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Sky buys Discovery NZ for $1
Sophie Moloney, Sky chief executive
Sky is buying Discovery NZ, owner of the struggling Three channel, from Warner Bros Discovery (WBD) for $1, on a cash-free, debt-free basis.
Discovery NZ owns and operates Three and broadcast video on demand (BVOD) streaming platform ThreeNow. Its NZ stable also includes a range of other linear and free ad-supported streaming television (FAST) channels.
Although ThreeNow has seen strong growth, Discovery NZ has been losing money. Last year it announced the closure of Newshub as part of a major restructure.
Sky says the move announced today will grow and diversify its revenue, and is forecasting it to result in EBITDA growth of at least $10m from FY28.
It will also boost its combined total linear television advertising revenue share in the New Zealand market to 35% and total digital television advertising revenue share to 24%.
Compelling opportunity
Sky chief executive Sophie Moloney says: “This is a compelling opportunity for Sky that directly supports our ambition to be Aotearoa New Zealand’s most engaging and essential media company. It positions us to scale faster, accelerates our growth and further diversifies our revenue streams, particularly in advertising and digital. We are acquiring a business with complementary operations that is a strong strategic fit for Sky, in an accretive way for our shareholders.
“In particular, acquiring the established and fast-growing ThreeNow BVOD platform adds an important missing component to Sky’s portfolio, without incurring the significant brand and platform development costs and inherent revenue risks associated with building a BVOD service ourselves.
“The combined portfolio will give Sky significantly increased scale, diversity and mass reach that will unlock more opportunities in advertising and maximise the return on our investments in content through a strengthened, multi-platform approach,” Moloney adds.
Michael Brooks, managing director Australia and New Zealand for WBD, says: “This is a fantastic outcome for both WBD and Sky. New Zealand’s media industry challenges are well documented. Over the past 12 months, the Discovery NZ team has worked to deliver a new, more sustainable business model following a significant restructure in 2024.
Three and ThreeNow bring value to Sky
Brooks adds: “While this business is not commercially viable as a standalone asset in WBD’s New Zealand portfolio, we see the value Three and ThreeNow can bring to Sky’s existing offering of complementary assets. The transaction includes a significant and ongoing content supply agreement for WBD’s premium content, for the mutual benefit of both parties.”
Moloney says: “Notwithstanding the ongoing challenges faced by the Discovery NZ business, Sky is uniquely placed to give effect to this opportunity to accelerate our growth strategy.
“On completion, Discovery NZ’s balance sheet will be clear of certain long-term obligations, including property leases and content commitments, and will include assets such as the ThreeNow platform, a portfolio of content rights acquired in the normal course of business and clear of content payables, and a normal level of other net working capital (subject to a customary post completion adjustment process). This transaction structure enables a pathway to achieving positive underlying free cash flow from year one.”
Juliet Peterson, vice president, head of networks, will continue to lead the Discovery NZ business, reporting to Moloney.
Moloney comments: “I am excited by the possibilities this transaction unlocks for our business, by delivering transformative scale in advertising and digital, and significantly advancing our revenue growth strategy. We look forward to welcoming the excellent and highly regarded Discovery NZ team to Sky, and to working together to deliver on the opportunities this transaction presents for our customers, partners and shareholders.”
Chief media & data officer Lauren Quaintance adds that Sky and Discovery NZ will continue to operate as separate, standalone businesses for at least three months before beginning a structured transition.
“Later in the year, we will start to share our plans for bringing the two businesses together, and we look forward to starting that when the time is right.”
