Spark sold Lightbox to SKY

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#2380536 23-Dec-2019 17:24

langi27:

a lot of people asking how this will effect their free lightbox subscription, how about my free neon account thats included with my mobile plan though 2degrees? Do i get access to Lightbox now?

Good question! And vice-versa for Lightbox users.
As a previous Neon subscriber, I wouldn't like to pay for it. How do you find it recently? Not having Apple TV app was annoying for me, but the technical issues were the biggest complaint

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#2380537 23-Dec-2019 17:32

Hammerer:

People keep talking about SkyTV as if it were SkyTV of longstanding issues. I'd say that there is more chance that pundits are wrong about SkyTV than this CEO making a crock out of what he's got. The new CEO is making some good changes and these positive changes are coming much more frequently than they used to. For this reason alone, I doubt that many people can say they know SkyTV now.

I guess we, the people, are just going on the previous form of sky - hiking prices, removing content without warning, antiquated licensing model, generally behaving like a monopoly.
I actually have sky so I'm not full of malaise against it. However, I would suggest past actions might reflect the current views, and this isn't the first time they've had a new CEO promising much.

Given new CEO started in Feb when the share price was ~$2, and current share price is $0.74 -- I'd say the market feels the same way.

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https://www.bloomberg.com/quote/SKT:NZ

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#2380624 23-Dec-2019 19:07

We've had no change in the driving seat since John Fellet became CEO in 2001 so this is a new situation. Yes, Fellet wasn't CEO for that whole time but he certainly never let anyone else drive the strategy.

The pace and quality of changes has already improved under Martin Stewart the new CEO: "retiring" old-school execs; giving us better packages; giving us better pricing; giving us better device support; acquiring some better options technology (like Lightbox); and generally not doing much to upset us. What has he done that you don't like?

I don't think that the fall in share price is much to do with the new CEO. A lot of people were hoping Fellet had a real plan other than pass the buck.

As far as I can see, the only parts of the share price drop that relate to the new CEO are not giving us his complete plan yet and contributing to the board decision to reduce dividends. But the rest of Stewart's plan is probably only a couple of months away in their annual announcement and, if so, then that is within his first year. If it's a good plan then some of that share price will come back but he probably can't reverse the entire decline in subscriber numbers and revenue which is the real reason for the loss of value.

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#2380632 23-Dec-2019 19:35

LeatheryHawkeye:

jonathan18:

LeatheryHawkeye:

what's with all the speed test pics? We were getting these speeds over 10 years ago.

What’s with the ‘tude?

New members usually take a bit of time to suss out the lie of the land before expressing their inner b!tch, but I see you’re taking no time at all to reach that point on more than one thread, and that’s with a history of six posts!

Legitimate query - why do people post speed tests? Is it to help when they post for help with applications/connectivity?

Inner b!tch - E channel subscriber I see

What @jonathan18 said. Whats the problem? Some might be on ADSL1, ADSL2, or the StarTrek plan. What you don't know is what THEY know.

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#2380633 23-Dec-2019 19:39

LeatheryHawkeye:

Hammerer:

People keep talking about SkyTV as if it were SkyTV of longstanding issues. I'd say that there is more chance that pundits are wrong about SkyTV than this CEO making a crock out of what he's got. The new CEO is making some good changes and these positive changes are coming much more frequently than they used to. For this reason alone, I doubt that many people can say they know SkyTV now.

I guess we, the people, are just going on the previous form of sky - hiking prices, removing content without warning, antiquated licensing model, generally behaving like a monopoly.
I actually have sky so I'm not full of malaise against it. However, I would suggest past actions might reflect the current views, and this isn't the first time they've had a new CEO promising much.

Given new CEO started in Feb when the share price was ~$2, and current share price is $0.74 -- I'd say the market feels the same way.

SKT:NZ
https://www.bloomberg.com/quote/SKT:NZ

No malaise? ok.

Hiking prices? You heard of CPI? Maybe not.

So the new CEO is promising but not delivering? Please clarify

tdgeek

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#2380635 23-Dec-2019 19:42

Hammerer:

We've had no change in the driving seat since John Fellet became CEO in 2001 so this is a new situation. Yes, Fellet wasn't CEO for that whole time but he certainly never let anyone else drive the strategy.

The pace and quality of changes has already improved under Martin Stewart the new CEO: "retiring" old-school execs; giving us better packages; giving us better pricing; giving us better device support; acquiring some better options technology (like Lightbox); and generally not doing much to upset us. What has he done that you don't like?

I don't think that the fall in share price is much to do with the new CEO. A lot of people were hoping Fellet had a real plan other than pass the buck.

As far as I can see, the only parts of the share price drop that relate to the new CEO are not giving us his complete plan yet and contributing to the board decision to reduce dividends. But the rest of Stewart's plan is probably only a couple of months away in their annual announcement and, if so, then that is within his first year. If it's a good plan then some of that share price will come back but he probably can't reverse the entire decline in subscriber numbers and revenue which is the real reason for the loss of value.

Finally, a correct response... Sky has to compete, and the new CEO is doing well, but its up to the market to see results. We have seen significant changes, but not yet, the financial result of those changes. Fair play that investors (who have no impact on the company) react as they do

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#2380838 24-Dec-2019 10:54

Hammerer:

We've had no change in the driving seat since John Fellet became CEO in 2001 so this is a new situation. Yes, Fellet wasn't CEO for that whole time but he certainly never let anyone else drive the strategy.

The pace and quality of changes has already improved under Martin Stewart the new CEO: "retiring" old-school execs; giving us better packages; giving us better pricing; giving us better device support; acquiring some better options technology (like Lightbox); and generally not doing much to upset us. What has he done that you don't like?

I don't think that the fall in share price is much to do with the new CEO. A lot of people were hoping Fellet had a real plan other than pass the buck.

As far as I can see, the only parts of the share price drop that relate to the new CEO are not giving us his complete plan yet and contributing to the board decision to reduce dividends. But the rest of Stewart's plan is probably only a couple of months away in their annual announcement and, if so, then that is within his first year. If it's a good plan then some of that share price will come back but he probably can't reverse the entire decline in subscriber numbers and revenue which is the real reason for the loss of value.

Mr Market doesnt believe the new strategy. Higher costs, lower ARPU, nothing to arrest the subscriber decline. The earnings warning is the outcome of the new strategy - and the market sees further earnings warnings in the coming periods.

Instead of a slow glide path the strategy is to bet the farm and hope that it pays off. Given the history with Foxtel (lower pricing on packages, the launch of Kayo) and the absence of any benefit to Foxtel (from a subscriber, revenue or earnings POV) the market simply doesnt believe.

With the CEO gutting earnings Sky will be about breakeven in 2 years (excluding next years goodwill writeoff) and no sign of it ever recovering. Private equity will buy the carcass, people will get bonuses and another company will disappear from our capital markets.

Enjoy it while it lasts.

Sixth Labour Government - "Vision without Execution is just Hallucination"

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#2380847 24-Dec-2019 11:04

ockel:

Hammerer:

We've had no change in the driving seat since John Fellet became CEO in 2001 so this is a new situation. Yes, Fellet wasn't CEO for that whole time but he certainly never let anyone else drive the strategy.

The pace and quality of changes has already improved under Martin Stewart the new CEO: "retiring" old-school execs; giving us better packages; giving us better pricing; giving us better device support; acquiring some better options technology (like Lightbox); and generally not doing much to upset us. What has he done that you don't like?

I don't think that the fall in share price is much to do with the new CEO. A lot of people were hoping Fellet had a real plan other than pass the buck.

As far as I can see, the only parts of the share price drop that relate to the new CEO are not giving us his complete plan yet and contributing to the board decision to reduce dividends. But the rest of Stewart's plan is probably only a couple of months away in their annual announcement and, if so, then that is within his first year. If it's a good plan then some of that share price will come back but he probably can't reverse the entire decline in subscriber numbers and revenue which is the real reason for the loss of value.

Mr Market doesnt believe the new strategy. Higher costs, lower ARPU, nothing to arrest the subscriber decline. The earnings warning is the outcome of the new strategy - and the market sees further earnings warnings in the coming periods.

Instead of a slow glide path the strategy is to bet the farm and hope that it pays off. Given the history with Foxtel (lower pricing on packages, the launch of Kayo) and the absence of any benefit to Foxtel (from a subscriber, revenue or earnings POV) the market simply doesnt believe.

With the CEO gutting earnings Sky will be about breakeven in 2 years (excluding next years goodwill writeoff) and no sign of it ever recovering. Private equity will buy the carcass, people will get bonuses and another company will disappear from our capital markets.

Enjoy it while it lasts.

What do you suggest? Raise prices, drop content, so that the subscriber base will grow? IMO, they are adding value to it, ARPU will drop, but the hope will be that Sky/Neonbox/SSN will add subscribers, but with a reduced ARPU. The "new" Sky, i.e. post SVOD competition will not achieve the same profits, they may do a share buy back just to reflect the smaller business.

Sky was a large, dominant business. Now its a smaller business, along with other players. If they can settle at a level of revenue that provides a profit then that is the new Sky. Ive seen a few here that will now keep Sky due to improvements. SkyGo is now very good quality, more channels, its a genuine added value service now.

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#2380853 24-Dec-2019 11:18

ockel:

Mr Market doesnt believe the new strategy. Higher costs, lower ARPU, nothing to arrest the subscriber decline. The earnings warning is the outcome of the new strategy - and the market sees further earnings warnings in the coming periods.

Instead of a slow glide path the strategy is to bet the farm and hope that it pays off. Given the history with Foxtel (lower pricing on packages, the launch of Kayo) and the absence of any benefit to Foxtel (from a subscriber, revenue or earnings POV) the market simply doesnt believe.

With the CEO gutting earnings Sky will be about breakeven in 2 years (excluding next years goodwill writeoff) and no sign of it ever recovering. Private equity will buy the carcass, people will get bonuses and another company will disappear from our capital markets.

Enjoy it while it lasts.

I don't believe the earnings warning is the outcome of the new strategy. There is nothing new about higher costs, lower ARPU, nothing to arrest subscriber decline - that was all happening under the old boss. The focus previously was more on returning a profit/dividend to investors - which Sky did quite well while it had a virtual monopoly in the space. They also deliberately crippled their apps / streaming technology so as not to cannibalize their set top box customers - and keep their profits up. e.g. Sky Go was limited to mobile devices / tablets with no casting while Fanpass had a limited number of channels and quite a high price point. The result of that strategy is that sky is behind the 8 ball when competition comes in with better apps / user experience / prices in the online arena.

I think the earnings warning is a result of the previous strategy and competition entering the market and probably would have happened regardless.

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#2380859 24-Dec-2019 11:30

No. The previous strategy caused a slow leak in subscribers over the years. Now, they have in the last year incurred extra costs improving things, so the decline on an already reduced profit would still be happening, plus those extra costs. The result is an earnings warning. The benefit from this years efforts will be seen in things like subscriber growth in the latter part of the year (if that has happened) If subscriber levels have reached the low point in the trough, and there is now growth in that, earnings can increase. The market doesn't feel that though. Or it may feel that but wants to see end of year subscriber growth first. Worth a speculative punt, you could easily get a 50% capital gain here.

ockel

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#2380870 24-Dec-2019 12:08

evnafets:

ockel:

Mr Market doesnt believe the new strategy. Higher costs, lower ARPU, nothing to arrest the subscriber decline. The earnings warning is the outcome of the new strategy - and the market sees further earnings warnings in the coming periods.

Instead of a slow glide path the strategy is to bet the farm and hope that it pays off. Given the history with Foxtel (lower pricing on packages, the launch of Kayo) and the absence of any benefit to Foxtel (from a subscriber, revenue or earnings POV) the market simply doesnt believe.

With the CEO gutting earnings Sky will be about breakeven in 2 years (excluding next years goodwill writeoff) and no sign of it ever recovering. Private equity will buy the carcass, people will get bonuses and another company will disappear from our capital markets.

Enjoy it while it lasts.

I don't believe the earnings warning is the outcome of the new strategy. There is nothing new about higher costs, lower ARPU, nothing to arrest subscriber decline - that was all happening under the old boss. The focus previously was more on returning a profit/dividend to investors - which Sky did quite well while it had a virtual monopoly in the space. They also deliberately crippled their apps / streaming technology so as not to cannibalize their set top box customers - and keep their profits up. e.g. Sky Go was limited to mobile devices / tablets with no casting while Fanpass had a limited number of channels and quite a high price point. The result of that strategy is that sky is behind the 8 ball when competition comes in with better apps / user experience / prices in the online arena.

I think the earnings warning is a result of the previous strategy and competition entering the market and probably would have happened regardless.

Fundamentally disagree. Since the new CEO has come on board - HD is free (bye bye HD revenue, and more HD channels have been added, increased costs). SSN has increased from 4 channels to 12 channels - and the price has reduced. Thats increased costs and its highly doubtful that new SSN subscribers have offset the revenue decline from price cuts. Those are just two easy examples that you can model yourself.

These two aspects alone will have resulted in the post AGM review of forecasts, shown no change in revenue trajectory and resulted in the need to inform the market for the remaining 9 months. If it was through the actions of the previous CEO then this substantially lower level of profit would have been flagged in August at the FY19 results.

Higher rugby costs wont even start until after 2020 so there is another layer of costs for analysts to factor into FY21 - and more downgrades. Add SkyGo casting (bye bye multiroom) etc etc and future revenues are increasingly at risk - but little corresponding decline in costs. That is an ugly profit squeeze to consider in future years. I shudder to think of the new Lightbox millstone on the bottom line. Not too hard to see further downside to the share price.

The previous CEO was focused on shareholders - thats his job. The new CEO has already been criticised by an analyst for sacrificing shareholders for customers. And the customers arent sipping the Koolaid. If you focus on customers at the cost of shareholders then the business will collapse - and all stakeholders (shareholders, employees, suppliers and customers) will suffer.

Sixth Labour Government - "Vision without Execution is just Hallucination"

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#2380892 24-Dec-2019 12:40

ockel:

Fundamentally disagree. Since the new CEO has come on board - HD is free (bye bye HD revenue, and more HD channels have been added, increased costs). SSN has increased from 4 channels to 12 channels - and the price has reduced. Thats increased costs and its highly doubtful that new SSN subscribers have offset the revenue decline from price cuts. Those are just two easy examples that you can model yourself.

These two aspects alone will have resulted in the post AGM review of forecasts, shown no change in revenue trajectory and resulted in the need to inform the market for the remaining 9 months. If it was through the actions of the previous CEO then this substantially lower level of profit would have been flagged in August at the FY19 results.

Higher rugby costs wont even start until after 2020 so there is another layer of costs for analysts to factor into FY21 - and more downgrades. Add SkyGo casting (bye bye multiroom) etc etc and future revenues are increasingly at risk - but little corresponding decline in costs. That is an ugly profit squeeze to consider in future years. I shudder to think of the new Lightbox millstone on the bottom line. Not too hard to see further downside to the share price.

The previous CEO was focused on shareholders - thats his job. The new CEO has already been criticised by an analyst for sacrificing shareholders for customers. And the customers arent sipping the Koolaid. If you focus on customers at the cost of shareholders then the business will collapse - and all stakeholders (shareholders, employees, suppliers and customers) will suffer.

1. Two easy examples? We don't have access to the actuals costs nor the subscriber effect

2.Shown no change in revenue trajectory? As you know, these changes didn't happen a year ago, and any subscriber gain won't factor in, as any subscriber gain/reduced churn are recent. I want to ignore the result as it will clearly be low, and focus on next year, i.e. whether subscriber revenue exceeded these changes

3. focus on customers at the cost of shareholders then the business will collapse. Ti satisfy shareholders, customers have to exist, they have been declining for years. The past offers and prices caused that. Fellett hung on and hung on till he was removed. You either re hash the business or liquidate it

You used to be very pro SkY, are you still? Surely you don't think that continuing the Fellett formula would rescue this business?

ockel

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#2380906 24-Dec-2019 13:05

tdgeek:

ockel:

Fundamentally disagree. Since the new CEO has come on board - HD is free (bye bye HD revenue, and more HD channels have been added, increased costs). SSN has increased from 4 channels to 12 channels - and the price has reduced. Thats increased costs and its highly doubtful that new SSN subscribers have offset the revenue decline from price cuts. Those are just two easy examples that you can model yourself.

These two aspects alone will have resulted in the post AGM review of forecasts, shown no change in revenue trajectory and resulted in the need to inform the market for the remaining 9 months. If it was through the actions of the previous CEO then this substantially lower level of profit would have been flagged in August at the FY19 results.

Higher rugby costs wont even start until after 2020 so there is another layer of costs for analysts to factor into FY21 - and more downgrades. Add SkyGo casting (bye bye multiroom) etc etc and future revenues are increasingly at risk - but little corresponding decline in costs. That is an ugly profit squeeze to consider in future years. I shudder to think of the new Lightbox millstone on the bottom line. Not too hard to see further downside to the share price.

The previous CEO was focused on shareholders - thats his job. The new CEO has already been criticised by an analyst for sacrificing shareholders for customers. And the customers arent sipping the Koolaid. If you focus on customers at the cost of shareholders then the business will collapse - and all stakeholders (shareholders, employees, suppliers and customers) will suffer.

1. Two easy examples? We don't have access to the actuals costs nor the subscriber effect

2.Shown no change in revenue trajectory? As you know, these changes didn't happen a year ago, and any subscriber gain won't factor in, as any subscriber gain/reduced churn are recent. I want to ignore the result as it will clearly be low, and focus on next year, i.e. whether subscriber revenue exceeded these changes

3. focus on customers at the cost of shareholders then the business will collapse. Ti satisfy shareholders, customers have to exist, they have been declining for years. The past offers and prices caused that. Fellett hung on and hung on till he was removed. You either re hash the business or liquidate it

You used to be very pro SkY, are you still? Surely you don't think that continuing the Fellett formula would rescue this business?

I think the Fellet formula would have been a long slow grind with substantial cashflow generation (typical sunset industry outcome). The previous business model was patient - wait for new competitors to work out that with no barriers to entry that industry profits in total dont grow and startups wear continual cash losses until exit. To be able to take advantage at that point requires a business to still exist - if you are still around then you can make some decisions. Spark has, in the last 12 months, worked this out with Lightbox. Terminal business - no growth, no profit, sell it or shut it down. Others have already been and gone (Quickflix, Ezyflix, PremierLeaguePass, BeIN to name a few) - cos there are no supernormal profits (and never have been).

The current strategy has hastened the sun going down. The cashflow generation will be absorbed by higher cash costs. Revenue path will be little changed. Mr Market has already told you that. Take the PE and work how many years of life the current stock price is implying. [Hint: its not many]

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#2380912 24-Dec-2019 13:14

ockel:

I think the Fellet formula would have been a long slow grind with substantial cashflow generation (typical sunset industry outcome). The previous business model was patient - wait for new competitors to work out that with no barriers to entry that industry profits in total dont grow and startups wear continual cash losses until exit. To be able to take advantage at that point requires a business to still exist - if you are still around then you can make some decisions. Spark has, in the last 12 months, worked this out with Lightbox. Terminal business - no growth, no profit, sell it or shut it down. Others have already been and gone (Quickflix, Ezyflix, PremierLeaguePass, BeIN to name a few) - cos there are no supernormal profits (and never have been).

The current strategy has hastened the sun going down. The cashflow generation will be absorbed by higher cash costs. Revenue path will be little changed. Mr Market has already told you that. Take the PE and work how many years of life the current stock price is implying. [Hint: its not many]

Fair enough. In the distant past here, I think I suggested that it will become a smaller business, possibly even become just a sports business. Share buyback to realign earnings with paidup capital. The downward spiral will reach a trough, that will still be a profit, or not, that's the question. Annecdotally here, the recent changes have stopped some churn. Sky deals thread shows people still want it. It depends on the revenue path post these changes.

Are you predicting say 2 years, or 3 to 5 years?

ockel

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#2380944 24-Dec-2019 14:49

tdgeek:

ockel:

I think the Fellet formula would have been a long slow grind with substantial cashflow generation (typical sunset industry outcome). The previous business model was patient - wait for new competitors to work out that with no barriers to entry that industry profits in total dont grow and startups wear continual cash losses until exit. To be able to take advantage at that point requires a business to still exist - if you are still around then you can make some decisions. Spark has, in the last 12 months, worked this out with Lightbox. Terminal business - no growth, no profit, sell it or shut it down. Others have already been and gone (Quickflix, Ezyflix, PremierLeaguePass, BeIN to name a few) - cos there are no supernormal profits (and never have been).

The current strategy has hastened the sun going down. The cashflow generation will be absorbed by higher cash costs. Revenue path will be little changed. Mr Market has already told you that. Take the PE and work how many years of life the current stock price is implying. [Hint: its not many]

Fair enough. In the distant past here, I think I suggested that it will become a smaller business, possibly even become just a sports business. Share buyback to realign earnings with paidup capital. The downward spiral will reach a trough, that will still be a profit, or not, that's the question. Annecdotally here, the recent changes have stopped some churn. Sky deals thread shows people still want it. It depends on the revenue path post these changes.

Are you predicting say 2 years, or 3 to 5 years?

Under Fellet it was something like 8-10 years before NPAT went to zero. I havent bothered modelling the value destruction under Stewart - its uninvestable so my time is better spent elsewhere but it looks like its probably 3 years.

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