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
NZ Herald
4 days ago
- NZ Herald
Amid the doldrums, market likes Sky-TV3 deal
'In line with Sky, we assume DNZ will generate $10 million ebitda [earnings before interest, tax, depreciation and amortisation] from 2028, with limited downside risk, given the $1 acquisition price.' Cost synergies provided a 'credible path to profitability', Craigs said. 'Sky will inherit a working capital tailwind from DNZ's prepaid content, allowing it to expense programming without cash outlay for the first 12-18 months, boosting DNZ's free cashflow contribution to a slight positive.' Sky is confident cost synergies can enable a $20m improvement in ebitda over the next three years. Craigs maintained its 'overweight' recommendation on Sky, with a target price of $3.63. Forsyth Barr said it looked like a sensible deal for Sky TV shareholders. 'Consolidating legacy media makes strategic sense from both a revenue and cost perspective,' the broker said. 'Sky TV's offering to advertisers as well as content providers will have strengthened meaningfully.' Forsyth Barr retained its outperform rating with an increased price target of $3.55 (from $3.20). Will rugby be the winner from the Sky TV-TV3 deal? Photo / Photosport Leading rugby writer Gregor Paul also likes the deal. 'In making a $1, debt-free purchase of TV3 and its associated brands, Sky TV has not only made itself the kingpin of a revamped media sector, it has, for the next five years at least, dramatically changed the way Kiwis will be able to consume rugby,' Paul said in his Herald column. Holding pattern The New Zealand sharemarket looks to be in a holding pattern while other markets soar. The S&P/NZX50 Index, which includes dividend payments, has lost about 2.4% in the year to date while the S&P/NZX50 Capital Index, which excludes dividends, fared worse – dropping 3.8% over the same period. 'It's nothing to panic about or be particularly worried about, but it's also nothing to be excited about for investors,' Craigs Investment director Mark Lister said. 'And the housing market probably looks quite similar.' 'It's been a very lacklustre year. 'It has not fallen out of bed, but it hasn't really gone up either – down six out of the past seven months. 'Whether you've been in New Zealand shares, whether you've been in New Zealand property, or whether you've been in commercial property, they've all been pretty flat to slightly down, which is in contrast to what we've seen internationally.' So far this year, the UK market has gained 10%, the US 7%, Australia 6%, Europe 8% and emerging markets up 16%. Lister said last year reaffirmed to investors the importance of international exposure. 'If you had been too hunkered down in New Zealand, you would have left money on the table, and it's been the same again this year.' Interestingly, New Zealand bonds have actually done better. 'So the boring stuff has performed better than the more exciting stuff in New Zealand, at least this year,' Lister said. 'And you've been better off if you've gone overseas, in terms of investing, so we're still waiting for that recovery, both in the housing market and in the sharemarket.' Expensive CBA? Commonwealth Bank of Australia (CBA), Australia's largest listed bank and the owner of ASB in New Zealand, has been a thorn in many active managers' portfolios for a while, Fisher Funds portfolio manager – Australian equities Robbie Urquhart said. It has the largest weighting in the ASX200 index, and its share price has had a stellar run, returning over 50% in the year to June 30. 'The problem for many active managers is that they've held CBA at a lower weighting than its index weight (over 10% of the index),' Urquhart said. 'So this share price performance has been a big headwind to overcome for managers seeking to 'beat the market'.' Urquhart said CBA is 'unequivocally well run'. 'The reason fund managers have been underweight largely comes down to valuation. 'CBA's earnings growth has been anaemic, and its share price move has been largely about multiple expansion.' In other words, CBA has become expensive. The big change we've seen on the ASX this month is that CBA's share price performance has reversed, Urquhart said. Buoyed by rising commodity prices, easing trade war concerns and talk of potentially large infrastructure projects in China, the beleaguered mining and resources companies have finally sprung to life. Large, diversified miners BHP and Rio Tinto have returned 14% and 12% respectively in July thus far, strongly outperforming the index. In contrast, CBA has been the casualty – falling 6%. 'This is suggestive of Australian investors selling CBA to fund buying in resources names,' Urquhart said. 'The big question is whether this is temporary, or the start of a more enduring trend.' As the reporting season nears, all eyes will be on the results from Aussie heavyweights CBA, BHP and Rio Tinto. 24-hour trading? London Stock Exchange Group is weighing up whether to launch 24-hour trading as bourses race to extend access to stocks amid growing demand from small investors active outside normal business hours, the Financial Times reports. The group is looking into the practicalities of increasing its trading hours, according to people familiar with the situation, from the technology required to regulatory implications, the paper said. Outlook Looking ahead, Wednesday has annual meetings for Ryman Healthcare and Mainfreight, and the market will be expecting a heads-up from both companies regarding their expected earnings for the current 2026 financial year. Ryman, which has been beaten up by the market over poor earnings and a couple of big capital raises, has seen its share price improve in recent weeks. Mainfreight – with its strong links to the global economy – will also be closely watched. Later in the week, second-quarter results from Apple, Amazon and Microsoft – a fair whack of America's so-called Magnificent Seven – are due out. Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.
NZ Herald
4 days ago
- NZ Herald
Bremworth to restore woollen yarn production in Napier and hire up to 40 people
A dyehouse and more recently a finishing line have been restored on site since the cyclone and the company announced on Thursday it was spending $6m to reinstate its yarn-making equipment. Bremworth's new chief executive Craig Woolford said the investment was 'huge' for the plant and business. 'Basically, what it is going to enable the plant to do is make yarn,' he said. 'We haven't been able to do that for a long time [at Napier]. 'It will be a fully-functioning spinning plant at the end of October. 'That was its sole purpose [before the cyclone] – a spinning plant.' The woollen yarn from Napier will be sent to Auckland to be made into carpet. Bremworth also has a spinning plant in Whanganui. 'For the past couple of years, Bremworth has been buying yarn from all around the world, with little control over quality etc, and having to carry huge inventories to cover the long lead times,' Woolford said. 'So it makes perfect sense to bring all our yarn manufacturing back in-house with the spinning plant in Whanganui and the spinning plant [in Napier], which will be fully operational at the end of October.' The Napier plant will run as a smaller model than it was before the cyclone. 'To put it in perspective, we had up to six cards [large machines for making yarn] running, we are now going to have two cards running fulltime,' he said, of the new Napier facility. 'Unfortunately, the wool share of the New Zealand soft flooring market has been shrinking. 'So we have sized the business up to our market share at the moment. 'There is significant investment going into the sales side of our business and, I guess, if we get to a point where we are pushed to capacity, then we can put another card on.' He said that would lead to more staff being hired. Not including the 40 new staff being hired, the plant has a team of about a dozen for the existing finishing line and dyehouse, plus further engineers on site. The exterior of the plant is still visibly damaged from the cyclone and Woolford said that would be fixed, probably by the end of the year. Part of it will also be knocked down. Bremworth is an NZX-listed company. In February, the company announced it had reached a 'full and final settlement agreement' with its insurers in relation to the cyclone of $104m. Another significant company in the wool industry, WoolWorks NZ, is located directly across the road from Bremworth on Waitangi Rd and underwent a full rebuild after the cyclone. Gary Hamilton-Irvine is a Hawke's Bay-based reporter who covers a range of news topics including business, councils, breaking news and cyclone recovery. He formerly worked at News Corp Australia.
NZ Herald
4 days ago
- NZ Herald
Media Insider: TVNZ set to scoop World Cup rights in major new pay TV move; MetService trials app charges for ad-free weather forecasts
State-owned TVNZ has maintained it will always be an ad-funded, free-to-air network first and foremost. But having the capability to bid for sports rights - and charge audiences - is a critical new component in its business model and strategic intentions. In a week when TVNZ has learned its two biggest local competitors are becoming one - with Sky buying Three (TV3) for $1 - TVNZ is expected to use the World Cup to showcase its credentials as a reinvigorated sports broadcaster. TVNZ said last night it was not in a position to comment but several well-placed sources believe the state broadcaster has won the rights following a highly competitive battle with Sky. The men's football World Cup is the biggest sporting event on the planet - even ahead of the Olympics - with billions tuning in every four years. According to Fifa, the 2022 World Cup in Qatar drew five billion fans across all media - the total reach of the France-Argentina final alone was a record 1.42 billion viewers. Argentina celebrates winning the World Cup, after beating France in the final in Qatar in 2022. Photo / AFP Sky held the World Cup rights in 2022, with some free-to-air coverage on Prime and Stuff. Next year's tournament, in the US, Canada and Mexico, features an expanded competition with 48 teams, including - for the third time in the tournament's history - the All Whites. Anyone who thought that Sky's fire-sale purchase of TV3 this week would create a broadcasting monster capable of blowing TVNZ and other rivals out of the water - especially when it comes to sporting and entertainment rights - has not factored in the digital investment which allows media firms to expand their own business models. TVNZ is investing up to $100 million over the next five years as it transforms into a digital-first business, with massive new revenue and audience targets. The new technology means TVNZ would be able to package up a major sporting event, offering - for example - a certain number of games for free, with others requiring a subscription. In the case of the World Cup, it might consider offering some or all of the All Whites matches live and free - along with the final and some other major games - but broadcasting the bulk of the tournament behind a paywall. As Sky becomes a more rounded broadcaster with access to well-established linear channels and - in ThreeNow - a broadcast video on demand (BVOD) platform, so too is TVNZ now encroaching into Sky's subscription TV space. Apart from several years when the ultimately doomed Spark Sport was operating, Sky has enjoyed a virtual monopoly on major New Zealand sports rights for more than three decades. And while TVNZ appears to have the rights for the World Cup - with possibly the Olympics to follow - it may well want to target season-round major codes in the longer term. It has benefitted from having domestic cricket rights after Spark Sport's sudden closure, but Sky has won back those rights after next summer. Special events certainly give broadcasters a short-term boost, but greater value is likely to be in long-term rights to the likes of rugby, league and cricket - full seasons keep subscribers engaged for months, and paying good money to follow their teams each week. Sky right now is on the cusp of securing rights for All Blacks and other top-level rugby such as Super Rugby, although NZR and Sky are still haggling over price. At the moment, the new rugby deal is for another five years, with Three (TV3) now looking more probable as the free-to-air platform, following Sky's announcement this week that it was buying the channel from Warner Bros Discovery. Olympics rights TVNZ chief executive Jodi O'Donnell. TVNZ is also believed to be a frontrunner to secure rights to the Olympics in 2027 - it's in a battle with Sky for those rights, too. In June, TVNZ chief executive Jodi O'Donnell indicated that the state broadcaster was bidding for the rights to the Los Angeles Olympics in 2028 – New Zealand is one of the territories for which rights have yet to be confirmed. In Australia, Nine has the rights to the 2028 Games as well as the Brisbane Olympics in 2032, and it is possible the International Olympic Committee (IOC) could be packaging up the rights for both sets of Games for a New Zealand broadcaster. TVNZ last held the Olympics rights in 2008, for the Beijing Games. More than 2.6 million Kiwis watched the Games in their opening weekend that year. Since then, Sky has had the rights for the 2012 London Games, 2016 Rio Games, 2020 Tokyo Games (TVNZ had secondary free-to-air rights) and 2024 Paris Games. Sky TV's 12 channels of coverage for the Olympic Games in London in 2012. Sky said last year that a total of 2.82 million people – 57% of New Zealand's population – watched the Paris Olympic Games. 'If you look at something like the Olympic Games, for example, the ability for that to be brought to New Zealanders so they can watch it free but the ability for us to compete for those rights means that we need to find some different revenue options as well,' O'Donnell said, of TVNZ's pending new technology. 'That might be an option that you'd think about – an Olympics Pass, for example.' Asked directly if TVNZ was bidding for the Olympics, O'Donnell said: 'There's quite a few sports rights in the market at the moment. We haven't been shy about our ambitions around that. We put our best foot forward. 'I don't have anything to share with lots of sporting rights available in the market at the moment.' Sky chief executive Sophie Moloney and Warner Bros. Discovery Australia and New Zealand managing director Michael Brooks at this week's press conference, following the announcement that Sky was buying Three for $1. Photo / Cameron Pitney Sky confirmed in June it was also vying for the Olympics rights. 'All our content partnerships need to make financial sense for Sky, both in their own right and as part of the overall mix of sport that we bring to our customers, and we are having constructive discussions on that basis,' said a spokeswoman at the time. 'We think it's healthy to have choice in the local media ecosystem, particularly as sports codes need broadcast partners from grassroots right through to high-performance competitions. 'Most of the headline-making sport in New Zealand and a high-performing range of entertainment content is on Sky.' MetService also enters subscription market Another state-owned commercial business, the MetService, has started charging audiences for weather forecasts as part of a new trial. The MetService has given customers the option of a $1.99 monthly fee or a $22.99 annual fee should they want an advertising-free experience on the app. The trial has raised eyebrows in some quarters, and on social media, about how a publicly owned weather forecaster could be charging the public for weather forecasts. The MetService is set up as a state-owned enterprise and commercial business. 'We launched the ad-free version of the MetService Weather app in early July as an outcome of customer feedback requesting the option to remove ads,' said a spokeswoman. 'The opportunity to sign up will be available for about one month or until we have the maximum number of participants for the trial, whichever comes first. 'For those who subscribe during the trial period, we've committed to keep the ad-free version of the app available for a minimum of one year. 'Input from subscribers will help us understand if there is enough interest to support an ongoing ad-free or premium service. The trial is ongoing, and we will be reviewing the results once it concludes.' She said the MetService was a state-owned enterprise that operated like a commercial business, returning profits to the Government. 'While key warnings and some forecasts are funded by the Ministry of Transport, most of what you see on our website and apps is paid for through advertising revenue which allows us to offer more forecast locations, data and features. 'We aim to keep ads balanced and user-friendly; however, we know they can sometimes get in the way, that's why we are exploring the viability of an ad-free option.' Stuff print site for sale Stuff's 35-year-old newspaper printing plant in Wellington faces an uncertain future with news that the owner of the site is selling up. Bayleys is advertising the land and buildings at 35 Bouverie St, Petone - the publishing company leases the site from Stuff's former owner, Australian media firm Nine Entertainment. The plant prints The Post and a range of Stuff's other North Island-based newspapers. Stuff also has a print plant in Christchurch. Stuff leases the printing site in Petone from Nine Entertainment. Photo / Bayleys 'Home to the same use for over 30 years, time is almost up for the current tenant, so now is the time to review this site's future alternate uses,' says the Bayleys advertisement. It says current lease arrangements expire no later than May 31, 2028, 'but with a right for the owner to require vacant possession in May/June 2027″. The site is owned by former Stuff owner Nine Entertainment, under the company name Mi9 NZ. 'Sites of this size in such a prime location are few and far between,' says the Bayleys ad. 'This one provides a great opportunity for developers, owner occupiers, and investors alike and gives you time to formulate plans for the property's future and receive a healthy return in the interim.' None of that sounds too promising for any future printing ambitions at the location. Stuff Masthead Publishing managing director Joanna Norris. Photo / RNZ However, Stuff masthead publishing managing director Joanna Norris said last night that the company had been prepared for the sale. 'We (Stuff Ltd) have a current lease for the land and buildings which house our Petone print plant. 'This runs to mid-2027, with a right of renewal option. The site remained in the ownership of Nine Entertainment Co. when Stuff owner and publisher Sinead Boucher bought Stuff back into New Zealand ownership in 2020. 'Nine has now given us notice that it will look to sell the land and began marketing last week. It is a great site, with an excellent tenant. 'Stuff Ltd has known and prepared for this eventuality. If the site is sold, we will work with our new landlord and most likely see out our current lease and renewal with further options in scope. 'This has no impact on our operation or publications.' Staff Masthead Publishing is the division responsible for all of the company's newspapers and digital subscription services, such as The Post and The Press paywalled websites. Earlier this year, it was revealed NZME had been in discussions to buy those assets, but talks were halted as NZME's board changes unfolded. Boucher has said she has no intention to return to the negotiation table, but after this week's seismic changes in the New Zealand media landscape - with Sky buying Three - it would not be a surprise if the parties do start talking again. The full Media Insider column returns next week. Editor-at-Large Shayne Currie is one of New Zealand's most experienced senior journalists and media leaders. He has held executive and senior editorial roles at NZME including Managing Editor, NZ Herald Editor and Herald on Sunday Editor and has a small shareholding in NZME. Watch Media Insider - The Podcast on YouTube, or listen to it on iHeartRadio, Spotify, Apple Podcasts, or wherever you get your podcasts.
