Originally Posted by
Stranger_Danger
"Cheap" does not mean less risky. Sky TV is at the pointy end of several megatrends - the very definition of a burning platform.
And is Sky TV even cheap? One reason people are happily paying insane prices for some things is low interest rates. If the buyer can be convinced of large cashflows far into the future, then they can justify almost any price, at least to themselves, in the present environment.
There is a good chance that the "best" days for Sky TV lie in the immediate future, and the further out you go, the more risk and uncertainty there is that they will have a viable business model. Therefore, it is much harder for one to use low interest rates as a mechanism to delude themselves, which is why the market isn't.
To some extent, what you're betting on is that the cashflows from the current business model can be deployed into finding the future. But, even on the most optimistic assumptions, how much cash can this business generate and what kind of future can a NZ content aggregator buy?
You have giant content creators like Disney and HBO seeking to control distribution. You have giant aggregators like Netflix, now creating content, with the megacap tech firms like Amazon, Google and Apple broadly in the same business. All of these have global scale and access to capital that Sky TV can only dream about.
Then at the bottom end, you have piracy. For those that are happy to pirate content, this is truly the best of times. Quality content being created for a sole platform by companies without a short term profit motive, but, once pirated, the content from EVERY platform is easily available at no charge. Great for pirates. Horrible for Sky TV.
I have not ruled out ever buying Sky TV - I actively monitor it as a potential investment, I'm not just in the thread to throw stones. But they are in an extremely tough spot due to the myriad of competitive pressures, and I don't see things getting much easier.
This is not a low risk investment.