Despite a revival in the markets, satellite broadcaster Sky is missing out on the more optimistic mood.
Its shares have fallen 10p to £10.93 after a couple of negative notes. Haitong Research has issued a sell note on worries about competition, not least in bidding for football rights. Analyst John Karidis said:
We start coverage of Sky with a sell rating and an 875p fair value estimate. Consensus, we understand, expects earnings per share to change -4% in 2017 (mainly because TV rights costs on English Premier League football will rise 83%) and +20% in 2018.
These estimates exclude Sky entering UK mobile in 2016. We think the current share price and consensus forecasts beyond 2017 are too high. BT and Ofcom look likely to increase pressure on Sky’s pricing power and costs in the UK (which will still generate around 76% of group EBITDA in 2018).
Also Vodafone has joined those lobbying Ofcom to, in effect, restrain Sky’s progress in the UK, and may also bid against Sky for top football rights in Germany this year in part to gain some leverage over Sky across Europe.
Meanwhile in a note on the media sector Investec has put a reduce recommendation on Sky with a £10.30 target.
