Sky TV takeover? Company appoints adviser after 'unsolicited approaches'

Tuesday, 29 June 2021

Sky TV chief executive Sophie Moloney says there have been “a range of talks” on the table.

Sky TV has received “unsolicited approaches” from would-be investors and has appointed investment banker Jarden to advise it on any future discussions, the company’s chairman Philip Bowman says.

“We have confirmed today that Sky will evaluate strategic investment partnerships that deliver sustained ongoing growth to the rights content and distribution reach of the company, which in turn will accelerate the creation of shareholder value,” he said.

Asked whether the approaches had included any full takeover offers for Sky, chief executive Sophie Moloney said there were “a range of talks on the table”.

“That is why the board has determined along with me, that appointing Jarden at this time is absolutely the right thing to do,” she said, commenting after a presentation to analysts on Tuesday morning.

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Jarden’s role would be ongoing rather than fixed-term, she said.

Moloney wouldn’t comment directly on whether any of the approaches Sky had received to date were under active consideration but said it was expecting some of them would be “ongoing”.

“For our side, we have got a strategy and we are going to be cracking on delivering it,” she said.

Moloney said that as chief executive she would be interested in partnerships that drove more value for the company’s shareholders.

“There has been industry consolidation but any partner that is going to help us be better at what we do already whether it is from a content or a tech perspective will obviously be of interest,” she said.

Next Sky box will give subscribers the option of speaking commands, rather than using their remote.

Forsyth Barr analyst Aaron Ibbotson said he didn’t interpret Sky’s comments to mean there was anything concrete on the table.

“It didn’t sound extremely serious to me in the sense that anything was imminent or that they were in discussions that had firmed up, but you never know.

“It makes sense they have appointed somebody to guide the process,” he said.

Sky Television hopes the launch of a new set-top box next year which will support ‘4K’ and which will be able to be controlled by voice commands will help it end the decline in its core business.

Product head Bridget McNeill said the “hybrid” set-top box would receive Sky’s satellite service and would have a larger hard drive, but would also be bundled with internet apps and content services.

The AndroidTV box will be able to make recommendations to subscribers based on their previous viewing, allowing individuals within a household to have their own “personal profiles”.

McNeill told analysts on a conference call that Sky was in the final stages of selecting a manufacturer and would launch the next box mid-next-year.

It aimed to have 150,000 to 200,000 subscribers using it within three years, she said.

The voice feature will let subscribers search for programmes across both Sky and other services, while giving priority to Sky programmes.

Moloney said Sky had yet to decide whether it would charge subscribers an extra fee for the set-top box, as it had previously hinted it might.

“Early indications from research suggests there are a number of customers who would be prepared to pay,” she said.

Sky hopes the new box will help it stabilise its core pay-TV revenues, with other initiatives such as its broadband service enabling the company to grow its overall annual revenues by $75m to $100m within three years.

It is expecting revenues of $695m to $715m this year.

Jarden analyst Arie Dekker said on the conference call that the new box sounded like a “very compelling proposition” but queried whether Sky could invest more to push it harder.

Sky’s head of broadband Daniel Kelly said it aimed to take a 3 to 5 per cent share of the broadband market within three years, which could put it fifth or sixth in the market behind either Trustpower or 2degrees.

Its gigabit service which launched in March has been competitively priced at $79 a month for Sky box subscribers, which Sky expects will continue to make up the bulk of its broadband customer base.

Moloney said Sky had developed an augmented reality WiFi app called “WiFi Guy” that customers could use to troubleshoot their connections, for example to test the strength of their signal in different rooms and to search for hotspots outside of their homes.

Sky chief financial officer Andrew Hirst told analysts on the call that it expected its profit this year would come in at the higher-end or possibly slightly above guidance.

That guidance is an operating profit of $170 million to $182.5m and a net profit of $37.5m to $45m.

Sky is hoping to achieve annual cost savings of at least $10m to $15m by 2024, in part through a simplification of its technology platforms.

Sky shares were trading unchanged at 17 cents in the wake of the presentation.

* CORRECTION: Sky TV expects revenues of $695m to $715 this financial year. An earlier version of this story incorrectly stated that was its expectation in the year to June 2024. (Amended June 29, 2021, 5.22pm.)