Big drop in Sky subscribers

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#1549414 10-May-2016 17:47

tdgeek:
ockel:

tdgeek: There have been a lot of great posts here, lots of ideas, Great read as to what options Sky has. If I had to pick one, it might be Richs post on whether the satellite is usable in Australia. If not, that may be Slys white elephant that precludes them from moving to SVOD over time. Might even be locked into a long contract. Interesting.

Satellite contracts are operating leases - 6 transponders on a 15 year lease starting in 2004. Its in the annual report.

So 2019 they could revisit that?

yeah, imagine that. A 4 channel UHF company that migrated to a 100 channel satellite company that migrated to a streaming company.

Who would have guessed. But according to some its an unsuccessful business that has managed to get to almost 50% penetration and the largest media company by revenue in NZ (probably even profit too). Hate to know what the definition of a successful company is.

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#1549416 10-May-2016 17:53

ockel:
tdgeek:
ockel:

tdgeek: There have been a lot of great posts here, lots of ideas, Great read as to what options Sky has. If I had to pick one, it might be Richs post on whether the satellite is usable in Australia. If not, that may be Slys white elephant that precludes them from moving to SVOD over time. Might even be locked into a long contract. Interesting.

Satellite contracts are operating leases - 6 transponders on a 15 year lease starting in 2004. Its in the annual report.

So 2019 they could revisit that?

yeah, imagine that. A 4 channel UHF company that migrated to a 100 channel satellite company that migrated to a streaming company.

Who would have guessed. But according to some its an unsuccessful business that has managed to get to almost 50% penetration and the largest media company by revenue in NZ (probably even profit too). Hate to know what the definition of a successful company is.

Factor in my idea as a rural RSP, helping our farmers get high GB Internet and bringing The Bachelor to their living rooms, priceless!

Benoire

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#1549417 10-May-2016 17:53

tdgeek:

Satellite internet is still a very high cost? Imagine the GB every month that 830000 people use that can transfer 1080i in real time. Is there an option to be a rural oriented RSP?

Satellite Internet IS a very high cost, but I would imagine doing Satellite distribution of content is a different matter as the only upstream bit is from Skys end and that is a fixed source that they control... I'm not saying that it will be cheap but cheaper that sat internet.

EDIT: to add, sat internet is expensive as each user MIGHT be accessing different content and therefore you're uploading/downloading a lot of different data. Satellite TV is a single set of sources, replicated and 'downloaded' or streamed via a beam, so I don't think it is the same as Satellite Internet at all.

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#1549423 10-May-2016 18:00

Benoire:
tdgeek:

Satellite internet is still a very high cost? Imagine the GB every month that 830000 people use that can transfer 1080i in real time. Is there an option to be a rural oriented RSP?

Satellite Internet IS a very high cost, but I would imagine doing Satellite distribution of content is a different matter as the only upstream bit is from Skys end and that is a fixed source that they control... I'm not saying that it will be cheap but cheaper that sat internet.

EDIT: to add, sat internet is expensive as each user MIGHT be accessing different content and therefore you're uploading/downloading a lot of different data. Satellite TV is a single set of sources, replicated and 'downloaded' or streamed via a beam, so I don't think it is the same as Satellite Internet at all.

Good call I have to admit it did sound too good to be true but it also seemed an idea, all those TB being used for the web instead of video.

radomatic

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#1549430 10-May-2016 18:11

ockel:

yeah, imagine that. A 4 channel UHF company that migrated to a 100 channel satellite company that migrated to a streaming company.

Who would have guessed. But according to some its an unsuccessful business that has managed to get to almost 50% penetration and the largest media company by revenue in NZ (probably even profit too). Hate to know what the definition of a successful company is.

I think that for someone to say they have been unsuccessful would be pretty uncharitable really. I think it would be very, very hard to argue that Sky have not been successful! As you say, they have pretty big revenues and some pretty impressive profit margins in my opinion.

That said, whether they can continue this success remains to be seen. Given increased competition in the streaming space and content/rights acquisition space... I guess it depends on how successfully they adapt to the changing market. Even then - I think it will be quite a while before they actually start hurting from the changing market - but it will absolutely happen.

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#1549433 10-May-2016 18:18

radomatic:
ockel:

yeah, imagine that. A 4 channel UHF company that migrated to a 100 channel satellite company that migrated to a streaming company.

Who would have guessed. But according to some its an unsuccessful business that has managed to get to almost 50% penetration and the largest media company by revenue in NZ (probably even profit too). Hate to know what the definition of a successful company is.

I think that for someone to say they have been unsuccessful would be pretty uncharitable really. I think it would be very, very hard to argue that Sky have not been successful! As you say, they have pretty big revenues and some pretty impressive profit margins in my opinion.

That said, whether they can continue this success remains to be seen. Given increased competition in the streaming space and content/rights acquisition space... I guess it depends on how successfully they adapt to the changing market. Even then - I think it will be quite a while before they actually start hurting from the changing market - but it will absolutely happen.

I fully agree. I guess what winds me up are the gouging comments. The profit can be changed to zero if they reduced prices by 15 per month. Public information is that their ROI is normal. So they need to adapt to SVOD imho. It's about costs.

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#1549448 10-May-2016 18:38

tdgeek:

I fully agree. I guess what winds me up are the gouging comments. The profit can be changed to zero if they reduced prices by 15 per month. Public information is that their ROI is normal. So they need to adapt to SVOD imho. It's about costs.

It's not necessarily as simple as saying there is $15 headroom per subscriber. It depends on how their net profit is derived - for example, what write offs, provisions, tax adjustments, depreciation and revaluations etc have been applied to their accounts to arrive at the $150m in the first place. It may be that they have much more flexibility for financial restructuring if needed when push comes to shove.

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#1549452 10-May-2016 18:53

dafman:
tdgeek:

I fully agree. I guess what winds me up are the gouging comments. The profit can be changed to zero if they reduced prices by 15 per month. Public information is that their ROI is normal. So they need to adapt to SVOD imho. It's about costs.

It's not necessarily as simple as saying there is $15 headroom per subscriber. It depends on how their net profit is derived - for example, what write offs, provisions, tax adjustments, depreciation and revaluations etc have been applied to their accounts to arrive at the $150m in the first place. It may be that they have much more flexibility for financial restructuring if needed when push comes to shove.

Possible. I have two accounting degrees so I understand that although I hadn't studied their P+L. Needless to say there ain't much wiggle room. Their issue is costs. I can only assume that costs to maintain satellite is high. No issue if you have 830000 customers. But SVOD doesnt have that. The customers pay their own way via unlimited broadband cheap pricing. But buying CDN or an alternative is not cheap either but I'd wager cheaper than satellite, STB infrastructure etc.

For sky to become desirable that's a huge revenue drop. The 59 deal has everyone here running to it but the ARPU is about 85. Currently 15 per subscribe is the profit.. IMHO costs need to drop and ODis imho the way to do that

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#1549454 10-May-2016 18:55

dafman:
tdgeek:

I fully agree. I guess what winds me up are the gouging comments. The profit can be changed to zero if they reduced prices by 15 per month. Public information is that their ROI is normal. So they need to adapt to SVOD imho. It's about costs.

It's not necessarily as simple as saying there is $15 headroom per subscriber. It depends on how their net profit is derived - for example, what write offs, provisions, tax adjustments, depreciation and revaluations etc have been applied to their accounts to arrive at the $150m in the first place. It may be that they have much more flexibility for financial restructuring if needed when push comes to shove.

Oops. If any write offs etc that you mention are one offs,yes that can help as its number money not generated . I doubt that's the case.

dafman

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#1549476 10-May-2016 19:52

And one thing I don't understand, if satellites are Sky's expensive Achilles Heel, how is it that Freeview can offer up a free satellite service?

ockel

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#1549482 10-May-2016 19:57

dafman:

And one thing I don't understand, if satellites are Sky's expensive Achilles Heel, how is it that Freeview can offer up a free satellite service?

Freeview is only free to the viewer. TVNZ, Mediaworks and the smaller players either lease a transponder from Optus or buy from Kordia. It costs them a pretty penny that they have to recover via advertising.

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#1549483 10-May-2016 19:59

dafman:
And one thing I don't understand, if satellites are Sky's expensive Achilles Heel, how is it that Freeview can offer up a free satellite service?

I don't know the answer but I would imagine the number of channels and the number of HD channels being offered makes a big difference to satellite costs.

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#1549484 10-May-2016 20:00

dafman:
And one thing I don't understand, if satellites are Sky's expensive Achilles Heel, how is it that Freeview can offer up a free satellite service?

If your referring to my posts I can only assume that i don't have data.

tdgeek

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#1549485 10-May-2016 20:02

It's all speculation but no doubt this brainstorming is occurring in real life in the Sky environment

dafman

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#1549531 10-May-2016 21:13

ockel:

dafman:

And one thing I don't understand, if satellites are Sky's expensive Achilles Heel, how is it that Freeview can offer up a free satellite service?

Freeview is only free to the viewer. TVNZ, Mediaworks and the smaller players either lease a transponder from Optus or buy from Kordia. It costs them a pretty penny that they have to recover via advertising.

last time I checked, Sky ain't advert free, so have similar ability for cost recovery via advertising ...

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