Sky Network Television Ltd [NZX:SKT] has surged 3.25% in trading today, from $1.24 to $1.27 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 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. Also, the emerging threat of Spark New Zealand Ltd [NZX:SPK] launching their own sports-centred service has created additional turbulence.

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, there is now some light at the end of the tunnel. In breaking news, Sky and Spark have now joined forces in an unexpected partnership — to jointly stream live coverage of the Rugby World Cup.

This alliance between Sky and Spark has revitalised positive interest in both brands. On a strategic level, it means that the two companies will be able to reach each other’s customer base, effectively doubling their reach.

Where could Sky go from here?

For now, the cooperation between Sky and Spark is limited solely to pubs and clubs throughout New Zealand. Their effort is specifically aimed at capturing and consolidating this niche base of sports fans.

However, the door remains open for Sky and Spark to cooperate even further, potentially reaching their general base of subscribers.

This speculation has buoyed market sentiment, creating a healthy amount of buzz. In the short-term, an upward trajectory in the share price for both Sky and Spark is to be expected.


John Ling,
Contributor, Money Morning New Zealand