to fix their credibility with coming up with any investment in the company.

[mikelee]

Was inevitable, wasn’t it. Sanity prevails, onwards and upwards from hereon. No more silly plays by the Board.
Just announce buyback or dividend and reward the shareholders.

I'd not consider buying a company with that ex-Air NZ goofball at the helm anyway. God only knows how that goofball managed to convinced an ex CFO & GM to join him in a sinking boat lol.

[Balance]

So who else took the opportunity of the sp drop to pick up a few more shares?

[winner69]

So who else took the opportunity of the sp drop to pick up a few more shares?

Always good buying around 2225 eh Balance

We’ll need to remind ourselves of that over the next year or so won’t we :t_up:

[Shareguy]

Great news.

[Entrep]

Genuinely surprised

[JohnnyTheHorse]

I have a healthy suspicion that Sophie was behind the leak about MW.

Can you explain your reasoning here?

Good to see this deal ended and happy to pick up more shares at what should prove to be a great price. I am of the view that the board will initiate a buyback imminently to take advantage of the low price and work towards restoring shareholder goodwill. The fact they said we would be updated "no later than" the full year results reinforces my view.

[bottomfeeder]

So who else took the opportunity of the sp drop to pick up a few more shares?

Me Woohooo

[Balance]

Me Woohooo

As usual, not enough? Well done!

[Balance]

I have a healthy suspicion that Sophie was behind the leak about MW.


Can you explain your reasoning here?

Good to see this deal ended and happy to pick up more shares at what should prove to be a great price. I am of the view that the board will initiate a buyback imminently to take advantage of the low price and work towards restoring shareholder goodwill. The fact they said we would be updated "no later than" the full year results reinforces my view.

I cannot see her as someone who would initiate or support such a dumb deal. So the best way of killing it is to leak it into the public arena and let the BOD feel the heat.

[bottomfeeder]

MW value heading to the toilet. They will be paying us at this rate. With the falls on the NZX, ASX, and Dow, only a fool would buy into MW. Announcement coming soon, I bet. Deal off, SKT share price will hit $2.70.

I am praying that my prophecy was not just wishful thinking. Not really religious, but feel like going to church for a while. Everything helps.

[Baa_Baa]

Finally. Its here ..

https://hotcopper.com.au/threads/ann-sky-not-proceeding-with-mediaworks-acquisition.6795571/?source=email

Copy post from HC, Just be thankful the BOD saw reason and ditched the imponderable notion of acquiring an indebted dog, unrelated or EPS accretive to Sky's core business. Pity they even considered it IMO and got caught out by the media for not letting shareholders know. I fear that will be the lingering afterthought here, as to whether Sky BOD and management really deserve our trust, and money, to keep on strategy and be transparent with shareholders. I give them the benefit of the doubt this time, they screwed up, got caught out, but listened to shareholders and dumped this stupid idea before it turned into a complete disaster. Write that up in the 'Lessons Learned' register and we'll be all good going forwards.

[Baa_Baa]

I cannot see her as someone who would initiate or support such a dumb deal. So the best way of killing it is to leak it into the public arena and let the BOD feel the heat.

I think you are very generous and gracious if you think she is that cunning and manipulative of the BOD, and we will never know, but if it was that, well ... good on her. At the end of the day, which has now ended, this ridiculous foray has been quashed and they have publicly announced a return to sanity and strategy - buy backs and profit distribution, organically growing the business. The turnaround that we all bought into and is working. It's only the absence of a promise to return to shareholder transparency that imo the jury will be still out on.

[bottomfeeder]

I have put my total holding up for sale at $2.69. The $2.70 spot was taken. Will show up first thing in the morning.

[Balance]

I have put my total holding up for sale at $2.69. The $2.70 spot was taken. Will show up first thing in the morning.

You may have forgotten that the market as a whole has taken a caning in the last 3 days?

Try $2.49 imo.

[Baa_Baa]

You may have forgotten that the market as a whole has taken a caning in the last 3 days?

Try $2.49 imo.

Some people can't see the wood for the trees. This whole thing happened within a global, not just local, market rout of historic proportions, the damage to SP has been relatively minor imo because most people thought it was BS and the BOD have now agreed it is BS. Would be silly now to bail out and not partake in the SP buyback and the profit distributions, even if it dampening the market SP enthusiasm for capital appreciation in the meantime.

Might even be a time to accumulate now that the BOD have capitulated and reset on core strategy of organic growth, share buybacks and profit distributions.

Equity investing is a lifelong learning curve, but it pays to bank the lessons and withdraw those deposits when the time comes around to leveraging downturns, whether inflicted by stupid company decisions or by macro market events.

But I'm not talking for traders, this is about long term success. You make your choices and back them until they are unbackable, then make other choices. SKT have screwed up, but it's immaterial now as they've admitted that and we can move on.

Short termers who focus only on the SP will have other views, that's their prerogative.

[Shareguy]

Given the state of the markets will be very surprised if there is a huge uplift in share price. On another note tried to ring them today twice. Wait time was 40 minutes. Hope it is because of unprecedented demand for upgrades or broadband connections.

[Balance]

Given the state of the markets will be very surprised if there is a huge uplift in share price. On another note tried to ring them today twice. Wait time was 40 minutes. Hope it is because of unprecedented demand for upgrades or broadband connections.

Nope - it was MistaTea harassing them non stop.

[Baa_Baa]

Nope - it was MistaTea harassing them non stop.

The same MistaTea who wants to be CEO and would immediately be out on the street with a washboard saying 'we're for sale, buy SKT, we're going to be acquired, I'll make it happen, trust me'. Just joking. This whole thing has been an awful joke, maybe we can all move on now, I hope so. I just want them to stick to the turnaround strategy and I think they might just do that now, it's working. Shareholder transparency is a lingering issue but it's fixable, they only have to start telling us what's going on and seek our input, before going off-piste with wild ideas. That's basic commercial stakeholder investor management, be up front.

[uravgtrader]

Ya'll reckon if I put in an order on Sharesies for $2.30 a pop for SKT it'll go through in the morning?

[jimdog31]

Can anybody else think of a reason now why they cant reinstate an investor day and provide up to date guidance?

The Cynic in me cant help but wonder if this whole thing has enabled them a couple more months, to do what exactly?

[bottomfeeder]

I am praying that my prophecy was not just wishful thinking. Not really religious, but feel like going to church for a while. Everything helps.

I went to church, sat in a pew, looked to my left and inscribed on the wall was - "Pride goeth before destruction" Very ominous.

[BigBob]

https://i.stuff.co.nz/business/128981260/sky-tv-terminates-talks-over-buying-mediaworks

[mistaTea]

Beautiful bright blue Sky this fine morning…

[snigmac]

Can anybody else think of a reason now why they cant reinstate an investor day and provide up to date guidance?

The Cynic in me cant help but wonder if this whole thing has enabled them a couple more months, to do what exactly?

My thoughts exactly! If we are to get a dividend in September 2022 or later this year, they should have an annoucment In late June/July 2022.

A annoucment in August will point to a dividend in 2023, while they have all this cash on hand... doing nothing.

[mistaTea]

My thoughts exactly! If we are to get a dividend in September 2022 or later this year, they should have an annoucment In late June/July 2022.

A annoucment in August will point to a dividend in 2023, while they have all this cash on hand... doing nothing.

They will announce cap return and divvy before august.

The note said NO LATER than august…that is just to give them time to sign off on the final plan for returning cash.

I would expect to hear more very soon. Certainly about the cap return.

Divvy can be announced with the FY results in August with a September payout date

[winner69]

Announcement starts ‘ announcement on 7 June prompted by media speculation’ means we weren’t goingbto tell you ha ha

Balance suggests Sophie leaked it …maybe she did

[snigmac]

They will announce cap return and divvy before august.

The note said NO LATER than august…that is just to give them time to sign off on the final plan for returning cash.

I would expect to hear more very soon. Certainly about the cap return.

Divvy can be announced with the FY results in August with a September payout date

There are a few NZX/ASX and IRD hoops that need to be jumped through to allow for a dividend and or other capital return to be provided in September. Hope Sky are aware of this.

[mistaTea]

Oaktree must be furious.

Who would want to buy MW now that Sky has taken a pass on the deal?

[LaserEyeKiwi]

Oaktree must be furious.

Who would want to buy MW now that Sky has taken a pass on the deal?

The buyer of last resort of course: retail investors in an iPO.

Just watch, there will be a ~$100 million Mediaworks IPO on the NZX within 18 months.

[mistaTea]

https://www.newshub.co.nz/home/money/2022/06/mediaworks-announces-sky-tv-s-bid-to-buy-it-fallen-through-in-email-to-staff.html

Yep, they are upset.

Especially Cam Wallace who was looking for a big payday. I just hope he didn't already rush out and buy the yacht before the deal closed...

[mistaTea]

I tell ya one thing though...

missusTea got a bloody good sort out last night on the back of the ASX announcement.

[JohnnyTheHorse]

I tell ya one thing though...

missusTea got a good bloody sort out last night on the back of the ASX announcement.

Thanks for the opportunity mate! Seems like she hadn't had a TA trader before???

[The Punter]

I tell ya one thing though...

missusTea got a good bloody sort out last night on the back of the ASX announcement.
Hope "Sophie' wasn't uttered during the sorting process.......

[mistaTea]

Thanks for the opportunity mate! Seems like she hadn't had a TA trader before???

or a Stallion...

[Balance]

Hope "Sophie' wasn't uttered during the sorting process.......

As in ‘Sort it oh Sort it’ ? :)

[mistaTea]

24 November 2021 Tower announce a $30.4M capital return: https://www.nzx.com/announcements/383421

01 March 2022 - Final Court orders received: https://www.nzx.com/announcements/388186

08 March TWR shareholders hit pay dirt: https://www.nzx.com/announcements/388590

So a process that took about 15 weeks.

Sky may opt for an on market buyback, but I do still think that they should take a similar approach to TWR given $55M of our cash came from an asset sale.

Let's say they announced their intention to do a tax free capital return payment next Weds 22 June. Based on the TWR timelines, we could expect to receive out payment on 05 October 2022.

That works out well too as we would have just received our dividend payment in September. So they can pay the divvy first and then cancel 1 in 10 shares and pay out the $55M.

This is the most efficient way to return capital to shareholders in my view and gives us the most options. If you want to increase your ownership in Sky when you receive the cash then you can do so. If you would prefer to use the cash for something else then you can do so. Maximum flexibility.

I anticipate a $55M tax free payment plus a $35M fully imputed dividend. A very tax efficient way of handing over the cash.

And that should still leave Sky with around $60M. Plenty of cash to invest in the value accretive things we would expect, such as:



Increasing broadband uptake
Increasing investment in the new STB to add new features etc
Entry into Mobile

[LoungeLizzard]

24 November 2021 Tower announce a $30.4M capital return: https://www.nzx.com/announcements/383421

01 March 2022 - Final Court orders received: https://www.nzx.com/announcements/388186

08 March TWR shareholders hit pay dirt: https://www.nzx.com/announcements/388590

So a process that took about 15 weeks.

Sky may opt for an on market buyback, but I do still think that they should take a similar approach to TWR given $55M of our cash came from an asset sale.

Let's say they announced their intention to do a tax free capital return payment next Weds 22 June. Based on the TWR timelines, we could expect to receive out payment on 05 October 2022.

That works out well too as we would have just received our dividend payment in September. So they can pay the divvy first and then cancel 1 in 10 shares and pay out the $55M.

This is the most efficient way to return capital to shareholders in my view and gives us the most options. If you want to increase your ownership in Sky when you receive the cash then you can do so. If you would prefer to use the cash for something else then you can do so. Maximum flexibility.

I anticipate a $55M tax free payment plus a $35M fully imputed dividend. A very tax efficient way of handing over the cash.

And that should still leave Sky with around $60M. Plenty of cash to invest in the value accretive things we would expect, such as:



Increasing broadband uptake
Increasing investment in the new STB to add new features etc
Entry into Mobile



Anyway we can get this as a memo to the Board?

Good start to days trading, 22c to $2.47, hopefully it will push on back to $2.70 in the days ahead. $3 on the back of a capital return is still on the cards.

[snigmac]

Thanks MistaTea, that is great info. Hope someone in the media can mention this so the board and management get a gentle reminder that this divy and captial return process can take some time.

[mistaTea]

Anyway we can get this as a memo to the Board?

Good start to days trading, 22c to $2.47, hopefully it will push on back to $2.70 in the days ahead. $3 on the back of a capital return is still on the cards.

Oh Sophie and the Board are aware of this.

I have made sure of it.

[LaserEyeKiwi]

Honestly the best thing Sky could do on a fundamental level to protect its long term future as a high margin content provider is to create some form of popular exclusive content (easier said than done!). If they cant do that then yes they need to keep expanding into other revenue generating areas that are not in structural decline.

Its amazing how there are now a bunch of businesses who are expanding outside there core area to offer bundles to get customers, often offering the bundled extras at not much above cost to attract/retain there core customers . Sky of course is offering broadband.

I was personally looking up trustpower Power+broadband+mobile offers yesterday to switch to (they also offer an additional amazing deal on free or almost free appliances - got my eye on a $2,5000 fridge that will only cost me $300 if I sign up).

Now consider slingshot: who have Broadband, Mobile, Power…..and now is offering insurance!

Eventually everyone is going to offer everything it seems.

Which brings me to the question - all these companies are reselling these bundled extras supplied by 3rd party providers, so should Sky consider changing its place in the supply chain? Rather than merely competing with all the other bundlers, should it also be offering its product to others as a supplier? Letting other power, broadband, mobile etc providers offer sky content as part of 12/24 month fixed term bundle plans seems like it would be a great way to reduce churn while also letting your competitors subsidize your product for their customer base, while also potentially reducing sky advertising & customer support costs (as all these other companies will promote the sky bundle deals and handle customer billing themselves.).

[mistaTea]

24 November 2021 Tower announce a $30.4M capital return: https://www.nzx.com/announcements/383421

01 March 2022 - Final Court orders received: https://www.nzx.com/announcements/388186

08 March TWR shareholders hit pay dirt: https://www.nzx.com/announcements/388590

So a process that took about 15 weeks.

Sky may opt for an on market buyback, but I do still think that they should take a similar approach to TWR given $55M of our cash came from an asset sale.

Let's say they announced their intention to do a tax free capital return payment next Weds 22 June. Based on the TWR timelines, we could expect to receive out payment on 05 October 2022.

That works out well too as we would have just received our dividend payment in September. So they can pay the divvy first and then cancel 1 in 10 shares and pay out the $55M.

This is the most efficient way to return capital to shareholders in my view and gives us the most options. If you want to increase your ownership in Sky when you receive the cash then you can do so. If you would prefer to use the cash for something else then you can do so. Maximum flexibility.

I anticipate a $55M tax free payment plus a $35M fully imputed dividend. A very tax efficient way of handing over the cash.

And that should still leave Sky with around $60M. Plenty of cash to invest in the value accretive things we would expect, such as:



Increasing broadband uptake
Increasing investment in the new STB to add new features etc
Entry into Mobile



Sky has 174,688,323 shares outstanding.

So a $35M dividend paid in September would be 20cps.

Then if they cancel 1 in 10 shares for a $55M capital return (payable in October or November depending on how long it takes Sky to get their act together)...they would cancel 17,468,832 shares. For each cancelled share, Sky would pay the owner $3.14 ($55M/17,468,832).

Easy, relatively fast to execute...and shareholder friendly.

[mistaTea]

Which brings me to the question - all these companies are reselling these bundled extras supplied by 3rd party providers, so should Sky consider changing its place in the supply chain? Rather than merely competing with all the other bundlers, should it also be offering its product to others as a supplier? Letting other power, broadband, mobile etc providers offer sky content as part of 12/24 month fixed term bundle plans seems like it would be a great way to reduce churn while also letting your competitors subsidize your product for their customer base, while also potentially reducing sky advertising & customer support costs (as all these other companies will promote the sky bundle deals and handle customer billing themselves.).

Sky have stated many times in the past that they are open to partnerships with anyone where they see value add.

If a power company wanted to offer bundles that included Sky products (most likely the streaming services) then Sky would go for it.

We already have a deal with Spark for both NEON and Sky Sport NOW.

We have deals with 2D for both NEON and Sky Sport NOW.

Yet to be seen what we do with Vodafone once they finish closing off the Vodafone TV service.

Sky have always been open to partnership deals.

[mistaTea]

Sky is big news today.

https://www.nzherald.co.nz/business/analyst-on-why-sky-tv-walked-from-mediaworks-and-whats-next/3VPR4GV3FKSGZPLAROOCEWXH24/

According to a miffed Wallace Sky were the ones who came begging him for a deal and then chickened out.

[moimoi]

Honestly the best thing Sky could do on a fundamental level to protect its long term future as a high margin content provider is to create some form of popular exclusive content (easier said than done!). If they cant do that then yes they need to keep expanding into other revenue generating areas that are not in structural decline.

Its amazing how there are now a bunch of businesses who are expanding outside there core area to offer bundles to get customers, often offering the bundled extras at not much above cost to attract/retain there core customers . Sky of course is offering broadband.

I was personally looking up trustpower Power+broadband+mobile offers yesterday to switch to (they also offer an additional amazing deal on free or almost free appliances - got my eye on a $2,5000 fridge that will only cost me $300 if I sign up).

Now consider slingshot: who have Broadband, Mobile, Power…..and now is offering insurance!

Eventually everyone is going to offer everything it seems.

Which brings me to the question - all these companies are reselling these bundled extras supplied by 3rd party providers, so should Sky consider changing its place in the supply chain? Rather than merely competing with all the other bundlers, should it also be offering its product to others as a supplier? Letting other power, broadband, mobile etc providers offer sky content as part of 12/24 month fixed term bundle plans seems like it would be a great way to reduce churn while also letting your competitors subsidize your product for their customer base, while also potentially reducing sky advertising & customer support costs (as all these other companies will promote the sky bundle deals and handle customer billing themselves.).

Which is why about 100 pages ago some on here were saying the sale of the outdoor broadcasting unit seemed a dumb idea. Rather than control the ability to create content they became a price taker.

GLTA

[mistaTea]

Which is why about 100 pages ago some on here were saying the sale of the outdoor broadcasting unit seemed a dumb idea. Rather than control the ability to create content they became a price taker.

GLTA

That is a different issue altogether. The fact that Sky used to record live sport did not mean that they 'owned' the content.

OSB was going to require a large CAPEX investment to bring the trucks/cameras etc up to scratch. And with NEP in the market, OSB didn't provide any moat to Sky anymore.

[LaserEyeKiwi]

Interesting article on Businessdesk with sources indicating the actual purchase price for Mediaworks was in the region of $300 million (!).

https://businessdesk.co.nz/article/media/wounded-sky-under-pressure-to-return-cash-after-mediaworks-u-turn

Also they were in final steps of several months of due diligence when the news leaked last week.

[LoungeLizzard]

Interesting article on Businessdesk with sources indicating the actual purchase price for Mediaworks was in the region of $300 million (!).

https://businessdesk.co.nz/article/media/wounded-sky-under-pressure-to-return-cash-after-mediaworks-u-turn

Also they were in final steps of several months of due diligence when the news leaked last week.

Jeez, sounds like we dodged a bullet.

Everyone who vented their spleen - and some I noticed were directly quoted in Stuff - can take a bow, for whatever small part they played in averting what would have been an unmitigated disaster.

[mistaTea]

Interesting article on Businessdesk with sources indicating the actual purchase price for Mediaworks was in the region of $300 million (!).

https://businessdesk.co.nz/article/media/wounded-sky-under-pressure-to-return-cash-after-mediaworks-u-turn

Also they were in final steps of several months of due diligence when the news leaked last week.

I don’t have a sub to business desk…

But the article no doubt highlights what an embarrassing fiasco this whole thing is.

Brings into question the judgement of Sophie and the board. A complete distraction when they should be focussing on the core.

How someone would pay ANY money for MW (let alone $300M!!!) is beyond me.

The only way that they can realistically get any shred of reputation back is to make a big payout to shareholders and invest in key areas that will support the base and grow streaming (which I outlined in a previous post).

[nztx]

I don’t have a sub to business desk…

But the article no doubt highlights what an embarrassing fiasco this whole thing is.

Brings into question the judgement of Sophie and the board. A complete distraction when they should be focussing on the core.

How someone would pay ANY money for MW (let alone $300M!!!) is beyond me.

The only way that they can realistically get any shred of reputation back is to make a big payout to shareholders and invest in key areas that will support the base and grow streaming (which I outlined in a previous post).

Agree with you Mr T .. have SKT Board learned anything out of this or will they continue to stumble forward ? :)

Why don't they now table a T/over for NZM .. all in shares / merger of course but after Cap Return & Dividend to clear out any surplus to current SKT Shareholders first ?

Would they be silly or imprudent enough to value NZM @ $1 biln after the MW aborted deal ? :)

[mistaTea]

Agree with you Mr T .. have SKT Board learned anything out of this or will they continue to stumble forward ? :)

Why don't they now table a T/over for NZM .. all in shares / merger of course but after Cap Return & Dividend to clear out any surplus to current SKT Shareholders first ?

Would they be silly or imprudent enough to value NZM @ $1 biln after the MW aborted deal ? :)

I think that a merger with NZME after the capital return and dividend payment is a plausible way forward.

They don’t have to value NZME at anything behind the current quoted value of its stock.

We just issue SKT shares to cover the prevailing market value of NZM shares. No cash needed or independent valuations.

It’s not a takeover - it’s a merger.

And NZM would be a much more interesting business to join forces with as opposed to MW. We already have a very warm business relationship with NZM…

So if no takeover materialised from PE or anyone else, NZM is an obvious way forward.

And I believe Michael Boggs is as keen as mustard. Especially with the TVNZ-RNZ merger getting clearance.

[Poet]

Agree with you Mr T .. have SKT Board learned anything out of this or will they continue to stumble forward ? :)

Why don't they now table a T/over for NZM .. all in shares / merger of course but after Cap Return & Dividend to clear out any surplus to current SKT Shareholders first ?

Would they be silly or imprudent enough to value NZM @ $1 biln after the MW aborted deal ? :)

Well, what a complete fiasco. Rumours say they were prepared to pay $300m of OUR money for Media Works, and they were still negotiating as of two weeks ago- you'd think private equity would have bitten their arm off weeks ago at that price - I guess there is no limit to greed when you have a sucker in your grasp eh?

In my opinion, and I'm not a large shareholder (but 300k shares, so not tiny either) I think the entire board should pack their bags and do the decent thing - they have absolutely (and I mean absolutely!) no credibility left. Certainly shouldn't bother looking around for some other deal to save face cause they will just stuff that up as well.

To quote Oliver Cromwell to parliament 1653



It is not fit that you should sit here any longer. You have sat here too long for any good you have been doing lately … In the name of God go.“

[nztx]

Well, what a complete fiasco. Rumours say they were prepared to pay $300m of OUR money for Media Works, and they were still negotiating as of two weeks ago- you'd think private equity would have bitten their arm off weeks ago at that price - I guess there is no limit to greed when you have a sucker in your grasp eh?

In my opinion, and I'm not a large shareholder (but 300k shares, so not tiny either) I think the entire board should pack their bags and do the decent thing - they have absolutely (and I mean absolutely!) no credibility left. Certainly shouldn't bother looking around for some other deal to save face cause they will just stuff that up as well.

To quote Oliver Cromwell to parliament 1653



It is not fit that you should sit here any longer. You have sat here too long for any good you have been doing lately … In the name of God go.“



Good points there too.

No doubt .. some board vacancies should result from the recent SKT MW chapter in a monster
spring cleaning session.

I would say that SKT is possibly a better business than NZM abeit SKT's tidy up of their act is later
than NZM's and with more carnage - consolidations, tapping holders etc and of course kneecapping
NZR in the process out of the deals..

NZM should to an extent be looked on as old Media - Papers, Radio - is it any better as a target than the unfortunate MW was ?

Does SKT need to merge or takeover anything, or even want to look at troublesome Old Media formats
even if managers of the other outfits have tried reformatting & updating their camps ?

Maybe we want to see international TV outfits or PE to come along with a sensibly priced takeout for SKT
instead ?

Or even an circular relationship where NZM & SKT each hold 35% of each other could be an interesting mechanism & structuring in sea of PE predators looking for a free meal ..

Who knows - consideration could be an inspecie dish out of shares in NZM to SKT holders & vice versa
to produce a defensive structure..

[Poet]

I'd be interested to see if they give us any more detail about the failed deal once things cool off a bit

[moimoi]

That is a different issue altogether. The fact that Sky used to record live sport did not mean that they 'owned' the content.

OSB was going to require a large CAPEX investment to bring the trucks/cameras etc up to scratch. And with NEP in the market, OSB didn't provide any moat to Sky anymore.

The possibility of creating and producing your own content could be separate from the contractual arrangements to film and broadcast what a sporting entity requires.

[mistaTea]

Should we take bets on what comes first?

NZX announcement:



Detailing the capital return; or
Notification that Sophie has 'resigned'

[mistaTea]

https://thespinoff.co.nz/media/16-06-2022/sky-just-decided-not-to-buy-mediaworks-why

Duncan sums up why Sky is probably one of the 'safest' places to invest right now, given it is still spewing FCF and...

"Sky can be viewed as a counter-cyclical business, meaning people use it more when times are hard. During the last recession, way back in 2008-2010, people stayed in and watched Sky, instead of going out and spending money on clothes or restaurants. MediaWorks, which makes almost all its money from advertising, is a regular old cyclical business. It makes money from advertising, which people buy more of when people are also buying clothes or eating at restaurants. So because there is more and more fear of a recession, a business like MediaWorks is suddenly viewed as a lot more shaky than one like Sky."

This is a point I have tried to make in the past. Some households feeling the pinch may well cancel (or cut back on) their Sky/NEON/SSN subs. But a lot of people will be reluctant to do that when first looking to cut costs. If you have less money to booze it up at the pub, go to restaurants, holidays or general shopping...that means much more time spent at home. If you are essentially forced to stay home more, then at the very least you want to have some good TV to watch.

As inflation continues to bite, you may even see an extra boost in our subs (particularly streaming).

So watch this space!

[bottomfeeder]

Should we take bets on what comes first?

NZX announcement:



Detailing the capital return; or
Notification that Sophie has 'resigned'


Its a pity they decided to look into MMW, just before the crash. SP is tumbling on the back of the announcement. Still its all easy in hindsight.

The question is ( lets put the MMW behind us) Can she pull the company through some of the tough times ahead. No doubt, we will be in recession very soon, and SKT will lose some subscribers, more if they dont get tbeir act together fast.

Boring Netflix losing their SP ( down 75% and personally breathing through a broken snorkel if they are relying upon a reality squid games to get them out if the downward spiral??????), we need some real management now to run a lean profitable ship. Methinks I smell a takeover when the dust settles.

[LaserEyeKiwi]

A couple of articles today mentioning that Sky pays $101m per year for the Rugby rights.

Has that number been revealed before? Actually a little cheaper than I thought it would be.

At that price I can see why some entities might decide to simply bid for the NZR rights themselves at the next rights renewal, rather than make a takeover attempt for sky.

[mistaTea]

A couple of articles today mentioning that Sky pays $101m per year for the Rugby rights.

Has that number been revealed before? Actually a little cheaper than I thought it would be.

At that price I can see why some entities might decide to simply bid for the NZR rights themselves at the next rights renewal, rather than make a takeover attempt for sky.


Sky never reveal what they pay for rights, but I think it was reverse-engineered from the NZR financials that were published a while back.

I think the fact that it would costs well in excess of $100M/year (plus NEP costs, marketing costs, commentator costs etc) to win rugby from Sky makes a takeover of Sky more attractive.

I would suggest SKy would go up to $120M/year if push came to shove. Given Sky's advantages with their satellite network, for a streamer to win the contract I think they are looking at $140M+/year. By the time they pay for all the other things you need to provide to film, market and deliver the matches etc... you are looking at a good $170M/year.

First off, to justify that kind of spend you must be expecting a HUGE number of subscriptions to your service (far more subs that Sky has ever been able to attract, even when she was a monopoly).

Second, Sky currently has a market cap of $400M. Takeover premium is usually 30-50% (so $520M - $600M price tag). Let's say Sky could negotiate top end given her cash posotion and strong FCF profile...

Well, if someone bought Sky for $600M they would effectively be getting her for $450M right now when you suntract the cash. Given all the content Sky comes with, strong earnings, a stable satellite base (becoming even more stable by the day as they sign up more broadband) and a rapidly growing streaming channel...it would make far more sense to buy Sky...and eliminate a competitor for NZR rights (meaning they would be purchased for a lot cheaper than if you had to go against Sky to win them).

[Monarch]

This whole fiasco has left me questioning whether I trust the board enough going forward to hold this stock. I still think the company itself is undervalued but maybe that discount is justified given the level of incompetence shown by those at the very top. LaserEyeKiwi, I think you might be on to something re creating their own content. I reckon the key to this companies survival over the next 20 years is attracting and retaining the 50+ age group as satellite customers. From what I have read this age group seems to appreciate news and information programs like documentaries etc, and I imagine these are some of the cheapest content types to produce. It could be worthwhile for sky to invest a few million to get a studio going and a few million in yearly budget to make a bunch of exclusive content of this nature. This could become especially important if discovery chose to abandon us and take all their channels down.

[mistaTea]

This whole fiasco has left me questioning whether I trust the board enough going forward to hold this stock. I still think the company itself is undervalued but maybe that discount is justified given the level of incompetence shown by those at the very top. LaserEyeKiwi, I think you might be on to something re creating their own content. I reckon the key to this companies survival over the next 20 years is attracting and retaining the 50+ age group as satellite customers. From what I have read this age group seems to appreciate news and information programs like documentaries etc, and I imagine these are some of the cheapest content types to produce. It could be worthwhile for sky to invest a few million to get a studio going and a few million in yearly budget to make a bunch of exclusive content of this nature. This could become especially important if discovery chose to abandon us and take all their channels down.

As part of the Warner deal, there has been a commitment for the two companies to collaborate on more "Sky NZ Orignal" shows.

LEK is definitely right about SKT doing more Original content. We see that in Sky UK now (Gangs of London etc).

I repeat, moving forward Sky TV either need to own the content OR the network.

If they want to go down the content path, the best way for them to achieve this is to sell the business to a big studio (or get them to invest in Sky as some kind of JV partner). With the best will in the world, Sky will never have the budget to be able to make a lot of really good shows themselves (let alone pay the big bucks to attract top talent actors etc).

The other option is to own the network. We used to own the network before UFB...but now to own the distribution network we have to become a telco. We obviously see benefit in telco services given our broadband arrangement with Vocus (now 2D). So it is not a stretch of the imagination to see that relationship go to the next stop.

I suppose a third option is an eventual merger with NZME...and though that is an interesting idea and definitely has merit, it is my least favourite option.

[bottomfeeder]

This whole fiasco has left me questioning whether I trust the board enough going forward to hold this stock.

No time to be selling at this SP wait for $3.00

[winner69]

I'd be interested to see if they give us any more detail about the failed deal once things cool off a bit

We'll never know .... to embarassing and they'll say 'confidential' if pushed

[mistaTea]

No time to be selling at this SP wait for $3.00


Christ no, not with a big dividend imminent as well as a broader capital return.

We all agree that Management and The Board have let us down too many times...and it is a big factor in any decisions owning this stock longer term...

But they have screwed the pooch so badly here that they have no option other than to distribute the vast majority of the cash pile to shareholders this year. Even though they probably don't want to...they have to now.

And their comment in the last announcement about being able to support "sustainable dividends" out into the future means that they must have confidence in continuing to gush positive FCF.

So if the business is expected to produce more cash than they need to invest out into the future there is absolutely no need to keep the majority of the cash on hand now.

I am anticipating a minimum total distribution of $90M this year. If they have any brains they will dig deeper into their pockets and go $100M.

$55M tax free capital return payment with a $45M fully imputed dividend.

If they don't do this...I can virtually guarantee you none of these guys will have a job at Sky for much longer. They are keenly aware of this now, so have no choice.

That would be a great result for shareholders, and still leaves Sophie and the crew plenty of cash to 'supercharge' existing projects on the strategic roadmap. See? I am a very reasonable man.

[Monarch]

As part of the Warner deal, there has been a commitment for the two companies to collaborate on more "Sky NZ Orignal" shows.

LEK is definitely right about SKT doing more Original content. We see that in Sky UK now (Gangs of London etc).

I repeat, moving forward Sky TV either need to own the content OR the network.

If they want to go down the content path, the best way for them to achieve this is to sell the business to a big studio (or get them to invest in Sky as some kind of JV partner). With the best will in the world, Sky will never have the budget to be able to make a lot of really good shows themselves (let alone pay the big bucks to attract top talent actors etc).



That's where the beauty of doing documentaries comes in, no actors no big budget cgi, just need to pay a few production staff, a narrator and find something interesting to talk about.

[Monarch]

$55M tax free capital return payment with a $45M fully imputed dividend.


Given you can only buy back 5% of a company per year, it would also make sense to get that underway as well. Hell they have $100 million of banking facilities do they not?

[mistaTea]

Given you can only buy back 5% of a company per year, it would also make sense to get that underway as well. Hell they have $100 million of banking facilities do they not?

Not a buyback, I am saying a capital return payment.

They can cancel 1 in 10 shares like TWR if they want to (I don't think they are required to cancel shares though).

It does take a few months from the time they announce the capital return to file paperwork with IRD, get court approval etc. But if they pull finger (i.e. announce it next week) I expect we would receive the cash in our bank accounts early to mid October.

[Monarch]

Not a buyback, I am saying a capital return payment.

They can cancel 1 in 10 shares like TWR if they want to (I don't think they are required to cancel shares though).

It does take a few months from the time they announce the capital return to file paperwork with IRD, get court approval etc. But if they pull finger (i.e. announce it next week) I expect we would receive the cash in our bank accounts early to mid October.

Yeah but could they not do both? Capital return the 55 million, then start buybacks. FCF tends to be above NPAT so the imputed dividend payout will be limited by NPAT, I'd rather buybacks than unimputed dividends.

[mistaTea]

Yeah but could they not do both? Capital return the 55 million, then start buybacks....

They could but then it is more complex.

I think they just need to keep it very simple, especially given the recent fiasco.

$55M capital return payment (which may or may not reduce shares outstanding) along with a $45M dividend. $25M total dividend the year after.

It's clean, it's simple...and it gets cash into shareholder pockets fast.

If the SP is still low next year they can consider a buyback program at the expense of a reduced dividend if that makes sense and has shareholder support.

[winner69]

All you can say is that its taken an inordinate amount of time for them to work out what to do ..... indecision or ineptitude?

You'd think that they would have had things teed up for all options a while ago .... before they fired any starting guns

You get the feeling they don't want to part with the cash .....unless they buy something

Wonder who else they doing DD on?

[mistaTea]

All you can say is that its taken an inordinate amount of time for them to work out what to do ..... indecision or ineptitude?

You'd think that they would have had things teed up for all options a while ago .... before they fired any starting guns

Aye, you are dead right. If they weren't buffoons they should have the capital return/dividend plan set in stone already (even if it became Plan B after they decided they were in love with Mai FM...)

Given they have not announced what they are doing with our money yet, they are most likely hastily trying to cobble something together. I would be disappointed, but my expectations are quite low now in terms of their behaviour.


You get the feeling they don't want to part with the cash .....unless they buy something

They should have been been paying a dividend from 2021, even if a token one to start with. Their desire to not pay us any money is the understatement of the year. It took a public humilation and dressing down from some of their institutional investors to snap them out of it.


Wonder who else they doing DD on?

One poster suggested they might try to revive Video Ezy. Right up their alley.

[RGR367]

Should we take bets on what comes first?

NZX announcement:



Detailing the capital return; or
Notification that Sophie has 'resigned'



I'm not betting but a virtual toast if 2 happens first.

[nztx]

I'm not betting but a virtual toast if 2 happens first.


Head hunted by MW perhaps ? .. do they pay better ? :)

[cyclist]

I'm not betting but a virtual toast if 2 happens first.

I'd be a lot more interested in seeing our chairman's resignation.

[nztx]

I'd be a lot more interested in seeing our chairman's resignation.


Very good point .. how about the majority of the Board ?

[cyclist]

I'd be a lot more interested in seeing our chairman's resignation.

Not 100% sure how this works, but Philip Bowman and Joan Withers were last re-elected in 2019. Three year cycle - does that mean we get our chance to send a signal this year?

edit: here is the 2019 meeting notice: http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SKT/341809/308794.pdf

[mistaTea]

Not 100% sure how this works, but Philip Bowman and Joan Withers were last re-elected in 2019. Three year cycle - does that mean we get our chance to send a signal this year?

edit: here is the 2019 meeting notice: http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SKT/341809/308794.pdf

I would be sweating like crazy if I were them and they are coming up for election soon.

As I say, they have to pay out big time (and tell the market exactly how much the big payment is and how/when it will be implemented very very soon) if they are hoping to be re-elected.

If they just quit now that would look really bad.

If they get fired at the next vote that would be another humiliation.

They are in a very tough spot - and SM has led them down this disastrous path.

If they pay out the vast majority of cash they will probably keep their jobs. But they should know that they have been put on notice.

[snigmac]

I think Sky need to:
1) provide a interim update on how the company is doing. We have no idea how the roll out of the box is going, whether Neon numbers are still growing and etc; and
2) provide some numbers of what will be provided to shareholders. Given the disconnect in communication due to the MW deal, we have no idea what they are drumming up (and the market is likely to have forgotten prior details- i know i have).

[mistaTea]

I think Sky need to:
1) provide a interim update on how the company is doing. We have no idea how the roll out of the box is going, whether Neon numbers are still growing and etc; and
2) provide some numbers of what will be provided to shareholders. Given the disconnect in communication due to the MW deal, we have no idea what they are drumming up (and the market is likely to have forgotten prior details- i know i have).

In terms of the new STB toll out, we know exactly how that is going.

Terribly.

It hasn’t even started yet.

They are very late. In part because of a chip shortage worldwide.

But we now know that Sophie and the team have also been a tad distracted the last couple of months…

[snigmac]

It's not a great image when companies don't communicate things like this as shareholders will assume that 'no news' equates to the worst possible scenario. Looks like we will need to wait and see.

[Balance]

It's not a great image when companies don't communicate things like this as shareholders will assume that 'no news' equates to the worst possible scenario. Looks like we will need to wait and see.

One Sky shareholder I was talking to today said he bailed out of his stock in the rebound yesterday.

Not because he does not like the stock at this point of its inflectIon but because he does not trust the directors and management to make the right decisions for the business anymore.

So he is happy to take what gains were left (still substantial) and as he puts it, he prefers to sleep well.

I am more optimistic than him so here’s hoping I am right.

[winner69]

Trackside - cant do a live rewind .... service not available it says

And friend lost service last night --- apparently quite a few people have suffered this this week

Sky technical crap - no wonder share price is what it is

Suppose I have to wait a few hours to talk to somenody .... as we are very busy at moment they say

[airedale]

I followed my post on here with post to Sky web site feed back page. I got an automated reply to say that it could take up to 10 DAYS to get a reply. 10 DAYS! I rest my grumpy case
The telephone help line is no help at all these days, non existent in fact.

[mistaTea]

Watching build up to Blues/Crusaders SR Final.

Smooth HD picture on my STB.

Superior quality to Sky Sport NOW (though SSN is better value if you only want sport channels)

[RTM]

Watching build up to Blues/Crusaders SR Final.

Smooth HD picture on my STB.

Superior quality to Sky Sport NOW (though SSN is better value if you only want sport channels)

Do you have both Mr T ?

[mistaTea]

Do you have both Mr T ?

No I am not THAT much of a fan boy.

But I have used SSN in the past.

[RTM]

No I am not THAT much of a fan boy.

But I have used SSN in the past.

Thought Sophie might have given you complimentary access.:)
But seriously it would be great to have them alongside each other to enable accurate comparison.
Does the "SkyGo" not offer the same streaming access as SSN ? Ages since Ive used it and certainly don't have a STB.

[mistaTea]

Thought Sophie might have given you complimentary access.:)
But seriously it would be great to have them alongside each other to enable accurate comparison.
Does the "SkyGo" not offer the same streaming access as SSN ? Ages since Ive used it and certainly don't have a STB.

Yes Sky GO allows me to stream sport too. Same quality as SSN.

The steaming options are good - it is HD and as good a quality as you can get.

But STB with a satellite feed is still a bit ‘smoother’ somehow.

The ball just seems to track a bit more seamlessly with the STB.

I also notice that the HD quality I get when I watch something on Sky seems a little ‘sharper’ than when I stream NEON.

[RTM]

Yes Sky GO allows me to stream sport too. Same quality as SSN.

The steaming options are good - it is HD and as good a quality as you can get.

But STB with a satellite feed is still a bit ‘smoother’ somehow.

The ball just seems to track a bit more seamlessly with the STB.

I also notice that the HD quality I get when I watch something on Sky seems a little ‘sharper’ than when I stream NEON.

Ta....that was my previous observation from a few years ago when somehow I had satellite and streaming. But I was on copper then. Fibre now.
Last week the Warriors feed was just awful. Pretty well matched the game, almost unwatchable !

[snigmac]

On a positive note, Sky managed to sell the property within the upper quartile of what the property could be sold for. So ay, at least we have that going for us :). Not sure if they would get that price now or over the coming 2 years.

[sb9]

NZME showing how its done in terms of capital return to shareholders. Come on Sophie and Board, prove us that you can do better than that.

[mistaTea]

NZME showing how its done in terms of capital return to shareholders. Come on Sophie and Board, prove us that you can do better than that.


Yeah, it would be disappointing if we don't hear something this week about their plans.

In theory they were working on this in parallel to the MW fiasco to ensure they had a Plan B if the deal didn't work out.

Well, we are waiting...

[snigmac]

It's a short week with Matariki. Management and co is unlikely to get back to us this week. We will most likely need to wait until next week.

At these prices, I think Sky will do a share buyback and dividend. 13-15c per share possibly.

[mistaTea]

It's a short week with Matariki. Management and co is unlikely to get back to us this week. We will most likely need to wait until next week.

At these prices, I think Sky will do a share buyback and dividend. 13-15c per share possibly.


https://www.nbr.co.nz/investment/nzme-sweetens-the-deal-on-share-buyback-programme/

Article makes reference to Sky in terms of capital return.

I don't think a buyback is he way to go as Sky will face the same liquidity issues that NZM has had. Plus Sky have an option that NZM didn't have - a tax free cash distribution to shareholders from the campus sale proceeds.

As I have said in the past, distributing the $55M tax free to shareholders is the most efficient way to retur capital to shareholders. Rather than an on-market buyback where they will purchase shares in dribs and drabs over a long period of time. It will be painful to watch.

Better to get IRD sign off to return the funds to shareholders an they can invest it how they like. Or spend it on frivilous bs! Up to the individual.

You back that up with a sizeable dividend. $45m (~25cps). From next year on they can probably sustain 10-15cps divvys.

But this way they can return $100M of shareholder money very efficiently. It should also restore a lot of shareholder goodwill towards management and the board..particularly important if Bowman and Joan Withers are hoping to be re-elected this year.

And this approach still leaves Sophie with ~$50M in the bank. Plenty of additional $$$ on top of CAPEX that has already been budgeted for to do projects that will grow the core, support the share price and prepare Sky for an eventual NZME merger (assuming Sky is not taken out before then by PE or someone else).

[JohnnyTheHorse]

I disagree. I think there is good reason to purchase on market at this level, especially with negative overall market conditions. Essentially provides a floor and will help fend off opportunistic bids. They can purchase 5% over the coming year, so say allocate $25m to the buyback. Another $30m capital return. Then of course a healthy dividend.

[mistaTea]

I disagree. I think there is good reason to purchase on market at this level, especially with negative overall market conditions. Essentially provides a floor and will help fend off opportunistic bids. They can purchase 5% over the coming year, so say allocate $25m to the buyback. Another $30m capital return. Then of course a healthy dividend.

Ultimately, I think you have to think "what is best for the shareholder?" in these situations.

If Sky did not have the option of a tax free capial return, I would agree with you. The SP is low, so an on market buyback would be favourable.

But Sky do have the option to return the entre $55M back to shareholders tax free. They can cancel some shares in the process if they want to as part of the transaction. Sareholders can then decide whether they want to use the money to increase their ownership of Sky or not.

I mean, how would a buyback (that will take ages to do) be more beneficial to shareholders than sticking the cash in their hands tax free?

[snigmac]

I don't completely understand the tax free part. Is the tax that doesn't have to be paid a tax saving for Sky or shareholders? I don't believe I have to pay tax on the sale of my Sky shares...

[mistaTea]

I don't completely understand the tax free part. Is the tax that doesn't have to be paid a tax saving for Sky or shareholders? I don't believe I have to pay tax on the sale of my Sky shares...


One of the big benefits of a buyback is that there is no tax on it (like you get when you receive a dividend). So if a company has excess cash AND the SP is at an attractive place (i.e. low) then a buyback is the most tax efficient way of distributing the cash.

However, in Sky's case...because $55M of the cash in the bank came from the sale of an asset...they can apply to IRD to return those funds to shareholders without them being subject to tax (because the payment has come from property sale, not operating earnings and therefore does not constitute a dividend).

The main argument for the buyback is tax efficiency...but if you can have the cash distributed to you tax free instead why would anyone not want that? You get the entire cash return right away and can do what you wish with it.

If the Sky SP is still low in your view you can use all or some of the cash you received to buy more (and increase your ownership % lie would happen if Sky were doing a buyback and you just held).

Unless there is some reason I am unaware of that makes the tax free payment not an option in this case, I think it should be the preferred option.

[snigmac]

I'm not a tax expert but I don't think there is any tax Sky has to pay even if the funds from the property were kept by Sky...

I still don't see the tax benefit ><.

[mistaTea]

I'm not a tax expert but I don't think there is any tax Sky has to pay even if the funds from the property were kept by Sky...

I still don't see the tax benefit ><.


Jesus Christ.

What in God's name are you even talking about man?

The tax benefit is for the shareholder​ not Sky TV.

[snigmac]

Mum and pop shareholders don't have to pay tax on the sale of Sky TV shares though or on a dividend, so there doesn't appear to be a tax saving advantage in favour of a cash distribution. From a tax point of view, the tax savings are the same?

[shazam]

Mum and pop shareholders don't have to pay tax on the sale of Sky TV shares though or on a dividend, so there doesn't appear to be a tax saving advantage in favour of a cash distribution. From a tax point of view, the tax savings are the same?

Shareholders pay tax on dividends received, as was pointed out to you.

[DeathByWarriors]

Mum and pop shareholders don't have to pay tax on the sale of Sky TV shares though or on a dividend, so there doesn't appear to be a tax saving advantage in favour of a cash distribution. From a tax point of view, the tax savings are the same?

Please share where I can get some of these tax free dividends you speak of? (unless you're exclusively talking about the funds from the property sale).

[mistaTea]

Mum and pop shareholders don't have to pay tax on the sale of Sky TV shares though

Aye, so if they did a buyback over 12 months (like NZM) then if that results in an increase in SP (a big maybe given the wider market turmoil...NZM SP has actually dropped significantly since they started doing their buyback...) then you could sell your shares at the higher price and not pay tax provided you have held them for longer than brightline.

But that would take ages to realise that gain, and there is a risk that the SP could continue to drop despite your $55M funds being used to cannibalise the stock.

I am saying that they have an option to skip all that and pay the $55M to shareholders without it being taxed (like it would if it was a regular dividend). And this should be the option they are looking at as it is a very efficient way of distributing the cash to shareholders and is risk free to the shareholder...


or on a dividend

We absolutely pay tax on dividends.

[snigmac]

My bad, I can see the error in my understanding lol.

[mistaTea]

https://www.nzherald.co.nz/business/nzme-to-pay-97m-special-dividend/5E3SDPJRTIB3HUVGIUEA256OVU/

These guys have been trying to buyback as much stock as they can since they were able to start buying on April 4.

The buyback ends on 16 December 2022 (6 months away).

Volumes are so low that in almost 3 months they could only buy back $5M worth. At this rate, even though the NZM is low...because the volume just isn't there, they would be lucky to buy back another $10M worth over the remaining 6 months.

So under current progress they cannot feasibly return the entire $30M via buyback. Not even half of that (hence the special dividend, which I think is a good move).

Sky TV is in the same boat...only the problem will be even bigger because they will be trying to distribute almost double what NZM are doing ($55M). No way can Sky buyback a meaningful amount of shares in a reasonable amount of time.

The best/easiest/most efficient way to distribute that kind of cash to shareholders is clearly the tax free payment option.

[Mel]

https://www.nzherald.co.nz/business/nzme-to-pay-97m-special-dividend/5E3SDPJRTIB3HUVGIUEA256OVU/

These guys have been trying to buyback as much stock as they can since they were able to start buying on April 4.

The buyback ends on 16 December 2022 (6 months away).

Volumes are so low that in almost 3 months they could only buy back $5M worth. At this rate, even though the NZM is low...because the volume just isn't there, they would be lucky to buy back another $10M worth over the remaining 6 months.

So under current progress they cannot feasibly return the entire $30M via buyback. Not even half of that (hence the special dividend, which I think is a good move).

Sky TV is in the same boat...only the problem will be even bigger because they will be trying to distribute almost double what NZM are doing ($55M). No way can Sky buyback a meaningful amount of shares in a reasonable amount of time.

The best/easiest/most efficient way to distribute that kind of cash to shareholders is clearly the tax free payment option.
The tax-free distribution to Sky shareholders would go some way to recognising the fiasco they've put us through and the resultant drop in shareholder value!!

[nztx]

The tax-free distribution to Sky shareholders would go some way to recognising the fiasco they've put us through and the resultant drop in shareholder value!!


Wont the SP drop some more after the distribution goes Ex .. or will all the eager beavers promptly throw
it back into more of the same said shares on the loose ? :)

[uravgtrader]

Won't sky want to keep some cash for ever-increasing sports rights?

[nztx]

Won't sky want to keep some cash for ever-increasing sports rights?

That's what Cap Raises are for after holders get conditioned to having received Cash back and start seeing
a forward dividend trail - aren't they ? :)

[Balance]

That's what Cap Raises are for after holders get conditioned to having received Cash back and start seeing
a forward dividend trail - aren't they ? :)

Yup - just have to look at the Aussie banks.

[mistaTea]

Wont the SP drop some more after the distribution goes Ex .. or will all the eager beavers promptly throw
it back into more of the same said shares on the loose ? :)

If the current market cap is a combination of PE multiple + cash in the bank...then the market cap will drop by the amount of capital returned regardless of whether they do it via buyback or tax free payment.

Under a buyback you will just end up owning a slghtly bigger piece of a smaller company (the total value of your shares will be unchanged).

Under a tax free distribution, if the market cap promptly fell by $55M after the distribution then your shares would be worth less but you would have cash in the hand. The 'new' value of your shares + the cash you have in hand would equal the previous total value of your shares. Then, if you feel Sky is the most attractive opportunity in front of you at the time you can always use the money to buy more shares and increase your ownership. Or you could spend it down the pub and piss it up against a wall. You get to decide.

if Sky try to distribute $55M by on market buyback it will take years. The tax free distribution is the most efficient way by far - and they can play smoke and mirrors if they want to by cancelling 1 in 10 shares during the process (so that the per share quoted stays higher). If they try a buyback by tender offer it will fail too - there just won't be much appetite for it given dividends are near.

And dividends will ultimately determine the final market cap. Sku currently only has a PE multiple of ~9 (projected FY22 earnings)...so it would not appear that the Balance Sheet is factoried into the valuation in a big way right now. If you subtract the cash pile from the valuation, then the current PE multiple is only about 5 or 6.

Plenty of room to go up if they can grow earings and restore market confidence so that they get a higher PE multiple.

[Snoopy]

We absolutely pay tax on dividends.


Mistatea, whether a shareholder pays tax on dividends or not depends on how much tax has been paid at source. If the company has paid tax at 28% (I checked the last interim result and SKT does this), then there will be an 'incremental tax deduction only' to make sure the individual shareholder pays tax at their marginal rate. (Although if the shareholder is another company there will be no such deduction). But the whole point of the imputation credit system is to make sure profits are not double taxed to the company and to the shareholder. So, in general, a shareholder will not be taxed more if a dividend is paid.

Saying shareholders 'pay tax on dividends' is, in my view, giving the wrong impression. The company has already paid tax on their profits, whether those profits are paid out as dividends or not. Declaring a dividend -or not- is irrelevant to the company tax position. You also have to bear in mind that a shareholder may indeed pay a higher (to make it more than than 28%) marginal tax top up rate on any dividend received. But as an individual shareholder, that shareholder's overall tax rate will in most cases be lower than the company tax rate (because shareholders are taxed at a much lower rate than 28% for the first tranche of their income). That means that as an individual, you will very likely pay a lower tax rate overall than a company. When the income tax calculation washes out at the end of the year, as an individual shareholder, you will very likely end up getting a virtual tax refund, despite any withholding tax 'tax grab' that hits your dividend before you receive it.



If the current market cap is a combination of PE multiple + cash in the bank....


The above comment has merit in the US situation where the company is taxed and the shareholders are taxed again on any dividend paid out. Dividends are double taxed in the US. This can lead to US companies retaining more capital on their balance sheets than desirable, because shareholders will be 'double taxed' if they pay it out. Such logic does not follow in New Zealand though, because tax free capital returns are possible as you have outlined yourself in previous posts Mistatea. Thus you can take it that any cash on the balance sheet is in general not surplus, but is part of an 'integral capital management structure' within the company. As an example, should that MediaWorks takeover have gone ahead, you can be sure that the 'surplus cash' on the balance sheet would have been deployed. By separating the cash out, as you seem want to do, you are actually counting the same cash asset twice. Your technique of double counting the cash assets within the company, is giving you a false sense of the value of the overall net assets that are actually there.

SNOOPY

[mistaTea]

Mistatea, whether a shareholder pays tax on dividends or not depends on how much tax has been paid at source. If the company has paid tax at 28% (I checked the last interim result and SKT does this), then there will be an 'incremental tax deduction only' to make sure the individual shareholder pays tax at their marginal rate. (Although if the shareholder is another company there will be no such deduction). But the whole point of the imputation credit system is to make sure profits are not double taxed to the company and to the shareholder. So, in general, a shareholder will not be taxed more if a dividend is paid.

Saying shareholders 'pay tax on dividends' is, in my view, giving the wrong impression. The company has already paid tax on their profits, whether those profits are paid out as dividends or not. Declaring a dividend -or not- is irrelevant to the company tax position. You also have to bear in mind that a shareholder may indeed pay a higher (to make it more than than 28%) marginal tax top up rate on any dividend received. But as an individual shareholder, that shareholder's overall tax rate will in most cases be lower than the company tax rate (because shareholders are taxed at a much lower rate than 28% for the first tranche of their income). That means that as an individual, you will very likely pay a lower tax rate overall than a company. When the income tax calculation washes out at the end of the year, as an individual shareholder, you will very likely end up getting a virtual tax refund, despite any withholding tax 'tax grab' that hits your dividend before you receive it.



The above comment has merit in the US situation where the company is taxed and the shareholders are taxed again on any dividend paid out. Dividends are double taxed in the US. This can lead to US companies retaining more capital on their balance sheets than desirable, because shareholders will be 'double taxed' if they pay it out. Such logic does not follow in New Zealand though, because tax free capital returns are possible as you have outlined yourself in previous posts Mistatea. Thus you can take it that any cash on the balance sheet is in general not surplus, but is part of an 'integral capital management structure' within the company. As an example, should that MediaWorks takeover have gone ahead, you can be sure that the 'surplus cash' on the balance sheet would have been deployed. By separating the cash out, as you seem want to do, you are actually counting the same cash asset twice. Your technique of double counting the cash assets within the company, is giving you a false sense of the value of the overall net assets that are actually there.

SNOOPY

Sure thing mate, I was thinking more about retail investors…and i agree that the percentage of tax they pay will be low due to the imputation credits.

Just pointing out that most people will pay some tax on dividends (even if it is a nominal amount).

The tax free distribution of the money from the asset sale guarantees that NOBODY pays any tax on that portion of capital returned.

Alternatively you could look at some kind of a special dividend and just accept that some shareholders will pay ‘some’ tax (but not a lot), and perhaps that is another option.

But I would still strongly prefer adopt the same model Tower did to ensure capital is returned in the most part efficient way.

Whoever route they go, I think a tax free distribution or special dividend will be better for shareholders than a buyback. Even though the price is attractive for a buyback, the volumes just aren’t there (as NZM have discovered recently).

[airedale]

The first half of the year has gone and 10 days since the last post on this usually lively topic. There are no signs yet of the new set top boxes being rolled out. Mista Tea, have you been given one to trial?

[snigmac]

I may have called Sky to query why there hasn't been a update on the substantive business since Feb/March. The Sky person didn't know of any releases that would be coming out until August's annoucement.

[mistaTea]

I may have called Sky to query why there hasn't been a update on the substantive business since Feb/March. The Sky person didn't know of any releases that would be coming out until August's annoucement.

Well, the gumchew who answered your call wouldn’t know about that kind of thing. And if he/she did…they aren’t exactly gonna say “yeah matey, we will do a big cap return announcement well before the FY results so just sit tight”.

But it would be foolish of Sky to wait until August 25 before shareholders get a meaningful update.

They are on thin ice as it is, and should realise that shareholders have now completely run out of patience.

If I was the Board and Management I would be looking to get cash into shareholders’ pockets as fast as I could.

Assuming they update the market soon, all we can hope is that the cap/return and dividend is meaningful. Still a risk that these guys want to keep the majority of the cash for future ‘investment opportunities’…but Sky having a lot of money burning a hole in their pocket is not a scenario that many are particularly enthused about now!

[snigmac]

We have a board/management that wanted to buy MW for 300m. I wouldn't put, not giving a update until sometime in August 2022, past them.

They weren't even aware that they havent updated the market on the substantive business in 3/4 months (e.g. how the rollout of the box - the future of the busiess and probably the single most important business activity for Sky). The box was supposed to have been rolled out and in customer hands by middle 2022. Even if things were bad with the rollout of the box, coms to say, there are issues and that these issues are being addressed would be better than nothing.

[mistaTea]

We have a board/management that wanted to buy MW for 300m. I wouldn't put, not giving a update until sometime in August 2022, past them.

They weren't even aware that they havented updated the market on the substantive business in 3/4 months (e.g. how the rollout of the box - the future of the busiess and probably the single most important business activity for Sky). The box was supoosed to have been rolled out and in customer hands by middle 2022. Even if things were bad with the rollout of the box, coms to say, there are issues and that these issues are being addressed would be better than nothing.

100% agreed.

[JohnnyTheHorse]

I was advised that the Sky Box launch is imminent. So I'd guess that'd mean within a month or two.

If we don't hear any update on the capital return this month the Board is either incompetent or in discussions with a party. It is critical they start feeding the market good news to help the shareprice.

At least the SP is starting to firm with someone clearly accumulating. But we need a news catalyst momentum to turn sentiment.

[Balance]

I am happy where the sp is.

The longer they delay the announcement, the better as the market volatility selldowns by the nervous nellies have been great!

[mistaTea]

I was advised that the Sky Box launch is imminent. So I'd guess that'd mean within a month or two.

If we don't hear any update on the capital return this month the Board is either incompetent or in discussions with a party. It is critical they start feeding the market good news to help the shareprice.

At least the SP is starting to firm with someone clearly accumulating. But we need a news catalyst momentum to turn sentiment.

Aye Stallion, their market announcement said they had been working on a capital return plan in parallel to doing due diligence on MW…

So all these weeks later, it is very odd that they have not updated the market with a signed off plan for how they are going to return capital, how much etc.

The delay only really makes sense if they are in talks with someone.

But there has been takeover speculation for sky for years now, and nothing has happened - so wouldn’t pay to get too excited about the prospect!

[JohnnyTheHorse]

I am happy where the sp is.

The longer they delay the announcement, the better as the market volatility selldowns by the nervous nellies have been great!

It has been beneficial. However if they are actually looking to sell the business then it puts them in a poor negotiating position.

[sb9]

Very poor communication from Board to the market, they should learn the art of massaging the market with snippets every now and then.

[snigmac]

Looks like Stuff picked up that Sky missed the launch date aswell...

[freebee]

https://www.stuff.co.nz/business/129164842/sky-tv-misses-target-for-launch-of-new-sky-box

[LaserEyeKiwi]

https://www.stuff.co.nz/business/129164842/sky-tv-misses-target-for-launch-of-new-sky-box

They still have two more rounds of trials to do??? (Expanded staff trial soon, and then another public trial before launching).

[mistaTea]

They still have two more rounds of trials to do??? (Expanded staff trial soon, and then another public trial before launching).

Good to read that they are doing internal UAT on the box now (even though it is late).

If they move at pace from here they should be able to to a general launch by September.

Vodafone TV customers clearly need to be prioritised.

Will also be interesting to see if they have been able to do anything meaningful with their pricing and packaging for the new box.

[snigmac]

Good to read that they are doing internal UAT on the box now (even though it is late).

If they move at pace from here they should be able to to a general launch by September.

Vodafone TV customers clearly need to be prioritised.

Will also be interesting to see if they have been able to do anything meaningful with their pricing and packaging for the new box.

Based on the article, it's unlikely that there will be a rollout in September (chip shortages and logistics delay etc). Looks like Sky has tried to hide this one under the rug with this MW nonsense!

The only thing going for Sky is Neon growth, which is likely to be strong Q3 and Q4 and having alot of cash from the property sale (which they did get a good price for) and dividend/cap return.

[JohnnyTheHorse]

You do need to be somewhat lenient on timings. I have clients ordering chip related equipment that 1 year ago was ex stock Singapore, and now looking at 6-11 month lead times. This has caught a lot of people off guard.

[snigmac]

I think it's the credibility of the board, directors and team that need to be looked at. It shouldn't be the case that shareholders and media pick up on missed deadlines. The company should have been all over this, given the importance of the project.