Sky TV beats local launch of HBO’s direct-to-consumer Max app with Warner Bros deal
Warner Bros Discovery (WBD) has struck a significant deal with Sky TV, marking its entry into the streaming video-on-demand (SVOD) landscape through Sky’s multi-platform offering. The partnership will see Max on Sky and Neon featuring a range of WBD’s classic franchises such as Friends, The Big Bang Theory, and Rick and Morty, along with content from brands like the DC universe, Warner Bros, Discovery, TLC, Animal Planet, Cartoon Network, and Harry Potter.
As part of the agreement, Sky’s Soho channel will be rebranded as HBO. Despite the new deal, Sky has assured customers that there will be no changes to pricing. In terms of audience impact, Sky stands to benefit from the collaboration.
Sky disclosed in an NZX filing that the agreement will lead to a one-off non-cash acceleration of programming amortization of $6-$7 million. Additionally, Sky will receive a cash payment of $4-$5 million from WBD for prepaid content upon the launch date of October 30, 2024. The payment from WBD to Sky is to compensate for content that was paid for but will not be aired due to the agreement ending earlier than planned.
Sky TV’s Chief Executive, Sophie Moloney, expressed that the partnership will bring financial benefits to investors, with improved commercial terms aligning with their strategic targets. Moloney highlighted that the agreement is expected to generate a free cash flow upside in the first half of FY25, with the full financial impacts to be realized at the half-year mark.
WBD ANZ General Manager, Michael Brooks, emphasized that the expanded partnership signifies their foray into the SVOD landscape through Sky’s multi-platform offering, completing their total video proposition. The collaboration with Warner Bros Discovery is a strategic move for Sky, securing improved commercial terms aligned with their goals.
The deal between Warner Bros Discovery and Sky echoes the trend of major content providers launching direct-to-consumer platforms, following the success of Disney+. With Disney pulling its content from traditional providers like Sky to focus on its streaming service, the dynamics of content distribution are evolving rapidly.
In the evolving media landscape, Sky TV serves as an aggregator, offering a consolidated platform for content delivery to audiences. However, challenges loom as Sky negotiates with New Zealand Rugby in contract renewal talks, with the potential launch of NZR+ streaming service impacting live game broadcasts.
The non-exclusivity aspect of partnerships could influence the rights fees paid by Sky to content providers like NZR. Despite facing challenges, Sky TV’s shares have shown resilience in the market, with a slight increase year-to-date. The company’s strategic moves and focus on enhancing shareholder value are positioning it for future growth and success in the competitive media industry.
