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  1. #1
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    Default SKT Sky Network Television Limited.

    An excerpt from the StockWatch newsletter. The StockWatch newletter is written by metro.

    StockWatch: SKT Sky Network Television Limited.

    "Sky Network Television provides UHF & digital satellite television to paying subscribers in New Zealand. SKT's acquisition of Prime TV NZ marks its foray into the free-to air television market. Sky's strategy for growth revolves around increasing its channels, increasing its subscriber base and maintaining a tight control over costs" - source: ASB Securities website.

    Company Address: 10 Panorama Road, Mount Wellington Auckland. Tel: 09 579 9999.

    History:

    Sky Network Television (‘SKT’) launched a three channel UHF analogue pay-to-view television service in 1990. Two years later two more channels were added. In late 1998 SKT launched its digital satellite service extending its reach to the whole country. At the same time the number of channels on offer increased significantly. SKT now offers over 80 channels including 6 sports channels, 5 movie channels, 5 general entertainment channels, 3 news channels and 4 documentary channels.

    SKT has enjoyed very significant growth over its 16 year life. It has also faced heavy capital expenditure and depreciation charges. Losses were reported for many years although it was, for a number of those more recent years, strongly cash flow positive. Its scale of operation has increased to the point that it reported an accounting profit in FY05.

    Last year Sky Network Television and Independent Newspapers (‘INL’) merged to create the new Sky Network Television (‘SKT’). At that stage all INL held was cash and a 66% interest in Sky TV. The merger saw SKT recapitalised. Both shareholders received cash payment and new borrowings were raised. As at 30 June 2006 SKT had net borrowings including capital notes (maturing October 2006) of $567m compared with just $109m when Sky TV was structured in a different form. SKT’s cash flows remain easily able to cope with this much increased debt burden. FY 06 EBITDA of $247.7m covered interest charges incurred of $50.4m by 4.9x.

    SKT's Latest Result:

    SKT reported FY2006 EBITDA of $247.7m up 12.70% but lower than some analysts were expecting due to higher programming and general costs. Reported profit was $60.2m down 19% also lower than many analysts had predicted. This was as a result of higher interest costs on the extra $500m worth of debt raised as part of the merger with INL.

    That aside, Sky Television had another excellent year with gains in net subscriber growth which was up 48,000 to 667,000 and installation revenue was also up.

    "SKT had another excellent year, continuing to show gains across all key areas including growth in subscriber numbers, average revenue earned per subscriber, as well as a reduction in operating expenses relative to revenue", said chief Executive John Fellet.

    Subscriber Base:

    Growth in subscriber numbers is a clear indication of the company’s success. Total subscribers have increased from 430,000 in June 2001 (or from a penetration rate of 29.5% of all NZ households) to approximately 667,000 as at 30 June 2006 (representing 42% of all NZ households). That reflects a 9% annual growth rate over the past 5 years. In the latest financial year ended 30 June 2006 subscriber numbers grew by 48,000 or 7.8%.

    Significantly, not only has Sky been experiencing aggregate growth in subscriber numbers but its existing UHF subscribers have also been switching over in increasing numbers to its digital satellite service. UHF subscribers have dropped in number from 162,000 in June 2001 to about 65,000 by June this year or from 37.6% of the total number of Sky subscribers to around 10% currently. SKT earns $39.51 on average in monthly revenue from a UHF subscriber (it calls this ‘arpu’) but a much greater $63.13 per month on average from a digital subscriber. Average revenue per subscriber per month, i.e. arpu, was in aggregate up from $56.86 to $58.30 in FY06.

    The subscriber base comprises 492,381 residential digital subscribers (73.
    metro / Sky Tower

  2. #2
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    Waiting for the back up satellite/transponder issues to be sorted out next year.A transmission blackout would make this stock worth very little.You can have all the subscribers in the world but if you have transponder or satellite failure it becomes a little more significant than rain fade.
    Have a look at the risks listed in the Sky bonds prospectus.
    Thats not to say the shareprice wont do well,I just can't be bothered with the risk.

  3. #3
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    COME KIWI`s buy this stock for very little RETURN.. [8D]

  4. #4
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    OOH Darn ! Engineers obviously had a BIG night before they welded those sucker antennae on.

    http://www.stuff.co.nz/stuff/dominio...1a6000,00.html

    Edit . Pesky redirects

  5. #5
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    Default

    Recommended at $5.55 last sale $6.00. Re last post, Im not aware of any ongoing problem with the Optus D1 satellite.

    MEDIA RELEASE
    15 November 2006

    SPECIAL ANNOUNCEMMENT

    At 3:00 am this morning, SKY successfully completed the transfer of satellite
    services from Optus B1 to its new satellite, D1. During the transfer, all SKY
    digital channels were off the air for a short period of time. After the
    transfer from B1 to D1 had been completed, service was fully restored.

    SKY's UHF service was not affected.

    metro / Sky Tower

  6. #6
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    spam

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    quote:Originally posted by metro

    Im not aware of any ongoing problem with the Optus D1 satellite.
    "There are fears the error .... may curtail Sky's ability to add extra capacity on the satellite to launch new channels in future."

    Sounds like a potential ongoing problem.

    http://www.stuff.co.nz/stuff/0,2106,...5a6160,00.html

  8. #8
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    quote:Originally posted by ratkin

    spam
    Wonder how many $105 cheques he's got
    “What the wise man does in the beginning, the fool does in the end”

  9. #9
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    strange nothing happen to the share price after the error
    Hope people dont start dumping there SKY shares

  10. #10
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    If the was a known "potential ongoing problem" affecting SKT future broadcasts or channel development under the continous disclosure rules then presumably SKT needs to make a formal announcement to the NZX...

    ...are you hearing this Jason? or is it just another "stuff" up?
    metro / Sky Tower

  11. #11
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    quote:Originally posted by ratkin

    spam
    I thought this was meant to be a forum that discussed shares and associated companies, not a vehicle to read SPAM and self-promotion

  12. #12
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    No-one has commented on the announcement of TVNZ's digital platforms launch and the impact this might have on Sky.

    My reading of it is there was a little residual uncertainty about what TVNZ might have up its sleeve, but the announcement this week has removed that uncertainty. It appears the TVNZ digital service will be no threat to Sky whatever:

    24 hour news channel: Will be mainly local content with bulletins on the hour (comment: there isn't enough news to fill 1 1-hour bulletin a day at present -- how to fill 24??)

    Sports channel: Sky has content sewn up -- what will they show?

    NZ Herald reported (without denial from TVNZ) that there will be a high proportion of repeats on the digital platform.

    There will still be a cost barrier (albeit low -- about $200 to buy the decoder).

    The digesting of this information may explain the recent rise in SKT's share price.

    Marriage isn't a word. It's a sentence

  13. #13
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    quote:Originally posted by ratkin

    spam
    Albert and Ratkin,

    That's fine. Accepted.
    But please feel free to post your own in depth analysis of any publicity listed NZ company including your valuation using DCF or any other methodology preferably including your mathematical workings.

    You can also be brave enough to stick your neck out and give a recommendation and let others comment...

    Any listed company will do...
    metro / Sky Tower

  14. #14
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    Now that we know that Sky's new D1 Satellite's transponders are not set up for New Zealand excusively and they are now broadcasting Sky services over Australia (now on Aus/NZ transponders). Do you think the share price is high due to increased chance of fraud?
    On a winner

  15. #15
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    quote:Originally posted by ds

    Now that we know that Sky's new D1 Satellite's transponders are not set up for New Zealand excusively and they are now broadcasting Sky services over Australia (now on Aus/NZ transponders). Do you think the share price is high due to increased chance of fraud?
    No.

    I can not follow your line of reasoning here.
    Presumably if you want to watch the pay NZ channels you need to pay a NZ subscription independent of where in the world you are.
    om mani peme hum

  16. #16
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    Yes, but the signal was just NZ's on B1 but now with the Aussies able to receive the signal maybe there will be a greater chance of someone cracking the encryption. Like in the UK with BskyB.
    On a winner

  17. #17
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    From NZ Herald Saturday 18th November

    Brian Gaynor: Sky to gain more ground over TVNZ
    Saturday November 18, 2006

    The Government's decision to give TVNZ $79 million for its new free-to-air digital services was called a "bail-out" by CanWest chief executive Brent Impey.

    Impey is not far from the truth as CanWest MediaWorks and Sky Network Television have given TVNZ a hiding in recent years in terms of ratings, revenue and profitability.

    Most investors believe the rout of TVNZ will continue, particularly as far as Sky is concerned.

    Rugby has played a major role in Sky's success and the pay-TV operator looks more like the All Blacks in Lyon last weekend while TVNZ resembles the French.

    The company is superbly managed and has more television channels than All Black squad members whereas TVNZ has a number of high-profile individuals but is not putting it together as a team.

    Meanwhile TV3, which had a dreadful start, is winning more and more games each season under Impey's stewardship.

    The three major television groups have published their 2006 annual reports and the financial data in the accompanying table gives a clear indication of their relative performance.

    The first point to note is that Sky is the country's biggest television company with revenue of $549 million compared with $409.8 million for TVNZ and $254.3 million for CanWest (CanWest had television revenue of $143.6 million).

    This development is relatively new as TVNZ's television revenue exceeded that of Sky TV until 2003.

    The second point to note is that the two free-to-air stations, CanWest (TV3 and C4) and TVNZ (TV One and TV2) generate most of their revenue from advertising whereas Sky is heavily reliant on subscriptions.

    TVNZ is losing ground in terms of advertising as it suffered a 2.7 per cent decline in revenue from this source in the June 2006 year whereas CanWest's television revenue increased slightly.

    TVNZ's major problem is that its costs are growing far more quickly than its revenue. Since 2003 advertising revenue has increased only 9.8 per cent or $30.0 million whereas programme costs, its biggest expense, have risen 25.4 per cent or $47.5 million (TVNZ received $29.4 million of government funding in 2006, mainly for programmes).

    Sky has a relatively low level of advertising revenue with Prime Television (acquired on February 8, 2006) contributing $7.1 million to the June 2006 year figure of $47.3 million. The backbone to Sky is its subscription revenue, which has risen by 38.4 per cent or $129.9 million since 2003.

    Over the same three-year period the group's programme costs have increased by only 5.7 per cent or $9.6 million.

    Chief executive John Fellet is confident that subscriber numbers will continue to grow and he told the recent annual meeting that Sky is installed in 42 per cent of New Zealand homes whereas the pay-per-view penetration rate in the United States is nearly 90 per cent.

    Fellet often jokes that rugby is a major key to Sky TV's success and the best outcome for his company would be a 52-week season.

    Sky had operating earnings or earnings before interest, tax, depreciation and amortisation (ebitda) of $246.5 million for the June 2006 year, substantially ahead of both CanWest and TVNZ. The pay-per-view company had an ebitda margin of 44.9 per cent compared with 25.8 per cent for CanWest and a mere 8.3 per cent for TVNZ. CanWest's television margin was 24.9 per cent and 30 per cent for radio.

    Sky's operating margin has steadily increased over the past few years while TVNZ's has declined. CanWest's ebitda margin expanded in 2004 and 2005 but fell in the latest year because of the difficult advertising market.

    TVNZ is in a difficult situation because it is caught between two conflicting objectives, namely the need to achieve a commercial return and its charter requirements. This makes it extremely difficult to compete with a powerful pay-per-view operator and a lean and mean CanWest.

    RTE, the Irish national broadcaster with a similar conflict between comm
    metro / Sky Tower

  18. #18
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    It is one thing to provide information and spread ideas about stocks
    Refer to my thread "ryman too boring to talk about" and you will see i have posted my views before

    In your case you give good info however you spoil it by advertising your newsletter on the post. Clearly you are trying to gather customers, this is the real reason for your posting, not the desire to inform

  19. #19
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    why buy or sell on other people advise, put the numbers on warren buffet formula....simple...as per WB formula I value this stock at 410c

  20. #20
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    Thanks Hiawatha. The Herald article I read suggested there would be sport content on TVNZ digital, so I blame my sources!

    Ratkin: Get over yourself. If you have whinges about Metro's posts, alert them to the administrator. Read the terms and conditions, you will find his posts are perfectly acceptable. Try saying something positive (about anything!).

    Pimpit: That is as may be, however Mr Market currently rates this stock at 595 (or thereabouts). I favour it for a number of reasons:
    Near-monopoly in pay TV market
    Dominant player in overall TV market (see Gaynor analysis above)
    Outstanding management (see record over last 5 years)
    Heavy cash flows and low relative debt levels
    Benign regulatory environment (by comparison see TVNZ, strangled by its charter)
    Excellent ebit margins and reducing churn
    operating risk profile: low.

    I rate it a good medium-long term hold and it will be staying in my portfolio for a wee while yet!
    Marriage isn't a word. It's a sentence

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