The Sky Network Television Limited [NZX:SKT] share price has increased by 4.1% at the time of writing.
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 $1.27 at the time of writing, and it has a market capitalisation of $494.21m.
Why has the [NZX:SKT] share price risen?
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.
As a consequence, between December 2014 to December 2018, Sky lost over 100,000 subscribers, leading to a series of financial shortfalls.
This rough period has understandably caused jitters among investors.
However, fresh rumours are now swirling that Sky is on the verge of diversifying and making the move into the broadband market.
The speculation gained credibility when wealth-management firm NZ First Capital described Sky as being a ‘credible new entrant’.
Where could Sky go from here?
Sky TV representatives have so far declined to address the rumours.
However, many analysts believe that Sky is ideally placed to extend its presence into the broadband arena.
Sky already has streaming services of its own — Fan Pass and Neon. In addition, Sky holds exclusive rights for rugby, rugby league, netball, and cricket, which will run until 2021.
Still, on the flipside, any attempt to move into broadband will almost certainly put it on a collision course with Spark New Zealand [NZX:SPK]. Asboth heavyweights jostle for space in the small Kiwi market, we could see a retail price war emerging on the horizon.
However, the gains may very well outweigh the costs. The stock value for Sky will almost certainly be buoyant if the company decides to make an official announcement on broadband expansion.
For now, it’s a case of wait and see.
Editor, Money Morning New Zealand