|Shares Out. (in M):||897||P/E||NM||NM|
|Market Cap (in $M):||5,139||P/FCF||NM||NM|
|Net Debt (in $M):||607||EBIT||80||150|
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I believe Sky Deutschland is poised to significantly increase German/Austrian ‘Premium’ Pay-TV penetration with its exclusive sports and movie content and extensive HD offerings. With financing in place and Bundesliga broadcast rights secured, SKYD GR should experience accelerating subscriber momentum and a significant improvement in top-line and EBITDA growth. Ultimately, I believe FOXA will acquire the remaining stake in SKYD GR over the near/medium-term.
‘Low Pay-TV penetration’ is somewhat of a misnomer as the majority of German TV households pay a subscription fee for free-to-air content (either 100 digital or 35 analog channels) – running ~€16/month
Bundesliga: What happened with Premiere (now SKYD) in 2006?
Sky Deutschland is the leading Pay-TV operator in Germany and Austria with ~3.4mm subscribers. SKYD has agreements with most major movie studios and a number of sports events, including exclusive Bundesliga football rights thru 2016/2017 and the Champions League. Sky Deutschland is 54.5% owned by 21st Century Fox (FOXA).
With full control of the Bundesliga rights – SKYD now has some scope to increase prices, reduce discounts and potentially adjust packages to include/upsell Sky Atlantic (Sky Movies) and HD channels
With the exclusive Bundesliga rights (starting in 2013), SKYD expects to see accelerating net adds (subscribers growth) from 2013 onwards. Official guidance is as follows:
Consensus initially assumed a moderation or even tailing off in net adds next year – but I believe SKYD should gain subscribers for the following reasons:
SKYD has been active in using promotions/discounts on its subscriptions to drive subscriber growth and try out its products. However, Bundesliga exclusivity should translate in some pricing power – leading to fewer discounts. Ultimately, SKYD may focus its promotional activity on giving away Sky+HD boxes (hardware discounts) vs. discounting subscriptions (software discounts) – leading to higher profitability over the longer-term.
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