The Sky Network Television Limited [NZX:SKT] share price has dived by 2.8%.
Sky — founded in 1987 — is New Zealand’s largest pay-per-view satellite TV provider. A popular presence in many Kiwi households, the company is well-known for its sporting coverage, as well as its movie and documentary offerings.
Sky’s share price is currently sitting at $2.43 at the time of writing. It has a market capitalisation of $945.61m.
Why has the [NZX:SKT] share price fallen?
Sky has long held a monopolistic position in the New Zealand market, with exclusive access to broadcasting rights in the sporting arena.
Recently, however, Sky’s grip on the market has been shattered due to the rise of streaming platforms such as Netflix and Amazon Prime.
For the year to 30 June, Sky announced that it had lost 57,000 subscribers, posting a financial shortfall of $241 million.
In an attempt to stem the bleed-out, Sky has introduced new streaming services of its own — Fanpass and Neon — in order to better compete in this new media landscape.
In addition, Sky still holds exclusive rights for rugby, rugby league, netball and cricket, which will run until 2021. This may allow Sky to hold on to its sporting fans, at least for now.
These strategic moves have served to calm the anxiety among investors this past month, allowing for an upward trajectory in share price. However, it appears that jitters have interrupted that trend, which has resulted in a downtick today.
Where could Sky go from here?
It’s yet to be seen whether Sky’s overall strategy will be enough to restore confidence among non-sports viewers who are hungry for the latest television dramas and documentaries. In this area, Sky is overshadowed by what Netflix and Amazon Prime has to offer in terms of original programming.
For this reason, Sky’s share price could continue to waver, at least until Sky proves itself able to consolidate its vision amidst these challenges in the long-term.
Editor, Money Morning New Zealand