Buyback of ‘significantly under-priced’ shares
The annual meeting also saw shareholders vote overwhelmingly in favour of a $70m capital return following Sky’s strong FY2022 result (see table below).
Notwithstanding its stock is up 18.7 per cent for the year, “the board believes that Sky’s shares are significantly under-priced”, Bowman said. (So do analysts. Sky is currently trading well below their 12-month targets - even targets lowered after the broadcaster revealed higher-than-expected programming costs at its full-year result).
“With this in mind the board is currently minded to initiate an on-market buy-back programme following the announcement of the interim results,” the chairman said. Sky is scheduled to deliver its FY2023 half-year report in February.
The size of the buyback would depend on Sky’s cash position and economic outlook, but Bowman said, “[But] by way of an example, based on the reduced number of shares following the proposed return of capital and given Sky’s net cash position, a $15 million buy-back programme would be expected to deliver a 5 per cent uplift in both ebitda and earnings per share.”
Big salary bumps for all staff
CEO Sophie Moloney said Sky had just announced a salary review.
“We are very mindful of the economic headwinds that we are all facing and the importance of securing key talent in these times impacted by scarcity of labour,” Moloney said.
“To tackle this head-on, we have just announced our salary review which included an increase of 8 per cent for those earning less than $100,000 a year, and 5 per cent for those earning up to $250,000.”
Consumer Price Index Inflation for the year to September came in at 7.2 per cent.
With costing controls in other areas, the salary bump and new dividend policy would not impact guidance, Moloney said.
Sky’s forecast FY2023 forecast is still for revenue of between $750m and $770m; ebtida between $150m to $170m, net profit between $50m to $60m and Capex of between $60m to $75m.
Sky Box update
“The launch of the Sky Box and Sky Pod is a key moment for us. The new Box is the most transformative product we have offered our customers in many years,” Moloney told shareholders.
The Sky Box (which will involve a $200 up-front fee) will offer regular Sky channels via a dish, and apps including Netflix, Amazon Prime Video, Disney+, Neon and Spark Sport via broadband, and offer frills including 4K ultra-high definition and a roomy hard drive.
The smaller Sky Pod ($100 upfront) will lack a hard drive and is aimed at those currently accessing Sky via the soon-to-be-shuttered Vodafone TV, which was in around 100,000 households as of August, according to the telco - although neither side would say how many were using it for Sky content.
The Sky Box was originally due “mid-year”. Sky has blamed the pandemic and war for production delays, and says it won’t rush delivery, given it’s mindful of the backlash against its last major interface upgrade (those who want to stick with their current decoder will be able to do so).
Vodafone TV was earlier given a stay of execution until this month, to allow Sky extra time to deliver its new hardware.
Today, that was extended again.
Sky Box customer trials were about to begin, Moloney said and the timeframe for the initial rollout of Sky Box and Sky Pod remained “as soon as possible”.
“But to give Vodafone customers comfort that they continue to watch Sky and other content until we’re ready to offer the Sky Pod and Sky Box to them all, we’ve agreed with Vodafone to keep the platform open across the summer break,” Moloney said.
In response to a shareholder question about whether there were any technical holdups, Moloney said she was on a staff trial and using the new Sky Box at home and that it was working “beautifully”.
She could not give any specific timeframe for the customer trial or broader rollout, however.
The meeting also saw tech industry veteran Geraldine McBride resign from Sky’s board after a nine-year spell, as flagged earlier this year.
McBride was replaced as an independent director by Mark Buckman, a self-styled “change agent and provocateur” Mark Buckman. His previous positions senior customer and marketing roles at Foxtel and Telstra.
Sky shares were up 2.25 per cent to $2.27 in late trading, bucking the broader market trend. The NZX50 was down 0.13 per cent.
