Sky TV's Rights Negotiation goes into Extra Time

Price increases are never welcome but sometimes, on rare occasions, we can soften that blow by offsetting ourselves in the market. For instance, accepting a 12-14% insurance premium increase from your insurer Tower is a lot easier to digest when your Tower shares return over 120% in the same year.

For the good of the shareholders, you start to say…

So, when SkyTv (Sky) recently raised their Sky Sport Now (SSN) prices I wondered if the same logic might apply – could investing in Sky shares help balance the cost ledger or even tip the scales in my favour? The challenge, however, is the uncertainty surrounding Sky’s rugby right renewal deal with New Zealand Rugby (NZR), a binary outcome that complicates how we determine Sky’s valuation.

When Sky last renewed these rights five years ago, losing them was considered “fatal” to its intrinsic value. Sky clearly agreed, paying a hefty sum of roughly $100m p.a. alongside giving the rugby union a 5% equity stake, to secure the rights and outbid Spark Sport who had just won the cricket rights. Now, the stakes are high again, with a fresh negotiation set to determine whether Sky retains the rights or faces a major upheaval in operations.