Beware The 'Experts', page-27

@MarsC

@mistaTea

and others, thanks for all the excellent contributions to this thread.

Leaving the Silver Lake deal aside for a moment, and looking at the changing broadcasting rights economics moving into 2021, I noticed that NZ Rugby released their 2020 annual report a few days ago (see link below); it contains some relevant information for SKT, because it states explicitly (on page 49) what NZR’s 2020 revenue from broadcasting rights was, i.e. ~52mNZ$.

https://www.nzrugby.co.nz/assets/Annual-Report_2020-web.pdf

So, if the price paid by SKT under the renegotiated contract (2021-2025) is ~80mNZ$ pa (as suggested for instance by the article below, which quotes a total deal value of ~400mNZ$ over the 5-year period), then the implied price increase would be to the tune of +54%

https://ministryofsport.com.au/nz-rugby-secures-5-stake-in-sky-tv-as-part-of-new-five-year-broadcast-deal/

I am assuming that the renegotiated deal announced in late 2019 was related to broadcasting rights only, but “sponsorship and licensing” also appear to contribute to NZR’s revenue. So, if the 80mNZ$ (or whatever the renegotiated price is) also includes some of those items, then the cost increase for SKT could be lower. If anyone here has any better insight on that, it would be appreciated.

In terms of possible impact on future cash flows, assuming 80mNZ$ for rights in 2021-2025: the pre-tax hit to SKT’s FCF would be ~28mNZ$ pa; of that, only ~14mNZ$ would have been captured by the FY2021 earnings guidance, because the new pricing kicked in only in January 2021. So, if one is using FY2021 guidance as a starting point, future modelled FCF should be reduced by ~10mNZ$ pa post-tax all else being equal.

Cheers