Ann: Sky Investor Update, page-22

I am going to say something...that might make me sound like a bit of an arsehole...but I'm going to say it anyway...

The vast majority of the contributors on ST and HC have very very small holdings of Sky both in absolute terms and % of their portfolio (most seem to hold a few thousand shares maybe). If you hold 5K shares in Sky that you paid maybe $10K or so for, then you are no doubt happy to just leave your share certificate in the bottom draw and just ignore it entirely. Maybe it will be worth a lot in the future, maybe it will go to zero...either way, downside is minimal and upside is who knows how big.

There are ~9% of us other shareholders with substantial positions and we control ~92% of the business.

I would argue that my focus on Sky in terms of reading every shareholder letter I could get my hands on, speaking far and wide to industry contacts for insights (you guys would be surprised if you knew all the people I chat to - no insider information or anything like that, but I do get good insights from people who actually do know the industry. Not like the NZ journalists or so-called analysts at Jarden and other places) and my deep focus enables me to truly understand Sky TV in a way that few shareholders that contribute on the various forums do.

And I just really want you to trust me here, as this is something I have thought long and hard about and I know I am right...obviously we aren't going to sell Sky for $500M all in. There is no way that gets 75% shareholder support.

But The Board are right to explore the sale of Sky because regardless what she does, the quoted value of Sky is never going to get anywhere near whatever you guys are thinking it should/could. The market is always going to discount Sky as though she is only viable to the end of her current key contracts.

A low SP doesn't matter in the short term...but in the long term it matters hugel!. If the SP never has a chance of ever getting to a reasonable value (based on DCF) then it will continue to retard Sky's prospects moving forward. Banks won't want to lend money on reasonable terms and her shares will continue to make for poor currency. That then makes it virtually impossible for Sky to transform/grow into something more substantial that secures her future and then allows the market to take another look at her in terms of long term viability and approproate valuation.

The price has to be right obviously, but the 9% who own 92% of the business will want a sale now to maximise value rather than wait for the ifs and maybes in a continually changing environment.

And with regards to sugar hits, that is exactly what a buyback and a divvy this year would be. A sugar hit that maybe gets the SP around $3 (meaningless to large holders as they can't sell their shares for that price without dropping the price a lot). And you will find that after the sugar hit is over and things go back to BAU with a token dividend each year (maybe $20M if you are lucky from 2024 onwards) you would be lucky to sustain a market cap of $400M (5% yield) given the eternal pessimism about Sky. And how much will she really grow if she is returning a substantial portion of FCF to shareholders via taxable dividends ongoing?

I agree with what the Board are doing. Just unsure about whether they will get a fair/reasonable price that will get enough support at this junction.