SKT Sky Network Television Limited.

[Ogg]

This could be achieved if Sky purchased it.

Zero chance Sky is buying Mediaworks.

In fact, it's a joke to even suggested a New Zealand or Australian media company will end up acquiring Mediaworks. Nine Entertainment has $300m debt on the books already. Seven West even worst at nearly $600m of debt! Everyone is piss broke and the banks are leading zilch. It's a fight for survival for these companies as it is.

The global trend in media is for more vertical integration and direct to consumer business model. The only logical buyer is a large American media conglomerate. Not only are these companies colossal in size, but they can borrow at 30 year rates at less than 2% interest. Factor in the low NZD and it's a no brainer.

Mediaworks are likely holding out for a higher price. It will likely be a 3 horse race between Discovery, Universal (Comcast) and ViacomCBS.

Who ever the buyer ends up being, no doubt they are taking a good look at Sky at the moment. With a low market cap and a dominate position as the only pay TV operator in NZ, Sky will be a great addition to strengthen a media portfolio in NZ, if not, there's a chance a competitor could purchase them and take the upper hand.

It's an interesting time in the New Zealand media landscape. Big changes are happening. If an offer does come for Sky, we're talking a minimum of 30c a share starting point, with a likely bidding war pushing the price up even further. The recent equity raise does provide more leverage in a buy out, as it avoids the possibility of a firesale, AKA the dreaded Smith City scenario.

Mediaworks will likely be sold for at least $100m, or roughly 1X revenue. The price could be a lot higher with so much interests.

"Mr Market", is currently offering ~$275m NZ 'pesos' for Sky TV. I'm more than happy to take that offer today. At that price, it doesn't bother me weather a take over comes or not.

[mistaTea]

Zero chance Sky is buying Mediaworks.

In fact, it's a joke to even suggested a New Zealand or Australian media company will end up acquiring Mediaworks.

You are almost certainly correct that the most likely outcome is a big, deep-pocketed US player taking advantage of the low prices for media companies in NZ coupled with the favourable exchange rate etc.

I imagine that Sky (and other Aussie players) have expressed interest though and kicked the tyres. If Mediaworks will still be able to get ~$100M though, it would seem incredible for a company like Sky (who has just needed to do a capital raise to fix its Balance Sheet) to make a purchase of that scale. Just not realistic.

A merged Sky-Mediaworks that entered the Broadband and Mobile market would be a great company though, and would be fantastic for consumers.

So here is hoping it all works out.

NBC (Comcast) should buy them both - they already have Sky UK. They could introduce Sky Q right away to the satellite base: a much better Set Top Box that even integrates with Netflix now.

If the 'going rate' in this climate is just 1x Revenue, then Sky would ultimately go for ~40c/share.

[Drew95]

So I own both Xero shares and Sky shares. And I have some cash to invest. I am trying to decide which will be the better investment in the next 12 months. From the most recent financial statements I have taken the following. Apple and oranges I know. Growth vs. Decline. But on a fruit for fruit basis I am inclined to go for Sky?? Thoughts??

SKY TV (before cap raise)
Revenue $787 Million
Op Profit 104 Million
Finance Costs $14 Million
Op Profit before Tax $100 Million
Assets $889 Million
Liabilities $497 Million
OE $390 Million
Price Per Share $0.16 cents

XERO

Revenue $718 Million
Op Profit 33 Million
Finance Costs $23 Million
Profit before Tax 10 Million
Assets 1153 Million
Liabilities 731 Million
OE 422 Million
Price Per Share $87.00

[Waltzing]

Well if your numbers are accurate then prehaps you need to look at potential increase decrease in subcribers. Zero has a world wide market and is the KFC of business platforms. Most users of SME software want simplicity so they can continue to whatch there fav streams. sky has a limited market and declining subs? Zero's share price is based on Global Growth and i should never have sold out many years ago when i realised they needed a CAP Raise and a US investor put in the millions required 2 weeks later...

However looking out long term 5G will change the way everything is delivered and consumed. But it takes over a decade for software to lose it installed base as new technology over takes a platform and browser based software is at the limits of it design window for sure and i dont think compiled javascript is ever going to cut it with 5G.g

5G will allow a complete new transaction business frame to exist where distributed transaction frames move across the networks. This means if your looking out 10 years and AIR PORT run ways and PORTS will still be the same infrastructure. Neither Sky TV or software will be the same as they are today.

[Ogg]

So I own both Xero shares and Sky shares.

Both are good. It all comes down to price.

If you're only looking to hold for 12 months, then Sky is the better investment.

If you're holding for the next 10 years, you'd be better off with Xero.

It's not that Sky won't be around in 10 years, in fact Sky is likely to be earning more money in 10 years than today (all be it modestly). It's more that it's less likely something interesting in Xero will happen in the short term , ie an "US investor putting in millions" and more likely it will experience another plateau period like it did between 2014-2018.

Stock investing is about taking opportunities and balancing that between your objectives.

[mistaTea]

Will be interesting to see how the trading volumes are from today.

Tomorrow is the last day for application and payment, so if a big chunk of the recent selling was existing shareholders raising funds to participate then that portion of trading will be finished now.

[sb9]

Thanks Ogg and Winner and all.......

Love that quote by Harpo Marx... "Any club that would have me as a member isn't worth joining!!"

But this will be different!.

Looks like I'm joining a very esteemed club!!

+1 into that club...

[Quantitative Easing]

Arguments for/against sky tv takeover

For:

Low valuation.
Big boys on board at cheap price and can advertise the company globally.
New SSH at lower entry price. Views of NZ Rugby and Rugbypass do not matter anymore.
Low NZD.
Rugby rights renewed.
Debt cleared.
On path to subscriber growth.

Against:

Getting regulatory clearance from commerce commission.

[Ogg]

Getting regulatory clearance from commerce commission.

The media landscape has changed significantly in the last few years.

5 years ago, there was some doubt that Google and Facebook have a monopoly over adverting, now it's no longer the case.

The NZME/Stuff merger is an example of the changing views regulator now have.

For media to survive in NZ, merger and acquisitions have to happen.

[mistaTea]

All I know is there has been an immediate bump in SP now that the existing shareholders aren’t dumping anymore.

All as predicted by Ogg. Mate if you live in Auckland we might need to start calling you the Wolf of Queen Street.

Let’s hope you are right about the potential takeover! Come on NBC, show me the money!!