21 Jun 2013

Reaction to Sky TV rights loss 'out of proportion'

10:24 am on 21 June 2013

An analyst says the market's reaction to Sky Network Television losing the rights to screen the English Premier League (EPL) has been completely out of proportion to the actual impact on Sky's business.

Investors shaved more than $100 million off Sky's market value on Wednesday and another $62 million on Thursday.

Forsyth Barr head of private wealth research Rob Mercer says Sky spends about $290 million a year on programming and does about 25 content deals a week.

Mr Mercer says Sky does about deal one each fortnight that is as high-profile as the EPL contract, which he estimates is worth about $2 million in annual revenue.

"The market has got a lot more spooked by this and the reason for that is cause they're thinking, well, is this the beginning of significant change for Sky TV and the way that competition can come at their business."

Mr Mercer says the EPL audience in New Zealand is likely to halve as a result of the league's deal with Coliseum Sports Media and if all sports were parcelled up in a similar fashion, the cost to consumers would quickly get out of hand.

He says Sky has to balance what it pays in programming rights with what consumers are prepared to pay to watch a range of sports.

Mr Mercer says Sky is in a fiercely competitive market for content and if it had to pay top dollar for everything it would quite quickly end up making a loss.

He says it's equally important for Sky to ensure it's doing the best for investors as well as producing a viable proposition for households.