KEY POINTS:
Sky Television chief executive John Fellet said last week's drop in the price of the company shares was due to investors cashing up to improve liquidity - and not because of perceived trouble ahead at Sky.
Shares in the Rupert Murdoch controlled pay TV monopoly fell 30c last week - most of that after the June 11 launch of its new generation My Sky high definition personal video recorders.
But Fellet was confident that neither the long delayed launch of My Sky HDi - and its capabilities for picking up high definition TV - nor talk of regulating Sky TV had hurt the company or its value.
Sky TV closed at $4.67 on June 6 before dropping to a six-year low of $4.37 and closed yesterday at $4.33, down 3c on the day.
Investment bankers told Fellet that Asian hedge funds had been reducing New Zealand investments, to improve cash holdings in advance of the end of the June 30 financial year.
"I think investors know that we have to go into this business, but at the same time, the market does not like new technology," he said.
He said that early adopters had already taken the new generation My Sky recorders, but the real test for the new technology would be in six months. The Sky TV capital costs of the new PVRs - about $25.6 million - were just a part of the additional costs for providing high definition, including $60 million in payments to studios for high definition programming.
As for free to air submissions calling for the Government to impose anti-siphoning rules on Sky TV reducing its dominance of sports rights, Sky said that debate had no impact. The talk of regulation had actually lessened last week at the time the Sky shares fell.
A market-based media analyst who would not be named said that the Sky approach to new recorders had been measured and delays with My Sky HDi enabled it it avoid capital expenditure.
Rob Mercer, media analyst for sharebrokers Forsyth Barr, said Fellet's explanation made some sense.
"There is an increase in pressure in the general weak market to sell and it is more about liquidity than it is about fundamentals for the shares," he said.
The announcement last week increased forecast sales or rentals for the My Sky HDi by 30,000 to 80,000.
Mercer said the new policy of allowing rentals for the My Sky HDi had opened up new existing possibilities. In other countries this hastened uptake.
Competitors TVNZ and MediaWorks talked of additional regulations such as anti-siphoning rules as part of a Government review of broadcasting regulations.
"But that possibility had been hanging over Sky TV for two years," Mercer said.
"Sky has developed into quite a strong pay company and that begins to be a threat to the viewership for free to air.
"It would be strange if the Government sought to regulate Sky to limit consumer choice."
