Shares in Sky Network Television Ltd [ASX:SKT] have hit an 18-year low today, down 7.4%. The Auckland-based TV provider could be set to lose key broadcast rights.
What caused the record low drop?
Sky TV could be set to lose its biggest money-maker — rugby.
The broadcaster has been hit hard by online streaming rivals such as Netflix, Inc. [NASDAQ:NFLX], with subscriber numbers down. However, they still hold key rugby broadcasting rights, at least for now.
Amazon.com, Inc. [NASDAQ:AMZN] has signalled an interest in bidding for the domestic rugby rights in 2021. The news may not come as a surprise to many. Amazon is already making a documentary on the All Blacks for their ‘Prime’ service subscribers.
If Amazon is successful, it could be the final nail in the coffin for Sky TV. Though only time will tell.
What next for Sky TV?
There is no sugar-coating it; Sky TV is in trouble. Analyst data from Reuters shows that the stock was consistently a hold rating just two months ago. Now the majority have lowered the stock to an underperform or sell rating.
Sky TV will need to act fast if they want to secure the lucrative rights to the rugby. Formal bidding for the rights begin in April next year. That’s just eight months away. Hopefully for investors, Sky can come up with a solution by then.
While Sky faces an uncertain future, there are plenty of other exciting opportunities to invest on the ASX today. If you’re interested in discovering what could potentially be among the four best stocks on the ASX in 2017, click here.
Junior Analyst, Money Morning