Sky TV sees $50m saving in sale of OB unit, confirms revised guidance

Sky TV has sold its outside-broadcast unit to NEP. A partnership between the pair will see NEP produce Super Rugby games and other Sky content. Photo / Photosport

Sky TV says the sale of its outside-broadcast unit to NEP will save it $50 million in capital expenditure over the next five years.

The pay-TV broadcaster did not disclose the amount of the sale. Around 38 staff will move across to the new owner.

Sky also confirmed its revised guidance for its financial year ending June 30.

In March, the company cancelled its earlier forecast for June-year revenue of $750m to $770m and earnings before interest, tax, depreciation and amortisation between $170m and $190m.

On May 22, it said it now expected revenue of $730m to $750m and ebitda of $155m to $175m in the year ended June 30. For the following year, revenue could fall to $610m to $640m and earnings to $100m to $130m. In a statement to the NZX this morning, Sky confirmed its FY2020 results will fall within those ranges.

Sky also said that a $200m banking facility that had been due to expire shortly has now been extended to July 2023.

It also said funds from its recent $157m capital raise had been used to pay down all bank debt and that as of today it holds $118m cash.

Sky will deliver its full result on September 10.

Seismic shift in the OB landscape

The NEP deal was first-flagged in December, and confirmed this morning before the market opened.

Sky bought Outside Broadcasting - at the time, NZ's only substantial OB operation - for $13m in 2010.

At the time, the deal was seen as a masterstroke. And for years, Sky's near-monopoly on OB infrastructure and staff did help it keep its hold on A-list sports. No one else had the gear and skills to shoot games.

But in 2018, multinational outside-broadcast player NEP set up shop in New Zealand.

Shortly after, it announced a partnership with Spark Sport to shoot hockey games. Spark has also drafted in British OB player Whisper to produce domestic cricket.

With outside-broadcast capability no longer serving as a moat to fend off competition, Sky TV's OB unit became a drag on its books. New chief executive Martin Stewart said it would be more efficient to farm it out.

Sky and NEP have inked a 10-year partnership deal, and Sky says 38 people or "the majority" of its outside-broadcast staff will move across to the multinational.

Sky shares were down 7.1 per cent to 13c in mid-morning trading, outpacing the broader market's 2.2 per cent fall.

The stock is down 78.36 per cent for the year.