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Ann: SKT withdraws guidance, page-20

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MarsC

4,255 Posts.

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25/03/20

10:08

Post #: 43684610
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Originally posted by mistaTea: ↑

I do have some thoughts.

First of all...nobody knows what the churn will be because, as you say sky are pulling out all the stops to show past rugby and also other sweeteners (like throwing in movies etc for 3 months on the house).

But even if churn is still noticeably higher...remember we are almost in April now. So must of the money we were going to earn for FY20 has already been earned. FY20 EBITDA may not change too much from initial projections.
Assuming the world gets a handle on the virus in the next couple of months...FY21 will still be decent enough if sport can get back to normal. And all of the sporting codes will be hungry and eager to get back to business...many are facing bankruptcy right now..

Fans will be eager too...after so long with no live competitions.

That brings me to my next thought. NRL...

So NRL just got canned and the warriors are on their way home. Sky have made no bones about their importance in the sporting ecosystem...and that, even though they can claw back payments made...they really don't want to as they know a move like that would be crippling for NZ sport. That is a fact. Nobody is arguing on that point...suddenly Sky's importance is back on the agenda - they aren't just the 'greedy bad guy'. They are integral to the live sport we all take for granted.

NRL contract negotiations for the next 5 years are coming up - they were due to be sorted out by the end of this year or early next I think.
There has been a lot of speculation that Spark Sport would write a bigger cheque to secure a top tier sporting code that is not as expensive as rugby. Or Sky would have to pay way over the odds to keep it away from Spark...

I wonder it Sky will refrain from recouping the money paid (even though they are well within their rights to) as a negotiating tactic.

We won't claw the money paid back...but how about we renew for the next 5 years on the same terms as the previous 5? We'll do you a solid if you remember we were there for you as a trusted partner when you needed us most...

win-win. Warriors get to not go bankrupt and maintain a relationship with a world class and trusted partner. Sky get to retain NRL for another 5 years without an expensive bidding war. That would mean they would have rugby, league, netball, international cricket, basketball, golf etc for the next half decade. An impressive line up unmatched by anybody in NZ.

I could be way off here, but I was thinking about it earlier and I don't think it's completely left field. This whole business is built on good relationships after all...

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Thanks for your typically insightful comments @mistaTea. With regards to 'churn', keep in mind that my concerns were not related to FY20 financial metrics, but rather cash flow over the 'shutdown' period, remembering that as at Dec 2019 SKT was not net-cash, and any substantial reduction revenues would render it unable to cover its opex over anything but a very brief period - without resorting to additional funding.

SKT Price at posting: 20.0¢ Sentiment: None Disclosure: Held
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Ann: SKT withdraws guidance, page-20

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