Sky Network Television’s chair and shareholders may not be able to agree if the company’s shareholders are getting the short end of the stick, but both parties are unhappy with Sky’s share price.

At the dual-listed television network’s annual meeting today, chair Philip Bowman said 2023 would be a “crucial” year for the business, one in which “excellence in execution” would be a key factor.

Peevish shareholders peppered the board with questions about Sky’s share price, which they saw as too low, as well as grievances over the company’s share consolidation last year.

Bowman faced most of the questions over Sky’s share consolidation and patiently – and not-so-patiently – told shareholders they weren’t being “swindled”.

“What we did was equitable for all shareholders,” he said. 

“It was to get the share price to a more realistic level and we hope that it will actually improve liquidity to some extent in trading shares."

Where Bowman did agree with shareholders, however, was that Sky’s shares were too low and undervalued.

“What we need to do is persuade the market that they are undervaluing our shares,” he told attendees.

In the year to Oct 31, Bowman said Sky’s shares on the NZX had provided a “healthy” increase of 18%, compared with the NZX50’s 13% fall.

“We are yet to see the share price reflect the improved results and outlook for the company,” he said in his speech.

“The board believes that Sky’s shares are significantly underpriced.”

Dramatic turnaround 

Bowman said Sky’s turnaround in position over the past two years had been “dramatic” and while there were still challenges to be navigated, Sky had a strong balance sheet and a strong $139m cash balance.

He said the 2022 financial period saw the return to revenue growth – it was also the first increase the television network had seen in six years. 

“It is important to also recognise that we benefited from a price increase on Neon, taken in the previous fiscal year, and late in the fiscal year we raised the price of Sky’s sport package,” he said.

Chief executive Sophie Moloney touched on Sky’s “successful” launch of Sky Broadband, which she called a “proof point” of Sky’s ability to deliver a new service.

Securing the renewal of the National Rugby League (NRL) competition and the NRL Women's Premiership until the end of 2027 was a “vitally important win” due to its growing popularity and full winter schedule.

Sky’s immediate priority was meeting the needs of its Vodafone TV customers, given the “looming” closure of the service, Moloney said.

A long time coming

Sky plans to offer its new Sky Box to its “most loyal” Sky customers first, but Moloney assured shareholders that it wasn’t a forced migration and those who didn’t want a new box could keep their current one.

“And yes, I’m conscious that the new Sky Box has been a long time coming,” she said.

“Some of the reasons for the delays are outside of our control, including covid, chipset shortages and global supply chain issues.”

Rigorous final testing and fine-tuning were being done and customer trials would be under way hopefully before the end of the year.

“To give ourselves – and our customers – a little more breathing room, we have agreed with our partner, Vodafone, that the platform will stay open across the summer break,” Moloney said.

“The launch of Sky’s new box will also play a part in reducing our costs base, with the box roll-out supporting a lower cost of acquisition.”

This would enable self-install, result in lower repair and maintenance costs, and drive lower capital intensity, she said.

Sky also announced today that it was changing its dividend payout range from 50-80% of its free cash flow – which excludes one-off items – to 60-90%. 

The dividend guidance for the 2023 financial year has now increased to between $18 million and $24m. 

Sky Network Television shares jumped 1.4% to $2.25 after the meeting, up from $2.22 yesterday.