SKT Sky Network Television Limited.

[KiwiBuffett]

i hope its your popcorn money and not your retirement funds

Yes not my biggest position but not my smallest either

[steveb]

Big question for you guys,do you think the commerce commission would sanction a takeover by spark,given the Vodafone/Sky merger failure?

[mistaTea]

Great analysis here and largely agree a part from the following points:

- Spark don't need to operate Spark Sport above water, and comparing their Market Cap drop to Sky's is misleading because of the size difference of the two companies. I'd be quite happy to see Spark Sport operating as a loss leader for the telco business. They are catching the wave in the right direction and that's all that matters at the moment.

- Saying that SKT now have more money free for other content is a bit of a fallacy because more money with less premium content available to throw it at is not a good thing - throwing a lot of money at 1.5 or 2nd tier sports is not going to be SKT's saviour.

I don't think the rats and mice channels will be enough to keep SKT afloat, premium drama and premium sport are what will do it and that looks less and less likely

With regards to being a loss leader, that will be true at the moment for sure. But Jeff Latch has been very clear in the past that the intention is for Spark Sport to stand up on its own two feet. To be a profitable business in its own right. As I say, Spark Sport does not have access to all of Spark earnings to go out and just win everything at any cost. They have a budget, and will have their own strategy for gaining content they feel will help build up a regular-paying subscription base.

So SPK shareholders would naturally be concerned about how much money is being spent and what return they can realistically expect. They love their generous dividends at the moment, don't forget.

My reference to Sky having more money to spend was not about them picking up 2nd tier sports. They now have more money for rugby and NRL. But once again, they will still have a maximum price that they can pay.

Let's say, for example, Sky could go to $450M for a 5 year SANZAAR contract. At the end of the day, if Spark came out and were willing to pay $550M, what should Sky do? Offer $600M? That would be a terrible outcome.
No, they would have to let Spark win it. A less terrible option.

If Spark then kept their price @$20/month (highly unlikely) they would need to get about 600,000 subscribers (by the time you take into account production costs etc) to break even. As much as we like to think of rugby as our national sport, there just aren't that many rugby fan households in NZ.

So SKy need to continue bidding hard - 'until it hurts' - but they have to also be able to walk away. It is a good thing imo because it shows Martin Stewart is bullish in the right areas, but isn't going completely crazy with the cheque book. He is still thinking of long term value for shareholders.

Now that there is serious competion for sport again, Sky will have to continue to modify their strategy to make sure they maintain contracts for all sport that matters to most kiwis (not just ALL sport). There is a world of difference in those approaches.

[KiwiBuffett]

That is a perfect analogy, and the exact thing SKY did wrong. A supermarket has everything in one place but lets you choose what you buy. Sky makes you pay for brocolli, hummus and tampons when all you want is a box of beer.

Yes I agree Sky could let customers customize a bit better what they want to watch and pay for but I imagine most new subscribers don't exactly know what they want yet because they've never seen these channels content before, but overall I'm still happy with what I get for the price I pay, I also like being patriotic towards a classic Kiwi company to get my content instead of switching to 8 different American providers to save a couple of bucks. Most people still pay $20 to watch one movie on a big screen.

[fungus pudding]

Because it is delayed by a heck of a lot so you are not getting pics in real time. Sky was about 5-7 seconds behind real time, streaming closer to 40 seconds behind. That is one reason. The second is streaming relies on too many differing factors. Broadband sometimes fails, so there is another complicating factor. IN addition the streaming picture is not as clear as the SKY one.

My experience of RWC on spark has been brilliant. Picture is so sharp -way ahead of sky.

[mistaTea]

Big question for you guys,do you think the commerce commission would sanction a takeover by spark,given the Vodafone/Sky merger failure?

They would have to reject it for all the same reasons they rejected it before. And, given Spark have invested so heavily in their own platform plus bidding over the odds for RWC and now cricket, I don't think they have any intention of making a play for Sky.

One does have to wonder if another player must be looking at Sky now with hungry eyes. Their SP is only about 4 times underlying earnings now.

I wonder if the commerce commision would block Infratil from doing a takeover since they own Vodafone now. It still makes a good strategic fot (Vodafone-Sky) and Spark would not be able to make the same claims about the two entities monopolising sport.

Spark have made it very clear since the failed merger that a Vodafone-Sky monopoly was never going to be the case in reality.

[mistaTea]

That is a perfect analogy, and the exact thing SKY did wrong. A supermarket has everything in one place but lets you choose what you buy. Sky makes you pay for brocolli, hummus and tampons when all you want is a box of beer.

Part of the way the bundles are currently structured is not actually Sky's fault. The content providers dictate what channels have to go together in a particular package.

It took a lot of work for Sky to negotiate with their key providers to split Sky Basic into Sky Starter and Sky Entertainment, for example.

Ultimately, it comes down to whether or not customers feel they get fair value for their Satellite subscription. With satellite subscription numbers continuing to fall, the answer for many seems to be NO.

I continue to advocate that Sky need to 'bundle their bundles'. If you ignore New Business Deals (and Save calls when people cancel) it would normally cost a household $70/month to get Sport via satellite (approx $25 Sky Starter, $31 Sky Sport and then $15 for MySky - and let's face it, in 2019 MySky functionality is the minimum that is expected).

A lot of people would think that is too much to pay, given they are happy to take or leave the other channels that come with it and only really want to watch the Sport offerings. And, given Sky's business model relies on a set top box (yet customer can subscribe to other OTT providerd without the need for a box) it seems absurd to have to pay a seperate fee for MySky.

In my view they need to come up with new 'Bundled Bundles'. For example, offer a Sport Package (Starter + Sport) for $49.99 12 month contract, no extra MySKy fee. They have loads of MySky boxes in storage so they can hand them out.

Then you could reward those loyal customers by saying "If you sign up for our Sport package, you can add Movies + SOHO for another $19.99 special loyaltly price).

You would find many people would spend their savings on buying more content. So now you have a household still paying $70/month for a wide range of content and feel pretty good about it. And that is $70 a month more than the $0 a month Sky are getting from the thousands who have cancelled their subs.

Obviously Sky would have to work through the numbers themselves to see what price points will work, but the principle is there.

I see no reason why they could not maintain a large profitable satellite base AND grow their SVOD paltforms.

[RTM]

My experience of RWC on spark has been brilliant. Picture is so sharp -way ahead of sky.

It’s been the same for me. When it’s working well, 99% of the time, it’s GREAT . Way better than the picture we get from Satellite Freeview.

[JeremyALD]

misatea, sky will 100% need to win rugby - whatever it costs. I don't think there's any doubt about that.

[RTM]

Only reason I stay with my SKY subscription is watching CNBC for international business. Sport is vastly overrated as a form of entertainment in my opinion.

I can send you a link that lets u watch CNBC FOX CNN and others pretty reliably if not in HD.
No VPN required. Easy. That was something I missed as well.