Sky Gains NZD 95 Million Revenue Boost with Discovery NZ Acquisition

A Strategic Leap in New Zealand Media

Sky Network Television Limited has announced a landmark acquisition of Discovery NZ Limited from Warner Bros. Discovery for a nominal sum of $1, on a cash-free and debt-free basis. This move, expected to complete by 1 August 2025, marks a significant strategic expansion for Sky, instantly adding an estimated NZD 95 million in annual revenue and diversifying its income streams with approximately 25% coming from digital sources.

The acquisition includes Discovery NZ’s key assets, the broadcast-video-on-demand (BVOD) platform ThreeNow, the free-to-air linear channel Three, and a suite of other free ad-supported streaming television (FAST) channels. These assets bring a complementary audience and content portfolio that aligns closely with Sky’s ambition to become New Zealand’s most engaging and essential media company.

Unlocking Scale and Digital Growth

ThreeNow, in particular, represents a critical missing piece in Sky’s digital strategy. The platform has demonstrated consistent growth, recording its twelfth consecutive quarter of increasing viewership. By integrating ThreeNow, Sky gains immediate access to a younger, more diverse digital audience without the substantial costs and risks of developing a BVOD service from scratch.

Sky’s combined audience reach will expand to approximately 2.2 million linear and 1.2 million digital viewers weekly, significantly enhancing its advertising scale. This translates to an estimated 35% share of the linear television advertising market and around 24% of the digital television advertising market in New Zealand, positioning Sky as a dominant player across multiple platforms.

Financial Upside and Integration Pathway

Beyond the immediate revenue boost, Sky anticipates material cost synergies primarily in content acquisition and broadcasting infrastructure. These efficiencies, combined with a clean balance sheet for Discovery NZ; free of long-term property leases and content commitments; set the stage for positive underlying free cash flow from the first year post-acquisition and sustainable EBITDA growth of at least NZD 10 million by FY28.

The transition plan includes a 12-month transitional services agreement with Warner Bros. Discovery, ensuring operational continuity and a smooth integration process. Sky expects net integration costs of approximately NZD 6.5 million, partially offset by contributions from WBD. Leadership continuity is maintained with Juliet Peterson continuing to head Discovery NZ operations under Sky’s executive oversight.

Market Confidence and Regulatory Clearance

Sky remains confident in meeting its FY26 dividend target of 30 cents per share, signaling financial stability despite the acquisition. The Commerce Commission has been notified and has indicated no intention to intervene, reflecting a regulatory environment supportive of this consolidation in New Zealand’s media landscape.

While the nominal purchase price may raise eyebrows, the deal’s value lies in the strategic fit, audience scale, and digital growth potential it unlocks for Sky. The acquisition positions Sky to accelerate its growth trajectory, diversify revenue streams, and strengthen its competitive edge in a rapidly evolving media market.