Sky Network Television Limited (SKT)



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General Information
Company Name: Sky Network Television Limited
Stock Code: SKT
Website: www.skytv.co.nz
GICS Sub-Industry: Broadcasting
Market Cap ($M): 2,226
Equiv. Shares (M): 389

Current Price Data+
Current Price Open High Low Last Close Volume Price Movement
 $ 5.720 $ 5.660 $ 5.750 $ 5.640 $ 5.620 574,028 $ 0.100  1.779 %

Current Broker Consensus Recommendation more
Recommendation: Hold (3)
Recommendation Date: 29th Oct 2014
Brokers Surveyed: 2

Company Overview

Business Description:
Sky Network Television Limited (SKT) is a provider of multi-channel, pay television and free-to-air television services in New Zealand. SKT distributes both local and international programme content to its subscriber base through a digital satellite network.

Strategy Analysis:
SKT continues to grow thanks to its monopoly status and a strong management team that continues to execute well. Subscription revenues are growing nicely bolstered by MYSKY in the recent past and the advertising business is outperforming its free-to-air rivals thanks to increased popularity of both Prime and SKY channels. The company intends to continue delivering strong results by offering subscribers more content, giving viewers the choice of watching content on different platforms (for example ISKY) and introducing new products like multi room or SKY Lite etc. The idea is to lift subscription and ARPU overtime. We expect the company to continually launch new products in an attempt to entice subscribers. The company is spending a decent sum of money on brand building and advertising to drive sub penetration from 51% to between 75-80% over the longer term. Sky Network TV reported NPAT up 9% to NZ$68.2m for the half-year ended 31 December 2012. Revenues from ordinary activities were NZ$443.64m, up 3.9% from last year. This improved financial position is primarily due to the continued success of the MY SKY HDi decoders and an increase in average revenue per subscriber (ARPU). The increase in ARPU is mainly the result of SKY customers upgrading to new services such as MY SKY HD or to premium channels such as SoHo. Basic and Diluted EPS were 17.53 NZ cents compared to 16.08 NZ cents last year. Net operating cash flow was NZ$150.83m compared to NZ$140.72m last year. The interim dividend declared was 12 NZ cents, compared with 11 NZ cents last year.


Financial Summary
Year to Jun NPAT EPS EPS chg (%) PER DPS Yield (%) Franking (%)
2015  F 153.8 39.5 9.9 14.5 27.7 4.8 100.0
2014  F 139.9 36.0 31.3 15.9 25.2 4.4 100.0
2013  A 105.8 27.4 8.5 15.2 44.8 10.8 100.0
Source: Morningstar analyst estimates.

Peer Comparison
EPS Growth (%) P/E (%) Dividend Yield (%)
Company Mkt Cap 2013 A 2014 F 2015 F 2013 A 2014 F 2015 F 2013 A 2014 F 2015 F
Prime Media Group (PRT) $308 M -0.3705 0.1180 0.0341 10.0119 8.9552 8.6598 8.10 8.76 8.96
Sky Network TV (SKT) $2,187 M 0.3333 0.1280 0.0043 14.1919 12.5812 12.5279 4.80 5.56 5.58
Southern Cross Media (SXL) $649 M -0.2121 -0.1497 0.0719 8.1488 9.5833 8.9407 8.15 7.52 7.29
Ten Network (TEN) $566 M -- -- -- -- -- -- 0.00 0.00 0.00

Market Comparison
Earnings P/E Ratio P/B Ratio P/E Growth P/S Ratio
SKT 0.59 13.8 1.93 2.15 2.70
Market 0.94 15.8 1.24 1.88 1.55
Sector 1.03 13.0 1.43 2.33 1.17

Directors
Name Position Start Date
Mr John Fellet Chief Executive Officer,Executive Director 25 April 2001
Mr Peter John Macourt Non-Executive Chairman 15 August 2002
Mr Robert William Bryden Non-Executive Deputy Chairman 24 March 1992
Mr Humphry John Davy Rolleston Non-Executive Director 08 September 2005
Ms Geraldine Celia McBride Non-Executive Director 13 September 2013
Mr John Anthony Waller Non-Executive Director 23 April 2009
Mr Derek Handley Non-Executive Director 13 September 2013

Management
Name Position
Jason Hollingworth Chief Financial Officer,Company Secretary
Cathryn Oliver Chief of Staff
Rawinia Newton Director of Advertising Sales
Greg Drummond Director of Broadcast Operations
Megan King Director of Content - Strategy, Planning & Delivery
Martin Enright Director of Content Acquisitions
Kirsty Way Director of Corporate Communication
Michael Watson Director of Marketing
Martin Wrigley Director of Operations
Travis Dunbar Director of Programming - Movies, Factual and G.E.
Richard Last Director of Sport
Charles Ingley Director of Technology

Substantial Shareholders
Holding Name
21,331,708 (5.48%) BNP Paribas Investment Partners (Australia) Limited
31,087,630 (7.99%) JCP Investment Partners Ltd
24,031,977 (6.18%) Hyperion Asset Management Limited

Calendar of Events
Date Event
23 September 2015 Report (Annual)
21 August 2015 Report (Prelim)
23 February 2015 Report (Interim)
© 2011 Morningstar, Inc. All rights reserved. The data and content contained herein are not guaranteed to be accurate, complete or timely. Neither Morningstar, nor its affiliates nor their content providers will have any liability for use or distribution of any of this information. To the extent that any of the content above constitutes advice, it is general advice that has been prepared by Morningstar Australasia Pty Ltd ABN: 95 090 665 544, AFSL: 240892 (a subsidiary of Morningstar, Inc.), without reference to your objectives, financial situation or needs. Before acting on any advice, you should consider the appropriateness of the advice and we recommend you obtain financial, legal and taxation advice before making any financial investment decision. If applicable investors should obtain the relevant product disclosure statement and consider it before making any decision to invest. Some material is copyright and published under licence from ASX Operations Pty Limited ACN 004 523 782 ("ASXO"). DISCLOSURE: Employees may have an interest in the securities discussed in this report. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/fsg.asp.

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