SKT Sky Network Television Limited.

[Ogg]

its cute you think I’m some sort of newbie investor who belongs to sharesies, rather than someone whose full time job for over a decade has been analysing global tech & media firms.

but by all means, continue pumping your money into a company that is bleeding high margin satellite customers with an ARPU of $80+ and adding low margin streaming customers with an ARPU under $20. Also not sure how you think AT&T would get there money back in 2 years when sky itself is guiding for only $5-$15 million in net income in 2021.

Would be less than 2 years, more likely 18 months once you've stripped out all the costs and done a restructure. Happy to take you through the math.

Sky isn't "bleeding". The satellite business remains robust. Lower ARPU streaming customers are an addition to the business, not a replacement.

This is a deep value play for experienced investors. Noobs should stick with Netflix.

[Stranger_Danger]

Would be less than 2 years, more likely 18 months once you've stripped out all the costs and done a restructure. Happy to take you through the math.

Sky isn't "bleeding". The satellite business remains robust. Lower ARPU streaming customers are an addition to the business, not a replacement.

This is a deep value play for experienced investors. Noobs should stick with Netflix.

I am an experienced deep value investor and this is a classic, dictionary definition, value trap.

It did nothing but go down during an easy money boom when an idiot could make money. We then had the crash, and any "value" attributes did not turn out to be defensive and it fell even more than the expensive growth stocks. Now we're having a recovery, and it isn't bouncing at all.

Three different investing environments. Same result. Either the market has got the Sky TV pricing wrong in one or more of those environments and this really is the biggest bargain out there, or alternatively, the business model of Sky TV is being (has been?) disintermediated and is heading for the knackers yard, looking perpetually cheap the whole way there.

[LaserEyeKiwi]

You almost sounded like you knew what you were talking about until that last sentence of yours.

Don’t worry - most newbies struggle to read Sky TV financial statements.

GAAP earnings will probably end up sitting somewhere between $20-$25M as COVID has not hit the company as hard as expected when they had that revised guidance.

But that actually means that the company generated closer to $60M - $70M of underlying ‘Owner Earnings’.

Ogg is probably referring to EBITDA - not a metric I particularly like, but one that is commonly used in the business world. In that respect, his claim is absolutely correct.

The “ITDA” costs in EBITDA is not free money, they are mostly real cash costs that need to be paid either immediately (Interest & Taxes) or at some future point (depreciation is allowed for a reason, normally that is against items that eventually need to be replaced). Suggesting a potential buyer gets EBITDA as immediate cashflow return is entirely disingenuous. Sky management itself is only targeting a 7-10% of revenue as a long term FCF target, alongside their structural business realignment to a lower revenue/lower cost model.

i think SKYs best move would be unloading the still currently profitable satellite customer base and infrastructure onto a private equity firm with a long term discounted supply deal, leaving a lean high growth streaming only business with exclusive sport rights that would be a very attractive investment.

[Ogg]

I am an experienced deep value investor and this is a classic, dictionary definition, value trap.

It did nothing but go down during an easy money boom when an idiot could make money. We then had the crash, and any "value" attributes did not turn out to be defensive and it fell even more than the expensive growth stocks. Now we're having a recovery, and it isn't bouncing at all.

Three different investing environments. Same result. Either the market has got the Sky TV pricing wrong in one or more of those environments and this really is the biggest bargain out there, or alternatively, the business model of Sky TV is being (has been?) disintermediated and is heading for the knackers yard, looking perpetually cheap the whole way there.

Every deep value play looks like a value trap!

The market was WRONG, when the stock was trading at the $6 range from 2012-2016. I was one of the biggest skeptics on Sky, I knew it was over valued and was going down. I remember when Murdoch offloaded his holdings in 2013, I knew that was the right move. I wouldn't touch Sky with a 10 foot barge pole back then!

The market was RIGHT, when the stock dropped from 2016-2019. Reality finally caught up with Sky after so long. Ma and Pa investors got wiped out. Overseas hedge funds run by clueless baby boomers took the hit! I was surprised it took so long for it to drop, about fricken time.

However, the market is WRONG to price the stock at an EV of ~$250m, with the assumption that the businesses is obsolete and going bankrupt like Block Buster video. It isn't and that's the play. Markets overshoot and undershoot all the time. The $150m placement is the turning point for this stock. Once the registry tightens and results are released this month, they will show a turnaround story with a clean balance sheet, and this will look like the cheapest stock on the ASX/NZX.

Show me a better value play then this?

[Ogg]

i think SKYs best move would be unloading the still currently profitable satellite customer base and infrastructure onto a private equity firm with a long term discounted supply deal, leaving a lean high growth streaming only business with exclusive sport rights that would be a very attractive investment.

You're basically saying that Sky:

1) Has a highly valuable and profitable mature business and;
2) Has an additional high growth business that is attractive.

"Mr Market" is offering it for sale for $225m today, and you're saying "no thanks, I've got something better"?

[Dlownz]

Every deep value play looks like a value trap!
The market was WRONG, when the stock was trading at the $6 range from 2012-2016. I was one of the biggest skeptics on Sky, I knew it was over valued and was going down. I remember when Murdoch offloaded his holdings in 2013, I knew that was the right move. I wouldn't touch Sky with a 10 foot barge pole back then!

The market was RIGHT, when the stock dropped from 2016-2019. Reality finally caught up with Sky after so long. Ma and Pa investors got wiped out. Overseas hedge funds run by clueless baby boomers took the hit! I was surprised it took so long for it to drop, about fricken time.

However, the market is WRONG to price the stock at an EV of ~$250m, with the assumption that the businesses is obsolete and going bankrupt like Block Buster video. It isn't and that's the play. Markets overshoot and undershoot all the time. The $150m placement is the turning point for this stock. Once the registry tightens and results are released this month, they will show a turnaround story with a clean balance sheet, and this will look like the cheapest stock on the ASX/NZX.

Show me a better value play then this?

[QUOTE=Ogg;833309]Every deep value play looks like a value trap!

I agree. I hated sky. Overpriced crap with a skygo service which was buggy as hell.
I have seen them turn the corner and more and more people are now happy with what they have from them. Rather than 1 service (sky satellite) we now have choice. Which is what everyone was asking for. Everyone seems to be getting what they want. People that want satellite get everyone at there disposal. People that want just movies and TV get neon. And those that just want sport get sport. Yes it's lower value but that what people want. Sky's finally giving people choices and that's all people asked for.
The rugby rights give sky time to transform before they have to negotiate the next phase. Maybe spark will gain other sports but at what cost yo spark. How many subscribers just spark sport have?

[Bjauck]

[QUOTE=Dlownz;833313]

Every deep value play looks like a value trap!

I agree. I hated sky. Overpriced crap with a skygo service which was buggy as hell.
I have seen them turn the corner and more and more people are now happy with what they have from them. Rather than 1 service (sky satellite) we now have choice. Which is what everyone was asking for. Everyone seems to be getting what they want. People that want satellite get everyone at there disposal. People that want just movies and TV get neon. And those that just want sport get sport. Yes it's lower value but that what people want. Sky's finally giving people choices and that's all people asked for.
The rugby rights give sky time to transform before they have to negotiate the next phase. Maybe spark will gain other sports but at what cost yo spark. How many subscribers just spark sport have?

Sky Go is a lot better than it used to be. The expanded selection of live channels with an demand catalogue and ability to cast to a big screen make it a handy app.

[mistaTea]

Sky Go is a lot better than it used to be. The expanded selection of live channels with an demand catalogue and ability to cast to a big screen make it a handy app.

Yes, and Sky are going to make it a stand-alone product. Sky GO is very very good now. Better usability, and much more stable than it was in the past.

So a cheaper option for those who want to stream traditional Sky channels, without having to pay for a MySky box. Cheaper for Sky, cheaper for the customer.

Would be a great addition to a broadband bundle too.

And still remains a nice ‘freebie’ for those who choose to consume Sky via satellite, whatever their reasons may be for not switching to full streaming.

[Bjauck]

Yes, and Sky are going to make it a stand-alone product. Sky GO is very very good now. Better usability, and much more stable than it was in the past.

So a cheaper option for those who want to stream traditional Sky channels, without having to pay for a MySky box. Cheaper for Sky, cheaper for the customer.

Would be a great addition to a broadband bundle too.

And still remains a nice ‘freebie’ for those who choose to consume Sky via satellite, whatever their reasons may be for not switching to full streaming.

That would be a great development. British Sky had the ability to subscribe to various internet-only packages years ago.

There are fewer atmospheric brown and black-outs with the SkyGo internet service compared to the satellite service. Also you can continue to watch on your gadget during a power cut (via 4g)

[mistaTea]

That would be a great development. British Sky had the ability to subscribe to various internet-only packages years ago.

There are fewer atmospheric brown and black-outs with the SkyGo internet service compared to the satellite service. Also you can continue to watch on your gadget during a power cut (via 4g)

Yes it is inevitable that it becomes a standalone offering.

They can also revamp their streaming packages. No need to force someone to take Sky Starter as an entry package with this distribution model because they don’t have the costs of sending out a tech to get the customer set up.

If someone just wants Sky Entertainment channels, for example, give it to them.

Better yet, completely redesign the steaming channel bundles so they meet market demand.

Caveat: Sky do have to negotiate with content partners when redesigning bundles. It’s not all in Sky’s control in terms of how things are packaged up. But it can be done.