Forsyth Barr’s Aaron Ibbotson and Benjamin Crozier see “$12m of savings from NZ Rugby rights” in FY2026 (which would take in the first six months of a new rights deal).

Jarden’s Arie Dekker and Vishal Bhula say there’s “much anticipation on the savings Sky negotiates this time around”.

The pair are expecting a deal – but probably not this week.

“Assuming a deal isn’t announced into the result, we expect [FY2026] guidance on the basis of renewal, without giving too much away on terms.”

The Herald’s Gregor Paul has reported that Sky put an $85m per year offer on the table.

Spark Sport is gone, and the global streamers have lost some of their enthusiasm for live sport with their post-pandemic pivot from adding viewers wilfully to focusing more on the bottom line.

For example, Amazon’s Prime Video, which was part of the previous six-season deal for the world’s most-watched sporting competition, the English Premier League, withdrew from the bidding for the latest rights package (2025-29).

Sky UK and TNT shared rights in a £6.7 billion ($1.52b) deal – which sounds monstrous but is actually a 50% reduction on the previous contract, allowing for inflation and per-game costs (it includes more matches).

The wildcard is the UK-based DAZN (pronounced “da zone”), which received a US$1b investment (for a 10% stake) from Saudi Arabia’s sovereign fund last December.

In January, DAZN announced a A$3.4b ($3.7b) deal to buy Australia’s Foxtel (the acquisition was completed on April 2). There have been rumours that an NZR flirtation with DAZN has delayed the finalisation of its new deal.

The dividend lure

The dividend has been a key lure for investors since August 2023, when Sky announced plans to double its full-year profit payout to 30 cents per share by FY2026.

As it bought Discovery NZ for $1 (plus around $10m in legal and advisory costs) in a no-debt deal, Sky reiterated that target.

The analyst consensus is that it will hit the 30 cents per share (cps) mark next year.

The full-year FY2025 payout is expected to meet or exceed guidance (Sky has forecast “at least 21cps”; the analyst consensus is 23cps).

On Friday, analysts will be looking for any word on how the dividend will track after 2026.

More Discovery NZ details

Forsyth Barr is looking for more details on Sky’s promise that “synergies” will lower Discovery NZ’s costs by 18%.

Sky has said the acquisition will add $10m to operating earnings by FY2028, but in FY2026, Forsyth Barr’s Ibbotson and Crozier see a $5m loss from the Discovery business (now known in-house as Sky Free).

Octagon Asset Management chief investment officer Paul Robertshawe told the Herald on July 22 that Discovery’s Three and ThreeNow would ultimately be worth 35c per share or $48m to its new owner – subject to Sky “finding no skeletons in the closet”.

Profit toward bottom end of guidance

Jarden sees a FY2025 full-year adjusted net profit of $42.2m, down from FY2024’s $49.2m.

Forsyth Barr sees a full-year result toward the bottom end of guidance: $40m-$55m net profit and $145m-$152.5m earnings before interest, tax, depreciation and amortisation (ebitda), from $153m in FY2024 on the “soft consumer backdrop” and higher churn (net loss of subscribers) with Sky’s satellite changeover woes between February and April.

The analyst consensus is that FY2025 total revenue will fall 1.4% to $760m as satellite subscriber losses are mostly offset by a 4.9% increase in streaming revenue and a 4.0% lift in advertising.

Satellite hit

Ibbotson and Crozier warn it’s possible Sky will report its largest fall in satellite revenue since 2021, with a net loss of 20,000 Sky Box customers in the second half.

Sky revised down its full-year earnings estimates in February after the full scope of its satellite issues became apparent. The broadcaster ran into grief after a new Optus satellite was not launched on time (in fact, it’s still two years away), forcing it to shift customers to the 14-year old Koreasat 6 as a temporary alternative to the increasingly wobbly Optus D2.

Looking ahead

Ibbotson and Crozier expect an ebitda lift to $165m in FY2026. Dekker and Bhula see $159m.

Sky shares were recently trading at $2.96, or 4.96% up for the year.

Jarden has a $3.15 12-month target price, Forsyth Barr $3.55.

Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.