Sky New Zealand has acquired Warner Bros Discovery‘s native channels enterprise for a token sum of NZ$1 (60¢).
The shock deal will see Sky turning into New Zealand’s dominant TV media participant by buying 100% of the shares in Discovery NZ from Discovery Networks Asia-Pacific, a subsidiary of WBD, on a cash-free, debt-free foundation. It is going to have round 35% of the linear TV advert market income share and 24% of the digital TV equal.
The deal contains free-to-air channel Three and its streaming platform, ThreeNow, together with a spread of different linear and free ad-supported streaming tv channels similar to HGTV in New Zealand. A multi-year content material provide association for WBD content material to its former channels has additionally been agreed.
The HBO Max and Warner Bros Worldwide Tv Manufacturing companies will not be included within the settlement and can stay with WBD, which is targeted on rolling out its worldwide streaming service all over the world and, like rivals, wrestling with the economics of conventional TV.
Sky and Discovery NZ are working collectively to construction a transition plan that can see the latter’s workforce be a part of the previous in coming months. Integrations prices are projected at NZ$6.5M. Juliet Peterson, Vice President, Head of Networks at Discovery NZ, will proceed to guide the enterprise, reporting to Sky CEO Sophie Moloney.
In a presentation to shareholders, the NZX-listed Sky mentioned the deal would supply an instantaneous income uptick of NZ$95M and positioned the corporate to develop into “Aotearoa NZ’s most partaking and important media firm.” Discovery NZ is anticipated to ship EBITDA of “a minimum of” NZ$10M from full-year 2028, with underlying free cashflow achieved by the tip of subsequent yr.
The deal is anticipated to shut on August 1. The New Zealand Commerce Fee was given confidential discover of the deal and has suggested either side it doesn’t intend to face in the way in which.
“It is a compelling alternative for Sky that immediately helps our ambition to be Aotearoa New Zealand’s most partaking and important media firm,” mentioned Moloney. “It positions us to scale quicker, accelerates our progress, and additional diversifies our income streams, significantly in promoting and digital.
“We’re buying a enterprise with complementary operations that could be a robust strategic match for Sky, in an accretive approach for our shareholders. Specifically, buying the established and fast-growing ThreeNow BVOD platform provides an necessary lacking part to Sky’s portfolio, with out incurring the numerous model and
WBD’s linear and pay-TV channels have struggling for a while, posting massive losses within the face of falling TV promoting spend. Upon saying that as much as 350 jobs would go in restructuring final yr, WBD APAC President James Gibbons mentioned that, “Other than 2009, the yr following the worldwide monetary disaster, this was the one largest year-on-year drop in 30 years – a 14.3% drop.” He claimed NZ$74M of TV advert cash had disappeared in 2023.
WBD closed information service Newshub final yr, as New Zealand’s conventional media companies wrestle to compete with streaming rivals and the shift to digital-first operations. Michael Brooks, Managing Director Australia and New Zealand for WBD, mentioned right now’s announcement was “It is a unbelievable end result for each WBD and Sky.”
He added: “The continued challenges confronted by the New Zealand media trade are effectively documented, and over the previous 12 months, the Discovery NZ workforce has labored to ship a brand new, extra sustainable enterprise mannequin following a major restructure in 2024.
“Whereas this enterprise just isn’t commercially viable as a standalone asset in WBD’s New Zealand portfolio, we see the worth Three and ThreeNow can convey to Sky’s current providing of complementary belongings. The transaction features a important and ongoing content material provide settlement for WBD’s premium content material, for the mutual advantage of each events.”
Moloney mentioned that, “However the continuing challenges confronted by the Discovery NZ enterprise, Sky is uniquely positioned to present impact to this chance to speed up our progress technique.”
Sky NZ was based again in 1987 and have become a pay-TV participant three years later. Rupert Murdoch’s Information Corp owned a major quantity of the shares for a few years earlier than promoting in 2013.
