Sky TV shareholders approve rugby deal

Thursday, 17 October 2019

Satellite delivery may still be a must-have for many of Sky's rugby fans, who Sky TV CEO Martin Stewart kept on board when he and NZ Rugby chairman Brent Impey announced a new deal in October.

Sky TV shareholders have overwhelmingly backed the company's rugby rights deal with NZ Rugby, after chairman Philip Bowman appealed to shareholders attending the company's annual meeting to support an 'ambitious turnaround plan'.

Bowman also hinted in response to a question from one shareholder that Sky might sell more of its programming on a more flexible basis.

He said Sky could have focused on its satellite television service and on cutting costs, in the face of competition from streaming services.

But it had decided instead to 'radically step up the fight', he said.

Sky may have the rugby, but out-of-pocket shareholders are not likely to be in the best of moods when they meet at the company's annual meeting on Thursday.

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Sky had made difficult decisions over the past six months, which included writing off $670 million of 'goodwill' from its books and suspending its dividend, but the status quo of the past decade was not an option, he said.

Bowman declined to provide a date by which Sky might resume paying dividends, saying its board had to 'get this company back into growth'.

But responding to a question over whether new customers could be won if they were able to pay only for the channels they wanted, Bowman said that message had been heard and 'there would be announcements in the next six to nine months.

Chief executive Martin Stewart would not reveal whether customers would be able to buy only the channels they wanted, but said the company was looking at ways of appealing to every New Zealander.

'The next six to nine months is about sales, marketing and consumer service, and pricing and packaging,' he said.

Sky was determined to 'retain its position as the premier New Zealand service for streaming sports and entertainment content', he said.

Despite upping its bid for domestic cricket by 50 per cent and still being outbid by Spark, he said Sky was negotiating sports rights from a position of strength.

'We have the largest paying base in New Zealand; we are the only player that can reach every Kiwi across streaming, [satellite] and free-to-air. We have world-leading production and broadcast capability, and a team that knows how to ensure high-quality, high-reliability delivery.'

Sky's streaming service was its core focus, he said.

'There is no question it is the future.'

Only 0.13 per cent of shares were cast against a deal that will give Sky the broadcasting rights to most domestic and international rugby competitions up to 2025.

But in a sign of some discontent, just over a quarter of shares were cast against a motion approving the issue of 800,000 share rights in Sky to Stewart.

Shareholder approval was required for the rugby deal at the meeting in Auckland because it is worth more than $235 million, which is more than half of Sky's market value on the NZX.

Stewart did not disclose the actual value of the contract at the meeting, and has previously said a report the figure was $400m should be 'ignored'.

One possible interpretation of a comment made by a source spoken to separately by Stuff could be interpreted as suggesting the figure was higher.

Most of the payment to NZ Rugby for the rugby rights will be in cash, but Sky will issue 21 million shares in Sky to NZ Rugby, giving it a 5 per cent stake in the company, as part-payment.

Sky will issue the shares to NZ Rugby on November 1 and it will be required to hang on to them for at least two years.

Last week, Sky TV lost the rights to domestic cricket for the next six years, following the end of next season.

Stewart said on Monday that Sky had been outbid 'by miles' for the rights by rival Spark.

But NZ Cricket spokesman James Bennett suggested on Wednesday that was speculation, saying Sky would not know the price that Spark had paid.

Stewart simply told shareholders at its annual meeting that it had been outbid.

'We bid more than 50 per cent more than what we were paying before, but we got outbid.

'If some people can see economic value where we can't … we have to make a return for our shareholders,' he said.

Investors in Sky have expressed relief at its deal to retain the rugby, but Sky's share price is still down more than 50 per cent over the past year.

Sky and Spark may not clash again for 'top tier' sports for another year or two, when deals for netball and rugby league are likely to be renegotiated.

Rights that are expected to come up sooner include those to next year's All Blacks' end-of-season tour, which are not covered by Sky's agreement with rugby body Sanzaar, and the rights to A-League football which are up for grabs from the end of the current season.