Advanced Television

SES, Eutelsat suffer from Sky over-reaction

January 27, 2017

By Chris Forrester

It doesn’t take much for investors to hear from Sky that it is launching a non-satellite service next year to have them selling their satellite shares. SES’s share price tumbled 5.7 per cent, and Eutelsat (which beams Sky Italia channels to subscribers) fell back 2.3 per cent on the news.

However, had investors listened to Stephen van Rooyen (Sky CEO) carefully, they would have heard him admit that Sky has a large digital satellite base who they do not see moving.  Indeed, it is widely held that in one of the upcoming centuries, homes might well enjoy fibre to the premises, but until that day happens, then satellite is the very best there is at delivering ‘one-to-many’ TV services.

Of course, a cable or DSL service might well pick up multi-occupancy dwellings in apartment blocks or residential premises where dishes are forbidden or discouraged and this is good for Sky (and Canal Plus, and any other satellite pay-TV operator). Sky suggested that some two million UK homes and another six million or so across Europe could benefit from their dish-less solution.

Indeed, one equity analyst at an investment bank summed up the position yesterday, saying: “We acknowledge that fibre is a long term threat to satellite infrastructure, but agree with Sky that it will take a long time until this plays out. SES has been saying pretty clear that it sees western European video as mature and low growth – we think this is all pretty consistent. Overall video growth is boosted by emerging markets.”

Moreover, SES (and Eutelsat) have long-term contracts in place with Sky, in some case until the mid-2020s. “Contracts are staggered as with movie studios i.e. they don’t drop all at one go, so even if you switched some channels off, you’d still be paying for other transponders, so you might as well keep broadcasting on them. But that would imply a reduced offer (less channels) to satellite homes … how realistic is this (they’d probably churn!)?,” says the bank.

Another bank comment (from Nataxis) echoes this theme: “We do agree that as fibre expands, more and more people will watch TV through a terrestrial solution as it has an advantage compared to satellite : it offers a “return path” which enables extra services (such as PPV, VOD, online voting…). On the other hand, even with current ambitious coverage plans by European telcos, there will still remain ~30/40% of Europe will not have access to terrestrial solutions with enough bandwidth to view TV. Hence, even as satellite platforms might lose subscribers to terrestrial solutions, they will REMAIN an important market for satellite well into the 2020s.”

However, this writer wishes that someone would also say “without buffering” when talking of cable or DSL delivery of programming.

The advice to clients from these banks, and others, was to ‘BUY’ SES (and Eutelsat) and take advantage of this price reduction.

Categories: Articles, Broadcast, DTH/Satellite, Services