It’s no wonder shares in New Zealand’s Sky Network Television fell to record lows on Monday and yesterday (sending a big tip that the ambitions of News Corp and Telstra to float part of the merged Foxtel/Fox Sports may end on tears) as it battles falling subscriber numbers, revenues and profits, all of which have forced the company to cut its dividend in half to protect cash flows. But it’s not all gloom and doom in Australasian media — Nine Entertainment shares hit a new all time intra day high yesterday of $2.36 on the ASX.

Sky TV’s share price is down more than 18% in the past five days, including 4.6% on Monday (and 38% in the past year) to a low of NZ$2.28. This is the lowest since it merged with Independent Newspapers in 2005 (both were then controlled by News Corp).

Sky TV, which is chaired by Peter Marcourt, the former News Corp chief operating officer lost 37,359 customers in the six months ending December 31. That was after it lost 34,000 subscribers in 2016-17 and saw its full year profits fall 21%. Its interim profits were up 12%, but it slashed the cost of some of its subscription packages by 50% to try and arrest the steady loss of subscribers to Netflix and rival NZ streamer LightBox. Last month, it cut its interim dividend to 7.5 cents per share, half the 15 cents it paid a year earlier.

Sky TV was valued at AU$836 million at yesterday’s record low close. It was NZ$2.01 billion when News Corp sold its 43.6% stake in March 2013 at $4.80 a share — around NZ$815 million. That NZ$1.135 plummet tells us how the subscription TV business has changed in Australasia and why any attempt to float part of Foxtel will fail unless News and Telstra accept a realistic price.

Sky TV is setting that price, and former News Corp stablemates Foxtel and Sky plc in the UK are following suit by starting talks over co-opting streaming services. The latest fall in share price came three days after Sky TV confirmed it had joined Foxtel and Sky plc in talking to Netflix and other video companies about a deal to offer streaming services. Sky plc is more advanced and will start offering a single bill arrangement with Netflix later in the year, while Foxtel is in the early days of talks.

This is the Murdoch empire throwing in the towel on trying to ignore streaming. It’s acknowledging Netflix’s dominance.

Peter Fray

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