SKY Network Television Limited (SKT.NZ) Earnings Call Transcript & Summary

[Foreign Language] Good morning, ladies and gentlemen. My name is Kirstin Jones, and I'm Sky's Company Secretary. I will shortly hand you over to the Chairman, Philip Bowman, but first, I will take this opportunity to outline a few procedural matters. As well as our live audience here in Auckland, we are joined today by shareholders and guests attending online who can watch the live webcast and see the presentation. In addition, shareholders and proxies attending online have the ability to ask questions and to submit votes. I'll now take a moment to outline the process for doing this. Online questions can be submitted at any time by selecting the Q&A icon to the right of your screen. Type your question into the field provided and press send to submit your question. You can also use this method to ask for help and a member of the Computershare team will respond to you directly through the chat function. Whilst you can submit questions from now on, we will not address them until the relevant times in the meeting. Whether you're attending the meeting virtually or in the room, we do ask you to ensure your questions are relevant to the meeting, and we encourage you to be succinct and specific. Please note, in the interest of time, if we receive multiple questions on the same topic, these may be grouped together. We will endeavor to answer all online questions during the meeting. However, if we run out of time, we will answer any outstanding questions directly via e-mail after the meeting. Turning now to voting. This will be conducted by way of a poll on all 5 resolutions. Those in the room who are eligible to vote should have received a registration card when you entered. If you did not receive your card, please visit the registration desk now, and a member of the Computershare team will be able to assist you. For those online, if you are eligible, you will be able to cast your vote by selecting the Vote tab to the right of your screen. To ensure those online have enough time, we will be shortly opening the voting. Once open, you can select your voting direction on each resolution from the options shown on screen. You will know that your vote has been cast when the tick appears. Lastly, for those in the room, if there is an emergency and we need to evacuate the building, please follow the instructions of the Maritime room staff. They will direct you through the doors from which you entered. If you entered via the elevator or need assistance, please make yourself known to a member of staff. We will assemble outside. Thank you, everyone. With the housekeeping now complete, I will hand the meeting over to our Chairman, Philip Bowman. Thank you, Philip.

Kirstin, thank you very much. As Kirstin mentioned, I'm Philip Bowman, and I'm the Chairman of Sky Network Television Limited. It's my pleasure to welcome you all to Sky's 2025 Annual Shareholder Meeting, and it's nice to see such a good physical turnout. To all our shareholders, proxy holders and guests joining today's meeting, thank you for making the time to be with us and whether you are in the room here in Auckland or attending online. As we have a quorum present, I'm pleased to declare our Annual Shareholders' Meeting open, and I'm also pleased to officially open online voting. I'm joined today by our Chief Executive, Sophie Moloney; Sky's -- our Interim Chief Financial Officer, Andrew Hirst; and Sky's Company Secretary, Kirstin Jones, who you've already met. We also have my fellow Board members. To my immediate right, Keith Smith, Sky's Deputy Chair and Chair of the Audit and Risk Committee; Dame Joan Withers; Mark Buckman, who chairs Sky's People and Performance Committee; Belinda Rowe; and at the extreme right, Mike Darcey. Members of Sky's leadership team are also in attendance today. And I also welcome representatives from our auditors, PricewaterhouseCoopers, and our corporate solicitors, Chapman Trip. Turning to the format of today's meeting, I will comment on the 2025 fiscal year as well as our plans for the current year. I'll then invite Sophie to provide more detail on the significant progress the management team made in fiscal 2025, including a summary of our financial performance and the priorities for the coming period. We'll then move to the formal business of the meeting. And finally, I'll open the floor here and virtually for questions of a general nature from you, our shareholders. And Sophie and I look forward to engage in a good conversation with you. Following the conclusion of the meeting, there will be an opportunity for those in the room to continue discussions over morning tea with the directors and members of the leadership team and also to experience some of our products firsthand. As Sky's Chairman, it's my pleasure to address you at our 2025 Annual Meeting. The past year has been another challenging one for the New Zealand economy and particularly for consumers. Most forecasts of a recovery made at this time last year proved to be optimistic. Instead, we've seen discretionary spend continue to be squeezed by inflation running ahead of income growth. Consumer-facing businesses such as retailers faced weaker demand, and Sky was no exception. Recent forecasts now suggest an economic recovery in 2026 and hopefully these will prove more accurate than those forecasts last year. At the same time, the local media landscape continued to evolve at an unprecedented rate, with both cyclical and structural shifts redefining the competitive landscape. Key impacts included the continued decline in linear TV advertising revenues, industry consolidation, and an increased focus by some global streaming platforms on the local New Zealand market. For Sky and our customers, the challenging year was compounded by the complexity of managing the migration from a prematurely end-of-life satellite under extremely tight timeframes. Against this backdrop, Sky delivered a solid set of results reflecting the clarity of our strategy, the resilience of our business model, and the disciplined execution by our team. And as we reported in August, management delivered results within revised market guidance ranges for the FY '25 year. Adjusted revenue was at the lower end of guidance whilst adjusted EBITDA was at the mid-point of guidance, and cash generation was strong. These results enabled the Board to declare an increased fully imputed final dividend of $0.135 per share, lifting the full year dividend by nearly 16% on the previous year. At last year's meeting, I highlighted the 2 key priorities for FY '25: Firstly, satellite migration. This was completed successfully despite very significant operational complexity but at the cost of some disruption for a limited number of our customers; second, renewal of New Zealand Rugby Rights. Negotiations concluded in August and subject to shareholder approval today, Sky has secured a further 5-year agreement on improved commercial terms. This outcome ensures that our customers will enjoy an expanded suite of content including every big rugby moment for the next 5 years. At the same time, the agreement allows New Zealand Rugby, with our support, to pursue supplemental free-to-air arrangements for provincial rugby. The new agreement with NZ Rugby, along with other rights secured, including those for the Olympics, New Zealand Cricket and Formula 1, cements our unrivaled coverage of sport that New Zealanders care about. These achievements demonstrate the ability to execute successfully under pressure, and they've strengthened the Board's confidence in management's capability to deliver on future opportunities that may emerge in the sector. One such opportunity this year was the acquisition of Discovery New Zealand, for a nominal consideration and on a debt-free basis. This transaction aligns with our strategy to grow advertising and digital revenues and strengthen Sky's position in the local media ecosystem. Sophie and I have received a significant amount of positive investor feedback since the transaction was announced. Put simply, the work undertaken to strengthen Sky's commercial position over recent years helped to create the conditions to secure this strategically important and carefully structured deal. The integration of Discovery New Zealand into our new Sky business division and the delivery of significant cost synergies and potential revenue synergies is the key focus for management in FY '26 and will be a continuing focus in later years. Over the financial year, Sky's share price appreciated by 27%, which combined with fully imputed dividends paid of $0.205 per share, delivered total shareholder returns of 36% for FY '25, tangible evidence of value creation and our commitment to rewarding shareholders. Having confirmed dividend guidance for FY '26 of at least $0.30 per share, management is on course to deliver against this target first communicated back in August 2023. At the current share price of $3.60, a $0.30 payout this year represents an impressive 8.3% cash yield and will deliver a further increase of 36% in our annual dividend. Importantly, one paid out of free cash flow and not out of debt, providing a clear illustration of a strength of Sky's cash generation and your Board's confidence in its sustainability. Following the Discovery New Zealand acquisition, the Board has paused further capital management actions in the short term, but will continue to review opportunities as synergies are delivered. This has been a demanding year for your Board, with significant additional workload arising from satellite migration, the rugby negotiations and the Discovery New Zealand acquisition. As with many New Zealand listed companies, our Audit and Risk Committee, supported by the management team, also undertook considerable additional work on Sky's climate-related disclosures. As a low-carbon intensity business, we believe that the current cost benefit and liability exposure of the present disclosure regime is disproportionate. We welcome the pragmatic decision from the government to amend the CRD regime in 2026. I would like to take this opportunity to acknowledge the dedication and professionalism of my fellow directors. Three of us on the Board, me included, are standing for reelection today, and we look forward to addressing you individually. An internal board effectiveness review confirmed that the Board continues to operate very effectively, and we review the composition of the Board every year to assess whether the mix of skills, competencies and experiences remains appropriate. The impact of the acquisition of Discovery NZ will be a new factor for consideration in FY '26. I'd also like to thank Sophie, her leadership team and the wider Sky team for their hard work and great resilience in navigating a complex year. These efforts have delivered positive outcomes for customers, partners and for our shareholders. And finally, thank you to you, our shareholders, for your continued trust and support. In this context, it is good to be able to report a very positive total shareholder return for FY '25. FY '26 will be an exciting year as we integrate Discovery New Zealand and continue to lay the foundations for accelerating our growth across the broader business from 2027. Your Board and management remain focused on delivering great value for customers and for shareholders alike. Thank you for your attention. And as I said earlier, Sophie and I look forward to your questions and engaging with you later in the meeting. Sophie, over to you. [Presentation]

Thank you, Philip. [Foreign Language]. Good morning, everyone. It is my privilege to address you again as your Chief Executive and Sky's 35th anniversary year. When I reflect on Sky's journey since 1990, from the early days of satellite broadcasting to the dynamic, multi-platform media company we are today, I'm reminded of how deeply woven Sky is into the fabric of Kiwi Life. And it feels especially fitting that in our 35th year, we have welcomed another iconic New Zealand media company into the Sky Group, with TV3 also sharing a proud 35-year legacy in this country. I'll touch more on that acquisition shortly. As Philip referenced, it certainly has been another busy financial year for your company with additional demands from significant projects and the challenges of navigating a tough operating environment. In this context, we are particularly pleased to have delivered a solid set of FY '25 financial results, with all metrics on an adjusted basis within the updated guidance ranges provided at the half year. While the customer experience impacts of the satellite migration project and the economic strain on household wallets meant revenue came under pressure, our disciplined cost control continued, with the results demonstrating our ability to swiftly adapt to optimize business performance. Our strategy continues to be guided by our ambition to be Aotearoa New Zealand's most engaging and essential media company and, of course, by our purpose to share stories, to share possibilities, to share joy. We have 5 strategic pathways to achieve that ambition. Now in the interest of time today, I refer you to our 2025 annual report, where we set out the achievements of each pathway in more detail, with a brief capture in my address today of the ongoing priorities in FY '26. And underpinning everything we do is our enduring commitment to be a responsible and sustainably profitable, Aotearoa New Zealand-focused business. To demonstrate our ability to achieve this enduring commitment, in August 2023, we set ourselves some ambitious 3-year targets. And it's gratifying to report that we've made good progress in the second year of delivery during FY '25. Pleasingly, the CapEx intensity and employee engagement results are already aligned with our FY '26 ambitions. While the revenue and EBITDA margin targets remain challenging, disciplined spending means we continue to be on track with the critical revenue-linked programming cost target. Importantly, while customer NPS, Net Promoter Score, is not quite where we want it to be yet, we have seen continued improvement following the successful migration to the new satellite in April of this year. And most notably for the audience in this room and online, we remain firmly on track to deliver our dividend target of $0.30 per share, a strong signal of our resilience and focus on execution. Speaking of resilience and our strategic pathway of making Sky a great place to work, as measured by the engagement of our people, I am delighted at the strides we've been making in this space to help our crew be their most productive selves at work. We understand that empowering our people leaders is also critical to achieving this pathway. You can be assured that we have real bench strength in our senior leadership, which is giving me and my executive team confidence about our delivery into the future. In terms of our strategic pathway of meeting customers where they are, delivery by satellite and via digital products remains key, as does the FY '26 priority of supercharging the new Sky experience. Now when I addressed you last year, migrating to a new satellite was our number one priority with close to 450,000 of our customers connecting to Sky's content via satellite at the financial year-end. As Philip shared, this was an incredibly complex project, undertaken in a highly compressed time frame, and it touched almost every part of our business. While it was not without its challenges, I remain incredibly proud of how our Sky crew pulled together to deliver for our customers and our business. As we signaled from the start, we expected the project to be largely cash neutral by FY '26, and this is still the case. We are now operating from the KT6 satellite, delivered by our partner, Optus. KT6 has a dedicated New Zealand footprint, with a superior signal for most customers compared to our prior satellite. And with Optus anticipating further delays of the completion and launch of the Optus 11 spacecraft, it is of great comfort to have KT6 as our primary satellite, with security of supply until the end of our current contracted period in 2031. Now while satellite delivery will remain an important component of our distribution strategy for some time to come, increasingly, our customers' experience of Sky is a digital one. At the full year, this included 37%, close to 170,000 Sky Box customers who are already enjoying the significantly enhanced digital experience of our new Sky Box or the Sky Pod. For those on the new Sky Box, this includes the benefit of IP switchover capability, and starting with today's Ashes test, the new Sky Box and Pod will offer 4K ultra high definition for certain sporting events. Over half of all Skybox customers are also using our popular Sky Go companion app to enjoy their Sky content while on the move. Adding to this significant digital audience, we serve just over 400,000 recurring customers on Sky Sport Now and Neon, with many more subscribing for these services at other times throughout the year. Our expansion in digital also includes the fast-growing digital advertising space, where we now offer high-value digital ad replacement on Sky Sport Now. As expected, this initiative has been a hit with advertisers, which, importantly, has not impacted the viewing experience of our customers as we simply swap out existing ad spots with targeted digital ones. This initiative builds on our existing digital advertising revenue streams from Neon and has now expanded to Sky Go. Accelerating advertising and the associated revenue is a strategic priority for Sky that created the opportunity for the acquisition of Discovery New Zealand. As Philip mentioned, the acquisition is a strong strategic fit that propels our growth strategy in a way that would have been difficult to achieve organically. This includes access to the fast-growing ThreeNow digital platform, which expands our reach to a younger, more diverse audience that is highly attractive both to content partners and advertisers. As shared at the time, you don't get to acquire a business for $1 if it is profitable, and the combined teams are working hard to deliver on the complex technology integration program, while also remaining clear-eyed on delivering cost synergies and moving to capture the revenue growth opportunities ahead of us, particularly from FY '27 onwards. In the more immediate term, our freshly renamed Sky Business team is now in market with a unified sales proposition and we look forward to sharing the outlook for the combined business at the half year with more on that process to follow shortly. As a further compelling proof point of the merits of the acquisition, our recent announcement that Sky has secured the exclusive rights to the Olympics through to Brisbane in 2032 was made possible due to the inclusion of Three and ThreeNow in the economic case backing this bid. Overall, it exemplifies how our significantly boosted free-to-air offering means we can meet many more New Zealanders than ever before across more platforms and with more choice. Here's a taste of that offering for you. [Presentation]

As referenced by Philip, in terms of our content as a strategic pathway, securing the Olympics only serves to further strengthen our unrivaled sports bundle, which remains a vital asset of our shareholders. And on the entertainment side, we are reinvigorating our strategy to deliver on the mix of entertainment programming that Kiwis enjoy from our broad range of studio partners. Much like sport content, our approach in this space is grounded in data and a deep understanding of what resonates. For instance, in FY '25, we know the standout hit for our customers was Paramount's Yellowstone. We're building on those insights to shape a strategy that curates the best entertainment content for New Zealanders. Continuing to produce and showcase premium local content is a key part of this. We recently celebrated the launch of Sky Originals and BBC Scotland's psychological thriller, The Ridge, and we continue to support stories that feel uniquely Kiwi. As you've just seen, the acquisition of Three has also enhanced our local content proposition with loved shows like 7 days, David Lomas Investigates and Married at First Sight now part of our customer offering. Our deepening of content engagement as a priority is also about creating content that engages fans and sparks conversation beyond the final whistle, including through initiatives like League Lounge with Shaun Johnson, and Forever Auckland FC. Turning now to the performance of our business in the initial months of this financial year. As we signaled at our full year results in August, economic conditions were expected to remain challenged, at least through the first half of FY '26. So far, this is largely playing out as we anticipated, with continued pressure on revenues and added pressure on Neon subscriptions. Notwithstanding this pressure, there is no change to Sky's FY '26 guidance provided in August on a stand-alone basis. While trading conditions for Sky Free have been softer at the revenue level than expected in the initial stand-alone period, lower-than-expected costs have somewhat offset the impact. Importantly, audiences have remained stable, and we're expecting positive signs in the 2026 calendar year as advertising brands and agencies see the benefits and new opportunities created by our unique combined proposition. Our expectation of delivering $3 million to $5 million of synergy benefits across the group in FY '26 is unchanged, as is our expectation that Sky Free will contribute positive free cash flow in its first year. Looking further ahead, we are confident the acquisition will achieve at least $10 million of incremental EBITDA for the consolidated group by the end of FY '28. As is usual, following an acquisition, we are working through a purchase price allocation process to establish the fair value of assets acquired such as content, brands and the platforms. We expect this process will be completed by the time of our interim results, along with an intention to provide updated guidance on a group basis at that time. Overall, at a Sky Group level, we're making good progress on each of the FY '26 priorities that contribute to the financial outcomes we are targeting. As shared at the start of the financial year, our EBITDA guidance includes provision for some reinvestment in people, marketing and customer experience after a challenging FY '25. This reinvestment will lay the groundwork for accelerating our growth from FY '27 onwards. In conclusion, I want to express my gratitude to Philip, and to our dedicated hard-working Board. Built on the work of preceding years, your guidance, challenge and unwavering support have been instrumental throughout what has been an intense and transformative year. This has been marked by major initiatives, including the satellite migration, securing the rugby rights and the acquisition of Discovery New Zealand. The depth of experience you bring is an asset to me and my entire management team as well as to all of our shareholders. Thank you. In addition to acknowledging the dedication and commitment of the wider Sky crew, I also want to acknowledge the contribution of my executive team including the fresh perspectives brought by our newest members, Kym Niblock, Juliet Peterson and Nikki Goodman. And as we look forward to welcoming our new Chief Financial Officer, David Mackrell, in January, I'd like to take this opportunity to offer a special thank you to Andrew Hirst. Andrew, your care and expertise has made a significant impact for which we and I personally are very grateful. And to all of our shareholders, all of you in the room and those online, thank you for your continued trust and support. You can be assured that we are firmly focused on our strategic pathways and FY '26 priorities to ensure we can deliver on our results and on that all-important 2023 target to double the dividend to $0.30 per share in this FY '26. Thank you.

Sophie, thank you very much for your address. Ladies and gentlemen, we now move to the formal business of the meeting. There are 4 ordinary resolutions and one special resolution for shareholders to consider. The ordinary resolutions relate to authorizing the Board to set the auditor's remuneration and the reelections of myself, Dame Joan Withers and Mark Buckman as directors. The special resolution relates to the New Zealand Rugby Rights Transaction. These resolutions are all set out in the Notice of Meeting, and you will also find them in the voting section of the online platform. There will be an opportunity to ask questions on each of the resolutions. But a reminder that only shareholders and proxy holders are able to ask questions. Kirstin has already outlined the process for submitting questions online. And for those in the room, I would ask that you raise your hand and wait for one of our team to bring you a microphone, and please state your name and whether you are a shareholder or a proxy holder. We've been accepting online votes throughout this meeting. And for those in the room, we ask that you vote by marking the card issued by Computershare. If you need a pen, please raise your hand and the Computershare team will provide one for you. Once the discussion on the final item of business has concluded, members of the Computershare team will collect voting cards in the room. And for those online, I will give you notice shortly before the voting will close. So moving to the first resolution to be considered by this meeting relating to auditor remuneration. I now move as an ordinary resolution that the Board be authorized to fix the auditors' fees and expenses for the ensuing year. Do we have any questions on this resolution? Kirstin, have there been any questions received online.

There are no questions for this resolution, Philip.

Thank you, Kirstin. With no questions, I'd now ask you to cast your vote on resolution 1. [Voting]

The second resolution refers to my own reelection, and I'll, therefore, invite our Deputy Chair, Keith Smith, to take the chair for this part of the meeting. Thank you, Keith.

Thank you, Philip, and good morning, fellow shareholders. As Philip mentioned, resolution 2 relates to the reelection of Philip Bowman as a Director. Philip's CV is well covered in the annual report. But in summary, he was first appointed on the 1st of September 2019 and was last reelected by shareholders on the 2nd of November 2022. He serves as an Independent Director and also as Chair of the Board, Chair of the Content Rights Committee and as a member of the Audit and Risk Committee. Philip retires in accordance with NZX Listing Rule 2.7.1 and being eligible offers himself for reelection. The Board has determined that Philip is an Independent Director and unanimously supports his reelection. I would now like to invite Philip to address the meeting.

Thank you, Keith, very much. Fellow shareholders, it has been quite a 3-year period since I last stood before you at the Annual Shareholder Meeting to seek the reelection to the Sky Board. The media sector in New Zealand has changed at unprecedented speed. Sky has gained share of advertising revenues despite a prolonged economic downturn and the accelerating transition to digital media. A premature and complex satellite transition has been delivered successfully. And for long renegotiations of the New Zealand Rugby Rights saw Sky retained as the home of Rugby in New Zealand. And most recently, we completed the acquisition of Discovery New Zealand. It has been a demanding and unpredictable environment, in which the Boards and management of every business have had to make many difficult decisions. Our international career spans a wide range of sectors in management, leadership and governance roles, each appointment bringing its own opportunities, its challenges and learnings along the way. Most roles were turnarounds where good businesses have got into difficulties for a variety of reasons. I still travel extensively, and I bring a global perspective to Sky and Board discussions. I've been privileged to lead several global corporations as Chief Executive, including through periods of significant disruption and change. I currently serve on 2 other listed company boards: Ferrovial SE, a global infrastructure and construction business, which is now based in Amsterdam; and KMD Brands, which is based in Christchurch, New Zealand. As was true in 2022, we've made and continue to make good progress. However, there remains much more to be done, in particular, successfully integrating the Discovery New Zealand business. And I would welcome the opportunity to continue to serve as your representative to build on that progress. Our investors are a broad church, many of whom I've had the opportunity to engage with over the past 3 years. Risk appetites range from aggressive to very conservative. Many have differing views on strategy, not to mention on dividend and capital management policy. Bottom line, I know from past experience that I can never keep all of you happy all of the time. What I can promise is that I listen to disparate views with an open mind and we'll continue to do that. I ended my reelection address in 2022 by saying that the next stage of transition will not be easy, that we won't get everything right, but be in no doubt that I'm committed to do my utmost with my Board colleagues to generate value for you, our shareholders. We have delivered on this promise with total shareholder returns of 84% over this period, including an effective 59% increase in the share price and $0.56 per share return by way of dividends with the recent and future dividend payouts benefiting to some extent from the repurchase of 5.4% of the company's shares. I'm pleased to have the unanimous support of my Board colleagues for reelection, and I would ask you to endorse my reelection to the Board. Thank you. Keith?

Thank you, Philip. I'd now move as an ordinary resolution that Philip Bowman, who retires as the -- at the annual meeting and is eligible for reelection, be reelected as a Director of the company.

Now I'll start with the floor. Do we have any questions on this resolution? Over here, Coralie.

Coralie van Camp. I would have liked to have dealt with the Rugby resolution before the Director resolution. My question to Mr. Bowman is, naturally, you're the one that's organized the Chief Organizer of the second rugby deal. The first rugby deal left me with only 271 shares, which means that the dividend and the share price are negligible. I can't agree to endorse you when I'm not happy about what I see in the last resolution, which I'll talk more about. So I have to vote against you.

Thank you, Coralie. That's noted. Do we have any more questions from the floor? Kirstin, do we have any questions received online?

Yes, we do, Keith. We have a question from Stephen Mayne. How old is Philip Bowman and is he intending to serve a full 3-year term as Chair? Also, why does his CV in the Notice of Meeting exclude the fact that he was a very famous Finance Director of Coles Myer at 1995, who stepped up on governance issues in a spectacular way that is still talked about across the ditch in Australia?

I don't think age is allowed to be said these days, but I'll let Philip choose how he answers.

Well, I think anyone can look up my age and who's who, but I was born on the 14th of December 1952. So I'm currently 72 years old. Second question is whether I intend to serve my full term as Chairman. No one knows what the future brings, but certainly, my present intention with the support of the Board would be to do so. In terms of Coles Meyer, we're talking a long time ago. That was 1995, 1996. It was covered in the media extensively, and I don't see any reason why people need to be reminded of that here in 2025. But thank you for the question, Stephen.

Kirstin? No further questions. Thank you.

Thank you, ladies and gentlemen. I would now like to ask you to cast your vote on resolution 2. And whilst you're doing that, I will hand the chair back to Philip. Thank you.

Keith, thank you very much. Resolution 3 relates to the reelection of Dame Joan Withers as a Director. Dame Joan was first appointed on the 17th of September 2019 and was last reelected by shareholders on the 2nd of November 2022. She serves as an Independent Director and also as a member of the Audit and Risk Committee and the People and Performance Committee. Dame Joan retires in accordance with NZX Listing Rule 2.7.1 and being eligible, offers herself for reelection. The Board has determined that Dame Joan is an Independent Director and unanimously supports her reelection. I'd now like to invite Dame Joan to address the meeting. Joan, please.

Thank you, Chairman, and good morning, everyone, and thank you very much for the opportunity to speak to you in support of my reelection to the Sky Board. I'm going to reflect back a little further than Philip, and I joined the Board 5 years ago at a very challenging time in Sky's history. And it has been a privilege to serve as part of a team, which has successfully moved the business from where we were back then, and that was moving through the massive disruption that was COVID. We were ridden with fundamental balance sheet challenges. We were incumbent in an industry that was facing existential threats. And we had, at that stage, an ambitious well-funded competitor, creating additional financial pressure for us in negotiating critically important sports rights contracts. A lot has changed in that time, but this is no time for hubris. We have seen off that local competition. The share price, as the Chairman has described, is in the ascendancy, and we are delivering dividends, which should keep shareholders happy. We have the rugby and other critical contracts, rights contracts under our belt, and we've now made a significant acquisition that capitalizes on the core competencies that Sky has and enables us to exploit our newly found but highly lucrative capability in selling advertising to complement our subscription revenues. And along the way, as the Chairman has described, we've had to effect a satellite transition earlier than we anticipated. It hasn't been an easy time. The New Zealand economy continues to be very challenging and businesses that are reliant on consumers' discretionary income are still, as we hear every day, having a very rugged time of it. So leadership of the business in the last few years has been fraught. And I do take a moment to compliment Sophie and her team on their dogged determination to guide the business through the numerous mine fields that they have faced always with the best interest of our shareholders, our customers and our team sharply in focus. I also pay tribute to the leadership and guidance of our Chair, Philip Bowman. His massive experience in many sectors the commercial nous and heft that he has and he brings to the table and the exemplary manner in which he has provided counsel to the CEO has made a formidable difference. So what do I bring to the Board? I think I am one of the most experienced media practitioners in New Zealand. I've operated in television, radio, newspapers and digital media companies. I was formerly CEO of 2 of the largest media companies in New Zealand. I've served as the Chair of TVNZ, and I've also served on the Board of Fairfax Media in Australia. I hold an MBA degree, and I'm an experienced governor having also chaired Auckland Airport, Mercury and The Warehouse Group, and I've also served on a number of other Boards. Alongside The Warehouse, I currently sit on the Board of ANZ Bank in New Zealand and Origin Energy in Australia. I believe I have good judgment and the longer that I operate in the business environment, the more I understand how important that is. As is understanding that no one is infallible and that eliciting the collective wisdom around the table is critical. It remains the case in the corporate world where we now have data, AI, sophisticated analytics and sometimes external experts assisting us to make the best decisions, it still comes down to the ability of the Board to probe beyond the obvious to ensure that all the relevant facts are to hand and to rationally assess the pros and cons of proposal. Sometimes I'm the black hat around the Board table, as my colleagues know, and sometimes, I'm the raving fan of a new initiative. My personal belief is that no matter if the composition of the Board is textbook in terms of skills and experience, ultimately, it's whether the Board is able to interact productively and drive to the best decision or outcome that makes the difference and drives long-term shareholder value. I want to thank my fellow directors for their support of my reelection and thank you, our shareholders, for your consideration of the resolution. Thank you.

Thank you, Joan, very much. I now move as an ordinary resolution that Dame Joan Withers, who retires at the annual meeting and is eligible for reelection, be reelected as a Director of the company. Do we have any questions on this resolution in the room? Coralie?

I'll cut to the chase for the same reasons I voted against you Mr. Bowman, I vote against Dane Joan and Mark Buckman.

Thank you. Any other questions in the room? Kirstin, any questions online?

Yes, Philip. We have a question from the New Zealand Shareholders Association. To Dane Withers, the New Zealand Shareholders' Association strongly encourages directors to own some shares in the company they are governing. I see you appear to own no shares in Sky TV. Could I please ask why you have chosen not to be a shareholder in the company?

I suggest you check again. I do actually own shares.

Thank you, Joan. There are no further questions. I will now ask you to cast your vote on resolution 3. Resolution 4 relates to the reelection of Mark Buckman as a Director. Mark was first appointed on the 21st of March 2022 and was reelected by shareholders on the 2nd of November 2022. He serves as an Independent Director and also as Chair of the People and Performance Committee. Mark retires in accordance with NZX Listing Rule 2.7.1 and being eligible offers himself for reelection. The Board, again, has determined that Mark is an Independent Director and unanimously supports his reelection. I'd now like to invite Mark to address the meeting. Mark, please.

Thank you, Chairman. [Foreign Language]. Good morning, shareholders. It's been a real privilege to serve as an Independent Director of Sky over the last 3 years and to also chair the People and Performance Committee during a period of significant transformation and renewal. When I joined the Sky Board, we were in a period of reimagining its role in a rapidly changing media environment. And today, we're a very different company, a larger, more integrated broadcaster, one that is more agile, more customer-focused and far more confident about its place in the role of New Zealanders. Under Sophie's leadership, the team has revitalized the experience, the Sky Box and our apps, integrated broadband and our entertainment propositions, promoted our streaming platforms, Neon and Sky Sport Now and improved operational performance right across the business. And more recently, the acquisition of Discovery New Zealand has been a pivotal step in accelerating advertising and digital capabilities and the significant achievements have strengthened the company and positioned Sky for the future. As a Board, we've placed significant emphasis on culture, leadership and performance. And in particular, I'm very proud of the work that the People and Performance Committee has led to ensure that our remuneration and incentive frameworks are fair, transparent and aligned to long-term shareholder value creation. And one initiative that I personally championed was the inclusion of safety and well-being metrics into Sky's KPIs because how we perform is equally as important as what we deliver. I've also made it a priority to get to know our business and our customers, visiting with our field teams, spending time in our call centers, going out on field trips with technicians and spending time directly with customers. Those experiences, I believe, have given me invaluable insight into the passion and professionalism of our people and the trust that customers place in Sky each day. I bring to the Board more than 2 decades of international media and telecommunications experience, having held senior leadership roles as both Managing Director of Foxtel's Consumer and Retail business and as Managing Director of the Telstra Media Group. More recently, and to Dame Joan's point before about the need to continue to evolve, I've continued to post-graduate study in digital strategy, sustainability, cybersecurity and artificial intelligence. These are disciplines that are increasingly important and central to Sky's future and a strong governance in the digital world. I'm genuinely impressed with the progress that Sophie and the team have made and the unity of purpose that now defines Sky. And with your support, I hope to continue contributing that mix of experience, curiosity and commitment to help Sky remain a bold, modern, successful and trusted New Zealand company. [Foreign Language], and thank you for your continued confidence.

Mark, thank you very much. I now move as an ordinary resolution that Mark Buckman, who retires at the annual meeting and is eligible for reelection, be reelected as a Director of the company.

Do we have any questions on this resolution in the room. I don't see any. So Kirstin, have you received any questions online?

Yes, Philip. We have another question from the New Zealand Shareholders' Association, to Mark Buckman. The question to Dame Joan Withers about owning shares in Sky TV applies similarly to yourself. Could you please respond?

As with Dame Joan, I think you should recheck your records because you'll find that I am a shareholder.

Thank you, Mark. No further questions?

No further questions.

Thank you. Ladies and gentlemen, I would now ask you to cast your vote on resolution 4. Resolution 5 relates to New Zealand Rugby Rights Transaction. This resolution seeks approval for Sky to enter into a new 5-year broadcast partnership with New Zealand Rugby commencing in January 2026. Approval of Sky's entry into the New Zealand Rugby Rights Transaction today would secure the New Zealand media rights for an unparalleled portfolio of rugby from 2026 through to 2030. This is an exciting transaction for Sky, and the terms have been heavily negotiated and are attractive from Sky's perspective. Due to commercial sensitivities, the total consideration payable under the New Zealand Rugby Rights Transaction remains confidential. However, Sky can assure shareholders that it remains committed to its target of maintaining total programming costs to between 47% and 49% of revenue, which is reflected in Sky's forecast for FY '26 after taking account of the New Zealand Rugby Rights Transaction. Because of the value of the New Zealand Rugby Rights Transaction over the 5-year term of the agreement, it is considered a major transaction under both the NZX Listing Rules and the Companies Act. Accordingly, the New Zealand Rugby Rights Transaction is subject to approval as a special resolution of shareholders. This resolution requires the support of a majority of 75% or more of the votes cast by shareholders entitled to vote and voting on the resolution. Your Board unanimously supports the NZ Rugby Rights Transaction, and it recommends that shareholders vote in favor. I now move as a special resolution that the New Zealand Rugby Rights Transaction described in the explanatory notes to this notice of Annual Meeting is approved for all purposes, including under and for the purposes of NZX Listing Rule 5.1.1(b) and Section 129 of the Companies Act 1993.

Do we have any questions on the resolution in the room? Coralie?

So I see that the average market capitalization is $410 million and over half would be $205 million. But you don't actually -- because you're citing commercial sensitivity, it's a bit like how long is a piece of string over half is the price that you're paying for it. So I couldn't possibly vote for something that doesn't have a fixed figure on it. And I also feel that if you're spending that sort of money on sport, that it will compromise the entertainment side of the business. So I'm voting against.

Thank you, Coralie. Any other questions in the room? Kirstin?

There are no questions online, Chairman.

Thank you, Kirstin. Ladies and gentlemen, I would now ask you to cast your vote on resolution 5. Ladies and gentlemen, that concludes our discussion on the items of business today. Please ensure that you have cast your vote on all resolutions, and Computershare will now collect votes from within the room, and following this, online voting will be closed. [Voting]

Has everyone who wishes to vote in the room and who has completed the voting card had their voting card collected? No one has a voting card still, all in order? Okay, I'll move on. You will now see on the screen the details of proxy votes cast ahead of today's meeting. Details of the final voting outcome will be released to the NZX and the ASX later today.

I'd now like to open the meeting to questions of general business and we'll begin with any questions from the room before moving to online questions. Do we have any questions from the room? Please.

My name is [indiscernible], shareholder. I have 2 questions, please. The first one is on Discovery. I mean you have been leading and integrating this business now for 4 to 5 months and you have repeated it's going to be $10 million synergies...

Sorry, can you hold the microphone a little closer to your mouth. It sounds breaking out.

Have to bite in it.