Paige Hennessy: Octagon Asset Management Equities Analyst on Sky increasing their Sky Sport fees

Sky TV is hiking their prices. 

A near-12% increase will come into effect for Sky Sport viewers this May. 

The company says the rise in price will allow it to keep investing in local and global fixtures, and it comes as Sky fights to keep its New Zealand Rugby rights. 

Octagon Asset Management Equities Analyst Paige Hennessy told Mike Hosking that while no one likes a price increase, investors see it as a reflection of reality. 

For Sky to make a profit, they have to reflect any cost increases in their prices – especially if NZ Rugby is unwilling to see rights deflation come through in their space. 

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Episode Transcript

Speaker 1 (00:00):
Good old Sky Sport come to the inflationary party with
a good old price rise almost twelve percent more as
of May now. Octagon Asset Management Equities analyst Page Hennessy
is with us on this page. Morning to you, morning
make I'm very well indeed, so as a punter, of course,
we all hate wage rises or cost rises, but I
suppose that's an investor, it's the bottom line. You're bringing

(00:21):
in more revenue and if you can make it stick,
that's no bad things.

Speaker 2 (00:24):
Yeah, I mean that's exactly right. Like, no one likes
the price increase, but for us as an investor, we
see it's a reflection of reality for Sky Sports and
streaming sports and new zones that the prices continue to
go up, and for Sky to produce an actual profit,
they must reflect that within their prices, especially if Injre
is not willing to see right cufflation comes through in

(00:46):
their space.

Speaker 1 (00:47):
The old m z are debate do you do Analysts
like you follow that with a great deal of interest.
Does this make or break ish for Sky depending on
which way it falls.

Speaker 2 (00:56):
I mean, that is the huge debate for us really
right Like last every five of the years, we have
this debate which is whether or not Sky actually needs
those New Zealand rugby rights to be a profitable business.
And last time everyone said it would have been fatal,
and Sky clearly agreed. They paid up one hundred million
year and gave a stake into Rugby to make sure
they've secured those rights over Spark. The problem is we

(01:19):
just don't know right as an investor, we don't know
what the cost face looks like for Sky and ultimately
don't know how many consumers would churn on the back
of losing rugby, and so for us it can be
quite makeel break because we don't know whether or not
the share price will have from here.

Speaker 1 (01:35):
From here, from an analyst point of view, is sport
their stickiest thing. In other words, they can come out
and yes I hate it, but I'll pay it because
it's sport and I love sport. In New Zealand love sport.
Therefore the wold.

Speaker 2 (01:44):
Cough, I think that's really hard to tell. I think
New Zealanders absolutely love sport. I think what New Zealander's
absolutely though, is the breadth of the sports offering. And
that's what's probably the most important to Sky these days
is that it's not just New Zealand rugby, where you
want to watch you want to watch af the NFL,
the NBA, And it's the fact that I can go

(02:05):
to one place and pay for it all. I think
that that is their key consumer offering.

Speaker 1 (02:10):
They couldn't agree with you more because I'm not interested.
Although I have the money to buy a whole bunch
of different stuff, I can't be bothered. And if I
can get it in one place, that's value, isn't it.

Speaker 2 (02:23):
I totally agree. I think one it's convenience, and two
I think you actually end up paying less overall. Like
if you think about the streaming on an entertainment basis,
if you're paying with Disney class Through pays with Netflix
there on Amazon, eventually you end up paying more than
if you just paid for a single aggregator who was
bundling or your entertainment into one. It's the same with sport,

(02:44):
and we've seen it on the parts. When spark Sport
left the market, most people actually benefit because we saw
more sport roll back into Sky and suddenly we weren't
paying an extra twenty five dollars a month on top
for Sparksport that we were also already paying for Scarsport
because most of them reality had both packages exactly.

Speaker 1 (03:01):
I don't really have time for this, but I'm too
fascinated if the zone come in and could they take
Sky completely.

Speaker 2 (03:09):
Look, they've done it, They've done it in Australia just recently.
They're a quiet Fox Shower, which you would consider it
to be Sky's counterpart. I think that's a smart pay,
Like do you come into a market you don't know
with a singular sport and a subscriber base you don't have.
That seems like a hard way to monetize assets to me,
whereas you could pick up Sky Sky trades that are

(03:29):
two times even a monkible. I just paid seven times
for Foxtown Australia, Like it is a bargain and you
get your huge subscriber base around six and fifty thousand
subscribers on top of a bundle of sports rights and
entertainment rights. It just seems to me the mostological answer
if designer is going to come into the market.

Speaker 1 (03:47):
Road stuff page. I'm enjoy talking to you, appreciate it.
We'll get your back page. Hennessy, Who's where the Octagon
Asset management Equities? Watch the space for more from the
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