Sky New Zealand today announced its acquisition of Discovery NZ for $1 from Discovery Network Asia Pacific, a subsidiary of Warner Bros Discovery (WBD).
Cash-free, debt-free transactions scheduled to close on August 1 include Discovery NZ’s key assets. This includes a portfolio of broadcast and gravel streaming platform Threenow, free aerial linear channels, and other linear and free ad support streaming television (fast) channels operating within New Zealand.
Sky expects the acquisition to bring about an annual revenue rise of around $95 million, with roughly 25% of which expected to come from digital sources. The company aims to integrate Threenow, the BVOD platform that recorded 12 quarters of audience growth. The move will increase the existing digital audience, bringing the total revenue share of TV ads to about 35%, and the total digital TV ad revenue to about 24%.
Sky CEO Sophie Moloney said the acquisition was a “persuasive opportunity” for Sky, who directly supported the company’s ambitions of New Zealand’s “most attractive and essential media company.”
“It scales us faster, accelerates growth and makes us more diverse in revenue streams, especially advertising and digital,” she said.
“We are getting our business in complementary businesses that are a strong strategic fit for Sky, in a supplementary way for shareholders.”
Moloney highlighted Threenow’s strategic value, highlighting “addling important missing components to Sky’s portfolio without burdening the critical brand and platform development costs associated with building your own BVOD services, as well as inherent revenue risks.”
“With the combined portfolio, Sky will significantly increase scale, diversity and mass reach, increase advertising opportunities and maximize return on content investments through an enhanced multi-platform approach.”
According to an announcement from NZX, Discovery NZ’s balance sheets clarify certain long-term obligations, including real estate leases and content commitments, upon completion of the transaction. This includes assets such as the Threenow platform and a portfolio of content rights, and is configured to allow for positive underlying free cash flow from the first year.
Michael Brooks, managing director of Warner Bros Discovery ANZ, said the acquisition was a great result for WBD and Sky.
“The ongoing challenges facing New Zealand’s media industry are well documented and for the past 12 months, the Discovery NZ team has been working to deliver new, more sustainable business models following a major restructuring in 2024,” he said.
“While this business is not commercially viable as an independent asset in WBD’s New Zealand portfolio, we believe that 3 and Threenow are worth bringing to Sky’s existing complementary assets.”
As part of the agreement, WBD will provide migration services and contribute to integration costs on commercial terms for 12 months after completion (Sky’s net integration costs are expected to be around $6.5 million). Juliet Peterson, vice president of networks, continues to lead Discovery NZ Business and reports directly to Moloney.
