Sky TV could become latest to axe pay-out to shareholders on Thursday

Wednesday, 21 August 2019

Spark pleased investors on Wednesday by maintaining its dividend this year and forecasting the same for next year, but Sky TV is not expected to follow suit.

Sky Television could become the latest media and content company to suspend paying dividends to shareholders when it reports its annual result on Thursday, an analyst believes.

The possibility of Sky suspending dividends would have been almost unthinkable a few years ago when the company was regarded as a cash cow.

But new chief executive Martin Stewart is attempting to pivot the business towards growth opportunities, last week announcing the $62 million acquisition of international sports streaming service Rugby Pass and the possibility of more investments to come.

The company also faces a possible escalation in its expensive battle to retain sports broadcast rights in New Zealand in competition to Spark, with rugby rights coming up for grabs.

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Publisher NZME suspended dividends to shareholders last year to focus on paying off debts.

Loss-making rival MediaWorks has not paid dividends to its shareholder Oaktree, and TVNZ created a furore last month by announcing it did not anticipate paying a dividend to the Crown for the foreseeable future.

Stuff paid a $22.5 million dividend to its former owner Fairfax Media last year. New owner Nine is also due to release its latest results on Thursday.

Jarden analyst Arie Dekker said in a research note last week that Sky's RugbyPass acquisition showed the company would be bolder and invest in protecting its business.

'Having headroom will be important over the next few years,' he said.

'Key rugby rights are coming up and we reiterate our view that we see cutting the dividend as certain and suspension as quite likely.'

Stewart has promised to ensure Sky remains the 'home of sport' but Spark chief executive Jolie Hodson reiterated on Wednesday that Spark had expressed interest in obtaining a greater number of 'tier one' rights beyond the English Premier League and the Rugby World Cup.

RugbyPass holds the streaming rights for key SANZAAR competitions in 62 countries but it is not clear that would have a bearing on where the New Zealand rights might go after Sky's rights expire here next year.

'RugbyPass is something [Sky] has pursued. I don't see that necessarily impacts any further rights that might come to market,' Hodson said.

Stewart has also said he does not see a linkage, and that RugbyPass is an international play for the business.

Hodson said after releasing Spark's financial results on Wednesday that Spark would maintain a 'disciplined approach to future sports rights opportunities'.

'We are looking at sport as being a segment of the streaming market that does have … appropriate commercial returns,' she said.