Sky TV to buy Three owner for $1
Sky TV has agreed to fully acquire TV3 owner Discovery New Zealand for $1.
Discovery NZ is a part of United States media giant Warner Bros. Discovery.
NZX-listed Sky said the deal would be completed on a cash-free, debt-free basis, with completion expected on August 1.
Sky expected the deal to deliver revenue diversification and uplift of about $95 million per year.
It 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.
"[It] directly supports our ambition to be Aotearoa New Zealand's most engaging and essential media company."
Sky said it gave the Commerce Commission confidential advance notice of the transaction and the watchdog 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.
"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 on demand ThreeNow platform.
Sky said irrespective of the transaction, the company was confident of achieving its 30 cents per share dividend target for 2026.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Newsroom
2 hours ago
- Newsroom
Sky taking the reins at Three makes sense for everyone
Comment: TV3 was New Zealand's first privately owned television station but in 35 years of operation it has lost well north of $1 billion in total for a string of local and overseas owners. While it produced some great TV it was also a great destroyer of shareholder value. The latest owner, US giant Warner Bros. Discovery finally cried enough and gave it away to Sky for less than you'd tip a waiter. Warners must have been close to shutting the doors on what was left of the local TV network after previously gutting the operation and contracting out its 6pm news production to Stuff. It may have stemmed the bleeding, but it clearly had no appetite for the investment required to keep the channel competitive. After buying the TV operation in 2020 (minus its only real asset – a large building and adjacent properties on Auckland's city fringe) for $20 million Warners lost hundreds of millions trying to keep a channel that produced some local shows, including news and (light) current affairs, afloat. In the end, it left a shell of a station (programmes are put to air from a control room in Sterling, Virginia) playing mainly reality shows. Sky has always been the logical owner of Three, but it has been smart enough not be sucked into paying over the odds for a free-to-air broadcaster in a small and declining market dominated by a state-owned network. There have been plenty of discussions between Sky and TV3's owners over the years, and at least one formal offer, which was turned down by the private equity funds that controlled MediaWorks (TV3's parent company at the time). Then CEO of Sky, John Fellet, dryly and correctly remarked at the time 'I think I've dodged a bullet.' One Australian private equity fund paid about $800 million for the business but lumbered the company with $700 million in debt. The banks moved in (not for the first time) and tipped MediaWorks into the hands of the receivers in 2013. A new set of private equity owners struggled along and lost hundreds of millions before selling up in 2020. No doubt Sky would have, once more, run the ruler over the TV operation at this point. It would have come up with a price tag of $1 but Michael Anderson (former MediaWorks CEO) pulled off a genius move and convinced US-based Discovery to pay $20 million for the TV assets. Discovery later merged with Warners – both companies enjoyed long-term relationships with Sky. From the beginning, Discovery seemed devoid of a strategy. The writing was on the screen when Warners left its major hits like Game of Thrones, White Lotus and other popular programmes on Sky channels. These shows could've transformed Three and seriously hurt TVNZ but clearly Warner Bros. felt it could make more money leaving them at Sky. The enduring relationship with Sky has clearly played a role in Warners giving Three to its local ally. Sky CEO Sophie Maloney told Newstalk ZB's Mike Hosking that she and her Warners counterpart (based in Singapore) had been discussing various options for Three off and on for about two years. Maloney also indicated that despite all of Warners' restructuring of the business and the deal with Stuff to supply it with a cut-price news service, Three was still unprofitable. Maloney's rock-steady confidence around the deal has been reassuring for Sky shareholders and, under questioning from a skeptical Hosking, she was unequivocal that TV3 would return to profit under Sky's management. Her optimism has been shared by share broking analysts with one predicting the deal might be worth $48 million to Sky. Sky says it has locked in a supply of Warner programmes for Three and judging by Maloney's confidence around profitability it is likely to be at a very good price. The synergies and value that Sky can bring to Three have always been obvious. Its sales and marketing team will take over the free-to-air inventory and add it to the advertising spots it's selling on the pay TV channels. Having more eyeballs available to advertisers will help it compete, and possibly give it an edge over TVNZ and other media companies. Three will also be a handy vehicle to promote Sky's own channels and subscription products. More rugby and cricket on Three will boost its ratings and Sky might also decide to migrate the best programmes from Sky Open (formerly Prime) to its new free-to-air platform. This would allow it to shut Sky Open, which is likely to have been losing millions annually. Sky has had to persist with its loss-making channel, so it could guarantee a free-to-air outlet for sport. That problem is now solved. Hosking put it to Maloney that TVNZ was now 'dead in the water' in terms of sport but the Sky CEO diplomatically suggested that certain segments of TVNZ's audience might be attractive enough to keep it in the hunt. NZ on Air will also find Sky a more attractive owner of Three than Warner Bros. While the reach of a platform rather than its owner should be the major factor in funding local shows for a network, there had to be some unease about giving millions in public money to an American corporate giant that has been rapidly reducing its staff and financial commitment to local programming. Will Sky look to up the level of quality programming (local and international) on Three? It's hard to know. Any significant cash investment in shows, unless they are a spectacular ratings success, is hard to recoup in this market. Warners and previous owners of Three have found out the hard way. Sky might be interested in a modest investment given its zero-capital outlay. It will want to stall the decline of the linear audience as much as it can while it builds up the on-demand platform, ThreeNow. Maloney described ThreeNow, which has been growing audiences, as a jewel in the crown. She will have a decision to make when Three's contract with Stuff to produce a 6pm news bulletin ends. The contract may have one, but most likely two, years to go. Sky will probably want a better product while Stuff will want more money. It might be an opportunity to move to a 30-minute, higher-quality bulletin. Before Warner Bros. shut its own news division (Newshub), it had, for many years, produced a nightly 30-minute news bulletin for Prime (Sky Open). It was a point of difference in the market and one of Prime's strongest performing shows.
1News
a day ago
- 1News
Five Big Things That Happened Today: Tuesday, July 22
Sky TV buys Three for $1; Winning Lotto ticket set to expire; Debt collector convicted and fined $115,500 for 'misleading conduct'. 1 Sky TV agrees to buy Three for $1 Sky TV has agreed to buy Three owner Discovery NZ for $1, the company announced this morning. The agreement was announced to the NZX, and means US television giant Warner Bros Discovery will leave New Zealand's free-to-air television market. Under the deal, Sky would take control of all TV3 brands, including Three, Bravo, Eden, Rush, HGTV, and the network's streaming platform, ThreeNow. ADVERTISEMENT Read More 2 Debt collector convicted and fined $115,500 for 'misleading conduct' A debt collector and his company have been ordered to pay $115,500 in fines and emotional harm reparations. Director John Stuart Campbell and his company Law Debt Collection pleaded guilty in the Manukau District Court to making misleading representations when collecting debt after a prosecution by the Commerce Commission. Read More 3 Serious crash causes major delays on SH1 in Horowhenua A section of State Highway 1 between Ōtaki and Levin was closed "for several hours" today following a serious crash — with a nearby marae open to motorists held up. ADVERTISEMENT Emergency services responded to the scene at Manakau between Whakahoro Rd and Kuku East Rd, about 10.20am. Read More 4 Man arrested seven years after cold case killing of Hawke's Bay dad A man has been arrested nearly seven years after the killing of a Hawke's Bay father in Flaxmere. Eddie Peters, 45, was beaten and left for dead on the driveway at a home on Diaz Drive in Flaxmere during the early hours of Friday, November 16, 2018. He died eight days later at Wellington Hospital. Read More 5 Time running out for Lotto first division winner to claim prize ADVERTISEMENT A $200,000 Lotto prize is soon set to expire – with the ticket holder still not having claimed their winnings. The ticket was purchased at Coastlands Lotto in Paraparaumu on the Kāpiti Coast. It is set to expire on August 31 – one year from its draw date. Read More Watch: Luxon hits back at Hipkins calling Family Boost an 'absolute flop' Prime Minister Christopher Luxon said he won't be taking any lectures from Labour leader Chris Hipkins. Watch Here ONE SEWING JOURNEY ADVERTISEMENT Jordaan Tuitama got into sewing four years ago. Now the 38-year-old man is breaking stereotypes of what sewing is and who it's for. Read More
Scoop
2 days ago
- Scoop
Sky TV to buy Three owner Discovery NZ for $1
Sky TV has agreed to fully acquire TV3 owner Discovery New Zealand 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.
