Sky TV to buy Three owner Discovery NZ for $1
Discovery NZ is a part of US media giant Warner Bros. Discovery, and operates channel Three and online streaming platform ThreeNow.
NZX-listed Sky said the deal would be completed on a cash-free, debt-free basis, with completion expected on 1 August.
Sky expected the deal to deliver revenue diversification and uplift of around $95 million per year.
Sky expected Discovery NZ's operations to deliver sustainable underlying earnings growth of at least $10m from the 2028 financial year.
Sky chief executive Sophie Moloney said it was a compelling opportunity for the company, with net integration costs of about $6.5m.
"This is a compelling opportunity for Sky that directly supports our ambition to be Aotearoa New Zealand's most engaging and essential media company," she said.
Sky said it gave the Commerce Commission confidential advance notice of the transaction, and the commission did not intend to consider the acquisition further.
Warner Bros. Discovery Australia and NZ managing director Michael Brooks said it was a "fantastic outcome" for both companies.
"The continued challenges faced by the New Zealand media industry are well documented, and over the past 12 months, the Discovery NZ team has worked to deliver a new, more sustainable business model following a significant restructure in 2024," Brooks said.
"While this business is not commercially viable as a standalone asset in WBD's New Zealand portfolio, we see the value Three and ThreeNow can bring to Sky's existing offering of complementary assets."
Sky said on completion, Discovery NZ's balance sheet would be clear of some long-term obligations, including property leases and content commitments, and would include assets such as the ThreeNow platform.
Sky said irrespective of the transaction, the company was confident of achieving its 30 cents per share dividend target for 2026.
'Massive change' for NZ media; ThreeNews to continue
Founder of The Spinoff and media commentator Duncan Greive said the deal would give Sky more reach and was a "massive change" in New Zealand's media landscape.
He noted Sky's existing free-to-air presence via Sky Open (formerly Prime), but said acquiring Three gave it the second-most popular audience outlet on TV.
"Because of the inertia of how people use television, Three is just a much more accessible channel and one that's been around longer," Greive said.
"To have basically the second-most popular channel in the country as part of their stable just means they've got a lot more ad inventory, much bigger audiences."
It also gave Sky another outlet for their content, and would allow it to compete further against TVNZ, both linear and online, Greive said.
He said there may be a question mark around the long-term future of Three's news service, which was produced by Stuff.
Sky made no reference to ThreeNews in its announcement. However, Stuff confirmed ThreeNews would continue for now.
"Stuff's delivery of ThreeNews is part of the deal but there are also now lots of new opportunities ahead that we are excited to explore together," Stuff owner Sinead Boucher said in a statement.
On the deal itself, Boucher said she was "delighted" to see Three back in New Zealand ownership under Sky.
"And who doesn't love a $1 deal!" Boucher said, referring to her own $1 deal to buy Stuff from Australia's Nine Entertainment in 2020.
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