Sky Network Television (SKT) Trading Update summary

Acquisition overview

• Agreement reached to acquire 100% of Discovery NZ Limited for $1 on a cash-free, debt-free basis, with completion expected on 1 August 2025.

• Discovery NZ includes the ThreeNow BVOD platform, free-to-air channel Three, and other linear and FAST channels.

• Transaction includes a significant ongoing content supply agreement with Warner Bros. Discovery.

• Discovery NZ's balance sheet will be cleared of long-term obligations and include key assets like ThreeNow and content rights.

• Commerce Commission was notified and will not further consider the acquisition.

Strategic rationale and growth acceleration

• Acquisition accelerates growth strategy, delivering immediate scale in advertising and digital segments.

• Expands reach to younger, more diverse audiences, unlocking cross-platform marketing opportunities.

• Adds established brands and a high-growth BVOD platform, strengthening digital capabilities.

• Increases return on content investment by leveraging a broader portfolio.

• Creates significant audience presence, aligning with ambitions to be a leading media company in New Zealand.

Financial impact and deal structure

• Expected to diversify revenue and uplift annual revenue by $95m, with about 25% from digital sources.

• Underlying free cash flow positive in year one; sustainable EBITDA uplift of at least $10m expected from FY28.

• Material cost synergies anticipated, mainly in content and broadcasting infrastructure.

• Net integration costs estimated at $6.5m, with transitional services provided by WBD for 12 months post-completion.

• Transaction fees estimated at $3.0m, with acquisition accounting subject to a purchase price allocation process within 12 months.