SKT Sky Network Television Limited.

[moimoi]

SKY's near term future potentially foreshadowed by the recent KMD announcement...

[mistaTea]

SKY's near term future potentially foreshadowed by the recent KMD announcement...

Yeah you could be right mate.

[mistaTea]

You are of course assuming that Sky survive MistaT.

Yes, my previous comment is based on the view that Sky will survive long-term.

Obviously, if I did not think that then I would not participate in any discounted rights offer.

In fact I would be dumping my shares as we speak as 28c is a hell of a lot more than 0.

[mistaTea]

If I am wrong and Sky goes bankrupt then I will have a lot of egg on my face.

If I am right though, and Sky will continue as a going concern (however with much reduced earnings)...then the current market cap makes zero sense, and a capital raise at this point should be an absolute last resort.

Let's say the GAAP earnings fall all the way to $10M a year. We know that, due to the massive depreciation and amortisation charges Sky are able to charge, you can conservatively add $40M to the GAAP earnings to get a view of how much the underlying earnings are for the business owner. In this example, it Owner Earnings would = $50M.

Even if the market was incredibly pessimistic about the business and was only prepared to pay 5 times the underlying earnings... that would be $250M. Over double the current market cap.

Hell, Mr Market could only be prepared to pay 3 times underlying earnings that the market cap would still be higher than what it is now.

Given my confidence that Sky will survive their current challeges, do I think they will be able to generate GAAP earnings of at least $10M a year out into the future. Why yes, yes I do.

[steveb]

They agreed to paid $62m for rugby pass in august last year seems a lot of money now,does anyone know how it's going?

[mistaTea]

They agreed to paid $62m for rugby pass in august last year seems a lot of money now,does anyone know how it's going?

Not sure what their exact sub numbers were since Sky do not break them out separately.

However it would be fair to say that their subs will have taken a big hit due to COVID since they only stream rugby... and there is zero live rugby at the moment. Not sure if RugbyPass have offered their service free for the next 3 months like Spark Sport.

RugbyPass was a long-term play. 2020 is going to be an absolute write-off for the service I think, but if things get back to normal from 2021 there is no reason to believe RugbyPass cannot still be a success.

Half of that $62M was paid with shares...shares that are now worth about a quarter of what they were when the deal was done. So, that $31-odd million worth of shares issued are now only worth about $7M. I imagine RugbyPass are very motivated to turn things around ASAP to help lift the quoted price of their shares.

In my opinion, it does highlight how crazy things have gotten though. At one point Sky was valued as having a Market Cap of about $80M only. Even if they overpaid for RugbyPass... let's say for arguments sake RugbyPass was only actually worth half what they paid - $30M given where it is now in terms of subs. Forget the hype about the large upside etc...

Well, when the Market Cap of Sky was $80M that would imply that Sky TV's entire NZ operation is only actually worth $50M. I think that is absurd. If $62M was a fair value for RP the it would mean the rest of Sky was only worth $18M!!

I just took a peek at the current Market Cap = $118M. Using the same argument as above ('real' value of RP = $30M), the Market is effectively saying that Sky TV's NZ operation is only worth $88M. I think that is nuts when you consider the quantity and value of rights held from 2021, a satellite base with over half a million customers, and growing NZ-based streaming platforms - which now includes the popular Lightbox.

Do I think a rational owner would sell Sky TV's NZ operations for only $88M? Nope. Realistically, I think a rational owner would expect at least 5 times that for the NZ operations. Plus a 'fair value' for RugbyPass.

And of course it goes without saying - in my view the world would be a much more orderly place if everyone just saw things my way!

[youngatheart]

UBS bought in. Must be a good sign!

https://www.nzx.com/announcements/351202

[macduffy]

UBS bought in. Must be a good sign!

https://www.nzx.com/announcements/351202

Not just buying. A lot of "derivative contracts" there as well. Options to buy/sell? Borrowing stock to short?

[blackcap]

Could this be the lifeline SKT needs?

https://www.nzherald.co.nz/business/...ectid=12322344

"Debts will be able to be placed in hibernation until companies resume trading normally, if the majority of creditors accept."

I guess the onus is still on the creditors accepting though. But no problems for directors and insolvency, so may stave off a capital raise? Then again the SKT020's are trading at a 60% yield today!

[Ogg]

Could this be the lifeline SKT needs?

https://www.nzherald.co.nz/business/...ectid=12322344

"Debts will be able to be placed in hibernation until companies resume trading normally, if the majority of creditors accept."

I guess the onus is still on the creditors accepting though. But no problems for directors and insolvency, so may stave off a capital raise? Then again the SKT020's are trading at a 60% yield today!

Sky don't need a life line.

I averaged up today. Holding 100k shares