Probe launched into Sky TV content deals

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#626604 17-May-2012 00:40

tdgeek: DS9, I agree.

If Sky has to share its currently exclusive content, then it is devalued to them. They won't have the pulling power to attract/retain their subscribers, as viewers can also watch it on free TV. So, they will have to pay less, and then, won't get the content from the content providers. Or Free TV also pays a share, which the makes free TV into pay TV. And no, I am not a Sky advocate, but the bottom line is Sky can afford to buy content, as it is a pay tv business. You cannot expect it to pay top dollar for premium content when viewers can cancel Sky and watch it for free. Free TV cannot afford to pay for that cream content either as its revenue is lower. So, you may not see the cream content as it is now not affordable.

I hear where everyone is coming from. If Sky did what many here want, that is, to pay for shows rather than $70 per month for multi channels. That will save consumers money, it will cost Sky money, then Sky will have less funds to buy that cream content. Chicken and the Egg, primarily due to a low, low population here.

Thats a nice story, what was their recorded profit this year again?

NonprayingMantis

6434 posts

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#626621 17-May-2012 06:38

itxtme:
tdgeek: DS9, I agree.

If Sky has to share its currently exclusive content, then it is devalued to them. They won't have the pulling power to attract/retain their subscribers, as viewers can also watch it on free TV. So, they will have to pay less, and then, won't get the content from the content providers. Or Free TV also pays a share, which the makes free TV into pay TV. And no, I am not a Sky advocate, but the bottom line is Sky can afford to buy content, as it is a pay tv business. You cannot expect it to pay top dollar for premium content when viewers can cancel Sky and watch it for free. Free TV cannot afford to pay for that cream content either as its revenue is lower. So, you may not see the cream content as it is now not affordable.

I hear where everyone is coming from. If Sky did what many here want, that is, to pay for shows rather than $70 per month for multi channels. That will save consumers money, it will cost Sky money, then Sky will have less funds to buy that cream content. Chicken and the Egg, primarily due to a low, low population here.

Thats a nice story, what was their recorded profit this year again?

something like $100m on $800m of revenue.

so: good, but not great.

tdgeek

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#626652 17-May-2012 08:42

NonprayingMantis:
itxtme:
tdgeek: DS9, I agree.

If Sky has to share its currently exclusive content, then it is devalued to them. They won't have the pulling power to attract/retain their subscribers, as viewers can also watch it on free TV. So, they will have to pay less, and then, won't get the content from the content providers. Or Free TV also pays a share, which the makes free TV into pay TV. And no, I am not a Sky advocate, but the bottom line is Sky can afford to buy content, as it is a pay tv business. You cannot expect it to pay top dollar for premium content when viewers can cancel Sky and watch it for free. Free TV cannot afford to pay for that cream content either as its revenue is lower. So, you may not see the cream content as it is now not affordable.

I hear where everyone is coming from. If Sky did what many here want, that is, to pay for shows rather than $70 per month for multi channels. That will save consumers money, it will cost Sky money, then Sky will have less funds to buy that cream content. Chicken and the Egg, primarily due to a low, low population here.

Thats a nice story, what was their recorded profit this year again?

something like $100m on $800m of revenue.

so: good, but not great.

I thought it was 60 Million. So, how is that based on assets deployed? Is it a cash cow and shares are through the roof as the profit is very high compared to assets owned? No. The size of the profit is not relevant, its how that compares to the assets owned, the same as your interest on your bank account.

DS9

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#626666 17-May-2012 09:10

Now here is a prime excample of why we need Pay TV and SKY in this country http://www.geekzone.co.nz/forums.asp?forumid=106&topicid=102544 10 HD channels for the Olympics.

No FTA network would have offered this and SKY can only afford it because of the costing models. Now imagine if they had to share the content we would get ONE's coverage all over again.

tdgeek

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#626670 17-May-2012 09:16

DS9: Now here is a prime excample of why we need Pay TV and SKY in this country http://www.geekzone.co.nz/forums.asp?forumid=106&topicid=102544 10 HD channels for the Olympics.

No FTA network would have offered this and SKY can only afford it because of the costing models. Now imagine if they had to share the content we would get ONE's coverage all over again.

And includes "Prime - More than 23 hour’s coverage per day featuring live events and highlights and a daily dose of Crowd Goes Wild - Olympic style."

NonprayingMantis

6434 posts

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#626684 17-May-2012 09:40

tdgeek:
NonprayingMantis:
itxtme:
tdgeek: DS9, I agree.

If Sky has to share its currently exclusive content, then it is devalued to them. They won't have the pulling power to attract/retain their subscribers, as viewers can also watch it on free TV. So, they will have to pay less, and then, won't get the content from the content providers. Or Free TV also pays a share, which the makes free TV into pay TV. And no, I am not a Sky advocate, but the bottom line is Sky can afford to buy content, as it is a pay tv business. You cannot expect it to pay top dollar for premium content when viewers can cancel Sky and watch it for free. Free TV cannot afford to pay for that cream content either as its revenue is lower. So, you may not see the cream content as it is now not affordable.

I hear where everyone is coming from. If Sky did what many here want, that is, to pay for shows rather than $70 per month for multi channels. That will save consumers money, it will cost Sky money, then Sky will have less funds to buy that cream content. Chicken and the Egg, primarily due to a low, low population here.

Thats a nice story, what was their recorded profit this year again?

something like $100m on $800m of revenue.
so: good, but not great.

I thought it was 60 Million. So, how is that based on assets deployed? Is it a cash cow and shares are through the roof as the profit is very high compared to assets owned? No. The size of the profit is not relevant, its how that compares to the assets owned, the same as your interest on your bank account.

from here
http://www.skytv.co.nz/Portals/0/Assets/AboutUs/Docs/NZX%20Release%20June%202011%20Appendix%201.pdf

rounghly $120m after tax profit from FY11. a bit under $800m revenue
around 1.3bn of net assets
so from a simple return on investment POV, around 10%.

DS9

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#626686 17-May-2012 09:49

NonprayingMantis:
tdgeek:
NonprayingMantis:
itxtme:
tdgeek: DS9, I agree.

If Sky has to share its currently exclusive content, then it is devalued to them. They won't have the pulling power to attract/retain their subscribers, as viewers can also watch it on free TV. So, they will have to pay less, and then, won't get the content from the content providers. Or Free TV also pays a share, which the makes free TV into pay TV. And no, I am not a Sky advocate, but the bottom line is Sky can afford to buy content, as it is a pay tv business. You cannot expect it to pay top dollar for premium content when viewers can cancel Sky and watch it for free. Free TV cannot afford to pay for that cream content either as its revenue is lower. So, you may not see the cream content as it is now not affordable.

I hear where everyone is coming from. If Sky did what many here want, that is, to pay for shows rather than $70 per month for multi channels. That will save consumers money, it will cost Sky money, then Sky will have less funds to buy that cream content. Chicken and the Egg, primarily due to a low, low population here.

Thats a nice story, what was their recorded profit this year again?

something like $100m on $800m of revenue.
so: good, but not great.

I thought it was 60 Million. So, how is that based on assets deployed? Is it a cash cow and shares are through the roof as the profit is very high compared to assets owned? No. The size of the profit is not relevant, its how that compares to the assets owned, the same as your interest on your bank account.

from here
http://www.skytv.co.nz/Portals/0/Assets/AboutUs/Docs/NZX%20Release%20June%202011%20Appendix%201.pdf

rounghly $120m after tax profit from FY11. a bit under $800m revenue
around 1.3bn of net assets
so from a simple return on investment POV, around 10%.

Also you have not included capital investment, the best way to gage a company is return on shares and that is about 6%

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tdgeek

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#626692 17-May-2012 10:07

Yes, so the returns are fair, Sky is not a cash cow.

Lets do some math. Many feel that Sky is over priced, a common theme is to just pay for what we watch, rather than a Sky monthly subscription. To save a lot of cost. Fair enough.

Sky made 120 mill profit, and if there are 1,000,000 homes in NZ, and I think Sky has a 50% market share. If say Sky halved their profit and reduced monthly fees. That would reduce monthly prices by an average of $120 per year, or $10 per month. That won't please any detractors. Our population is too low, there is just not the room to move, IMO.

Jas777

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#626727 17-May-2012 10:58

Paying for what you want to watch is in theory good but like everything the desired response might not be what you get.

The price per game or movie or TV show might not be as low as think it should be as basic does subsidise the premium channels. If most do away with basic then the cost will be transfered. And if sky divides the rights price by number of viewers the cost for 1 event maybe way more than for another. Some channels will still have to be on a subscription basis as that is how the channel operates especially the ones from overseas.

As for sharing with FTA especially on sports content, the local body might not get enough revenue so can't pay the good players enough so they go overseas. Can you imagine the only way to watch Dan Carter or Richie McCaw in the last 4 years was the watch the Top 12 or Magners League or Heiniken Cup? Or the Sports body may come to the conclusion that controlling their own rights may be the best option so it doesn't appear on FTA.

As an aside to this who wants to return to the days of TVNZ having the rugby and always showing it delayed. It seems a lot of people who are part-time fans want to have the same rights of full-time fans and don't care if it shafts them all.

Taking this to the next degree I could turn up to a live game and say I don't like the entrance price but should be allowed in anyway as that is way I think it should be.

NonprayingMantis

6434 posts

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#626731 17-May-2012 11:07

tdgeek: Yes, so the returns are fair, Sky is not a cash cow.

Lets do some math. Many feel that Sky is over priced, a common theme is to just pay for what we watch, rather than a Sky monthly subscription. To save a lot of cost. Fair enough.

Sky made 120 mill profit, and if there are 1,000,000 homes in NZ, and I think Sky has a 50% market share. If say Sky halved their profit and reduced monthly fees. That would reduce monthly prices by an average of $120 per year, or $10 per month. That won't please any detractors. Our population is too low, there is just not the room to move, IMO.

there are around 1.6-1.7m homes in NZ, and 50% have Sky. but the calc still works out roughly the same.

tdgeek

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#626732 17-May-2012 11:09

Agree. As in many of these discussions, I feel the key issue is our low population. Providing none of the players are creaming massive profits, I cannot see an easy solution, whether it be pay tv, broadband or mobile costs.

OldGeek

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#627053 17-May-2012 20:27

In my original post I pointed out that a law change would be needed to remove exclusive rights that would allow content (such as a movie or rugby game) to be available through multiple providers. I don't necessarily support such a move. However if Sky hold exclusive rights then not only do they control how content is delivered but also payment and delivery options - and all with no competition.

Living in the UK ten years ago I saw sport coverage that was far more comprehensive than we get here. For a soccer match you could watch the 'main' coverage or press the red button to see a myriad of other options such as choose an alternative commentary and choose which camera to watch the game through. At the time ITV were threatening to challenge BSKYB for sports coverage using a terrestrial subscription service which has since folded but this illustrates how comparatively crude Skys sports coverage is here.

JimmyH

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#627061 17-May-2012 20:43

While I don't claim to have expertise in TV production, I suspect size of market might have something to do with it.

A lot of production costs for sports matches (commentators, cameras and camera crews, studios, satellite bandwidth etc) are pretty much fixed, regardless of whether a match has 1 viewer, 100,000 viewers or 10,000,000 viewers. Assuming about the same proportions of the populations are willing to sign up for sport on pay TV, the the UK has around 14 times the number of subscribers to spread fixed costs over compared to New Zealand. If they are rational and expect extra camera angles etc to increase subscribers by x%, then I think it is easy to see how spending the money might make sense in the UK but not NZ.

JimmyH

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#627068 17-May-2012 20:47

NonprayingMantis:
tdgeek:
NonprayingMantis:
itxtme:
tdgeek: DS9, I agree.

If Sky has to share its currently exclusive content, then it is devalued to them. They won't have the pulling power to attract/retain their subscribers, as viewers can also watch it on free TV. So, they will have to pay less, and then, won't get the content from the content providers. Or Free TV also pays a share, which the makes free TV into pay TV. And no, I am not a Sky advocate, but the bottom line is Sky can afford to buy content, as it is a pay tv business. You cannot expect it to pay top dollar for premium content when viewers can cancel Sky and watch it for free. Free TV cannot afford to pay for that cream content either as its revenue is lower. So, you may not see the cream content as it is now not affordable.

I hear where everyone is coming from. If Sky did what many here want, that is, to pay for shows rather than $70 per month for multi channels. That will save consumers money, it will cost Sky money, then Sky will have less funds to buy that cream content. Chicken and the Egg, primarily due to a low, low population here.

Thats a nice story, what was their recorded profit this year again?

something like $100m on $800m of revenue.
so: good, but not great.

I thought it was 60 Million. So, how is that based on assets deployed? Is it a cash cow and shares are through the roof as the profit is very high compared to assets owned? No. The size of the profit is not relevant, its how that compares to the assets owned, the same as your interest on your bank account.

from here
http://www.skytv.co.nz/Portals/0/Assets/AboutUs/Docs/NZX%20Release%20June%202011%20Appendix%201.pdf

rounghly $120m after tax profit from FY11. a bit under $800m revenue
around 1.3bn of net assets
so from a simple return on investment POV, around 10%.

Which isn't actually terribly good for a high-risk business (as well as normal business risk, they face technology and regulatory risks that are higher than many other businesses). Also, while they are profitable now, from memory their investors had to eat many years of losses and negative cash flow before they got to that point.

richms

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#627094 17-May-2012 21:44

I would rather see the channels broken away from the distribution, and that from the retailing so that any retailer could sell sky channels packaged up how they want to VS the current rubbish where you can pay the same amount for the same packages to your telco instead of direct to sky.

Also a break on the monopoly of sky providing hardware, like in the US where there are now mandatory cablecards for many places, if sky or your other retailer had to provide a CI module etc to use in any hardware it would be a win as it would break skys monopoly on the overpriced mysky's

And the seperation of content creation from distribution would mean that sky sports would be able to be resold via other pay tv services, so someone could offer it over streaming, or ISPs could pick it up for their own IPTV networks much easier than negotiating while in the position of buying from someone who is basically your competition at the retail level.

Richard rich.ms

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