Sky NZ to sell shares to investors and launch broadband service
Sky New Zealand, the pay-television broadcaster, will sell shares to investors and raise NZ$157 million ($96 million) to withstand the financial impact of the coronavirus pandemic.
The broadcaster will also be entering the broadband market next year and said additional funds will allow it to be "positioned to execute on future growth opportunities once conditions improve."
Current Sky investors will be invited to buy 2.83 extra shares for each share they presently own at an issue price of 12 cents per share. As of Wednesday, Sky’s shares stood at NZ$0.33.
Sky is keen to target existing customers when it launches its broadband service in 2021 and believes it will improve its sports offering.
Chief executive Martin Stewart told the Stuff news website: “We want to provide the best possible sport and entertainment experience to New Zealanders, and a high-quality, high-speed broadband service built specifically for entertainment helps us do that.
“Broadband will be a superb addition to our offering because it enables us to reward our customers with greater value whilst opening opportunities for growth.”
Sky holds rights to multiple domestic and international sports properties, including a deal with New Zealand Rugby which it extended last October, with the rugby union body becoming an investor in the broadcaster in the process.
The broadcaster also has rights across cricket including the International Cricket Council’s events through to 2023 in an agreement extended in October, all Australia home international matches, New Zealand's tours of India in 2021-22 and 2022-23, and the Indian Premier League Twenty20 competition.
Other Sky properties include tennis’ Australian Open grand slam and the ATP Cup, the new men’s national teams competition which debuted in Australia this year.
Last year, Sky lost rights to New Zealand Cricket’s home series to rival sports streaming service Spark Sport having been the body’s broadcaster of choice since 1995.
Stewart revealed that Sky has invested around NZ$5 million in its new broadband service but will require an additional NZ$1 million.
The broadcaster is seeking to implement a series of cost-saving measures, with some of those related to sports rights contracts.
Sky expects its cost-saving initiatives to result in savings of up to NZ$95 million.
Before the pandemic, it was projecting a profit of between NZ$20 million to NZ$ 25 million.
Sky said it is continuing its discussions with rights partners in terms of paying fees for events which have been cancelled or postponed.
The broadcaster said: "For some sports contracts Sky has a reasonable expectation of a negotiated reduction in sports programming rights costs broadly proportionate to the content delivered. But negotiations also have a view to support the future health of Sky’s key sports partnerships.”
Stewart outlined that its rights contracts include 'force majeure' clauses designed to protect "both sports bodies and us in these sorts of circumstances and they allow for equitable reductions."
In a statement to NZX, the New Zealand exchange, in March, Sky said that while the company “has options to recover some costs associated with sports content rights,” it is “aware of the crucial role it plays in the sport ecosystem in New Zealand."
Despite many broadcasters around the world seeking rights repayments in the absence of live sport, and in some cases threatening legal action, Sky appears to be sensitive to the domestic sporting landscape during this period, previously acknowledging that “decisions made now have the likelihood of impacting on the health and sustainability of New Zealand sport for some years to come.”