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

Morning, ladies and gentlemen. My name is Kirstin Jones, and I'm SKY's Company Secretary. I will shortly hand the meeting over to your Chairman, Philip Bowman, but first, I will take this opportunity to outline a few procedural measures. As well as our live audience here in Auckland, we are joined today by shareholders and guests from around the world 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. Alternatively, you can call Computershare on 0800-650-034. While you can submit questions from now on, we will not address them until the relevant times in the meeting. Whether you are 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 that online questions may be moderated, and 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 shareholder 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 4 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 shortly be 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. And lastly, for those in the room, if there is an emergency and we need to evacuate the building, please exit from the door through which you entered. If you entered via the elevator or need assistance, please make yourself known to a member of staff. They are here to help. Thank you, everyone. With the housekeeping now complete, I will hand the meeting over to our Chairman, Philip Bowman. Thank you, Philip.

Good morning, fellow shareholders. As Kirstin mentioned, I'm Philip Bowman. I'm Chairman of SKY Network Television Limited. And it is my pleasure to welcome you formally to SKY's 2023 Annual Shareholder Meeting. To all our shareholders, proxyholders and guests joining today, thank you for making the time to be with us whether you're in the room here in Auckland or whether you're attending online. As we have a quorum present, I am pleased to declare our Annual Shareholder Meeting open. I'm also pleased to officially open online voting. I'm joined today by our Chief Executive, Sophie Moloney; our Interim Chief Financial Officer, James Marsh; Sky's Company Secretary, Kirstin Jones, who you've already met; and of course, my fellow Board members, Keith Smith, Sky's Deputy Chair and Chair of the Audit and Risk Committee; Mark Buckman, who chairs Sky's People and Performance Committee; Belinda Rowe, our newest Director who joined the Board earlier this year; Mike Darcey; and Joan Withers. You will have an opportunity to hear from Keith, Mike and Belinda later in the proceedings as we ask you to consider the reelection of directors. Members of Sky's leadership team are also in attendance today, and I also welcome representatives from our auditors, PricewaterhouseCoopers, and our solicitors, Chapman Tripp. Turning to the format of today's meeting. I will shortly comment on the 2023 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 2023, including a summary of our financial performance and our priorities for the coming period. We'll then move to the formal business of the meeting. And finally, I will open the floor here and virtually for questions of a general nature from you, our shareholders. And Sophie and I look forward to the opportunity to engage in a good discussion. And following the conclusion of a meeting, there will be an opportunity for those in the room to continue this discussion over morning tea, and to experience some of our products firsthand. My remarks this morning will begin by commenting briefly on Sky's market announcement regarding receipt of a nonbinding indicative offer to purchase all Sky shares. I'll then touch on the highlights of another successful year in the life of your company and on the local and global themes that are shaping our industry and our market. Finally, I'll provide an early indication of progress in fiscal '24 and look ahead to where we have set our sights for the future, before then asking your Chief Executive, Sophie Moloney, to discuss the business in more detail. Now as many of you will know, we disclosed in mid-October that we had received a highly conditional expression of interest from a third party to acquire all shares in Sky via a nonbinding indicative offer referred to as an NBIO. Given this offer was highly preliminary, incomplete and confidential, we only disclosed receipt of the NBIO at that time, in response to growing speculation about why the share buyback program paused in the run-up to the announcement of the annual results had not been restarted. Yesterday, we received an updated NBIO from this third party, proposing a transaction at a value range which falls short of the Board's view of the fair intrinsic value of Sky and, based on recent unsolicited feedback, the view of a number of Sky's significant institutional shareholders. The Board has advised the third party accordingly and discussions with it are at an end. The Board has resolved to restart the share buyback program on the same terms as were previously announced. Now let's talk about the 2023 financial year. While we entered the year aware of the potential challenges ahead, as the country faced tougher economic times, we held confident in our ability to navigate a successful path through this uncertainty. Equipped with strong leadership, a clear strategy, a strong focus on execution and with an ungeared balance sheet, Sky delivered a solid financial and operational result for FY '23. Customer relationships continued to grow, whilst key revenue, EBITDA and NPAT metrics, when adjusted for one-off items, each delivered in line within the guidance range that had been provided to the market. Whilst CapEx came in slightly above guidance, this reflected the timing of additional investment in the new Sky Box and Sky Pod as we begin to accelerate the rollout of these exciting new products. We finished the period with a strong balance sheet position of $56 million in cash and no debt. And this was after returning a substantial sum of $91 million to shareholders by way of a $70 million capital return and $21 million paid out in fully imputed dividends. Additionally, $4.5 million of capital was deployed through the initial phase of the share buyback program we commenced earlier this year. Sky's positive performance has allowed the Board to invest in the company's growth while also paying a meaningful cash return for shareholders. The final dividend of $0.09 per share brought the total of fully imputed dividends for FY '23 to $0.15 per share reflecting a payout rate of 89% of adjusted free cash flow, at the top of the 60% to 90% range we discussed at the last Annual General Meeting. Whilst acknowledging Sky's share price had suffered for some time in the lead up to the 2020 capital raise, the direction of travel has reversed since then. Total shareholder return was 24% in the 12 months leading up to the day before the NBIO announcement, the undisturbed price, and 45% up in the 2 years leading up to that date. This compares to returns for the NZX50 of 4% over 12 months and minus 13% over 2 years. And these results see your company ranked as the 6th and the 2nd best performer in the S&P NZX50, respectively, over these periods. While it is positive to see the market slowly recognizing Sky's significantly improved results and outlook, your Board remains adamant that the current share price falls a long way short of the company's intrinsic worth, noting that the undisturbed price of $2.47 reflected enterprise value multiples of 0.4x FY '23 revenue and 2.5x FY '23 EBITDA. So why is this the case? There are a number of factors that may be standing in the way of a fairer assessment of the value of Sky, and I'll address some of those now. Firstly, let's look at the local and global landscape. There is no question, economic conditions are challenging, with inflationary pressure impacting many New Zealand households. However, our cost base is well positioned to avoid the worst impacts of inflation given the largely fixed nature of the programming rights cost line. As many customers absorb rising household costs, the increasing value of our offering, including securing fan-favorite content, such as the Premier League, Formula 1 and 5 recent sporting World Cups is appreciated and keeping our customers engaged. Combining this with the "always on" everyday relationship we have with our customers, has meant that despite implementing necessary price increases, sports penetration levels, increased on Sky Box and Sky Sport Now and Neon customers grew. Essentially, we've demonstrated a high degree of resilience as New Zealanders prioritize spending more time at home. Many media businesses, particularly those heavily reliant on funding from advertising, are visibly under pressure. While the advertising market has contracted in New Zealand, Sky's historical underperformance combined with our unmatched content and significant reach across multiple platforms, means there is real opportunity for us to grow revenues in this space. From a local competition standpoint, we've seen a significant shift in the landscape over the past 12 months with the exit of Spark Sport, demonstrating challenges facing new entrants to the New Zealand sports streaming market. It's also highlighted the real economic value of sports rights in a market that lacks true scale. The local state-owned broadcaster, TVNZ, is also facing uncertainty given the failed merger with RNZ, changes in leadership and the likely change in mission under a new government. We've long been of the view that local players in our small market have more to gain from working in partnership with each other, particularly where we can deliver great local sport and entertainment to New Zealanders in ways that work for them, and we will continue to advocate this approach. On the global stage, the rush to streaming has resulted in a sea of over USD 9 billion in red ink in 2022, amongst the leading studios. As a result, we are seeing a rapidly emerging trend towards rebundling. And this trend plays to Sky's existing strength as the leading content aggregator in this market, and our model of offering customers a full suite of packages and viewing options across the Sky Box, the Sky Pod, Streaming, Free to air and through our commercial customers. We've also demonstrated the ability to operate programming costs through the recent Warner Bros. Discovery renewal on more favorable terms, providing the same quality of content including exclusive access to HBO. Once Warner Bros. Discovery's strategy for the Max app and associated content are clearer for this market, we look forward to discussing options for continuing our long-standing partnership. But should the exclusivity terms change, this would be reflected in the pricing. And regardless of the shape of our ongoing partnership, the app would be available via the new Sky Box and Sky Pod. The landscape has also changed markedly since the last rugby renewal was negotiated in 2019. At the time, we faced fierce competition from Spark Sport, and we were in a must-win battle to secure these rights. We also had a $100 million bond repayment looming and little room to maneuver. Since then, we are in a very different position. We've strengthened Sky's balance sheet and secured or renewed a number of key sporting properties through multiyear deals, including the NRL, the Premier League, Formula 1 and World Rugby. Our strategy is also much clearer. We value what our customers value. We now have a more disciplined, data-driven approach to determining a price that makes sense for the content we can be certain that our customers and potential customers will love. As we've seen with the recent Rugby World Cup viewership, New Zealand remains a nation that loves great rugby. We have strong relationships with New Zealand Rugby at all levels, including some positive recent engagement with the new leadership of NZR Commercial, and we're looking forward to robust but constructive negotiations about the future shape of this important partnership. In summary, the overall impact of changes in the external environment, combined with initiatives taken by management over the past 2 years, have seen our company's position materially strengthened. Taking all this into account, our FY '24 guidance reflects the Board's confidence in the Sky team's ability to grow revenue and control costs. This confidence extends to the increased CapEx investment that we're making to accelerate the rollout of the new Sky Box and Sky Pod products. As I said at the time of the results announcement, this will lead to a steeper but shorter period of elevated capital expenditure as we share the new Sky experience with more New Zealanders. Against this backdrop, the Board has resolved that free cash flows for the purpose of determining the FY '24 dividend will exclude the additional CapEx associated with the accelerated Box and Pod rollout, and the satellite mitigation CapEx that we noted at the August results. Our guidance points to an FY '24 dividend of at least $0.15 per share, demonstrating the Board's confidence in continuing to provide an attractive return for shareholders while also investing in the future development of your company. I'm pleased to be able to report that at the end of the first quarter of FY '24, we have seen a further increase in the number of customer relationships, supported by an exceptional sporting calendar that included several World Cup events. This has led to an increase in sports penetration and driven a positive impact on revenue, including a meaningful increase in advertising revenues as the new team recruited over the past 9 months begins to capture this opportunity. As expected, there have, however, been some challenges due to the slowdown in release of new content caused by the industry strikes in the U.S. These have started to impact Entertainment and Neon customers. And whilst a resolution now feels imminent, the effect of these strikes will take some time to work through. In all, following a very positive start to FY '24, the end of our first quarter sees us firmly on track to deliver on guidance provided with the full year announcement. Looking ahead, the Board has approved and published the 3-year targets through to FY '26 developed by management. And Sophie will expand on these in her address but suffice it for me to say that the Board sees a clear path to deliver these targets, including doubling the FY '23 dividend by FY '26. In closing, I wish to acknowledge my Board colleagues for their service to your company. At a structural level, we formed a new Content Rights Committee given the strategic importance to the company and the impact on customers, partners and investors alike. The mandate of this committee is to provide guidance, challenge, strategic input and counsel to management regarding specific content investment decisions. In March, we welcomed Belinda Rowe to your Board. Belinda has brought highly relevant skills, especially in advertising, and a fresh perspective that has further improved the quality of Board debate. You will also -- you will have an opportunity to hear from Belinda later in the meeting as she seeks your support to confirm her appointment to the Board. To my Board colleagues, thank you for your commitment of time, your constructive challenge to management and above all, your focus on generating value for shareholders. My thanks, too, on behalf of the Board to Sophie and her team for their determination to deliver the best viewing experience to customers, to improve service levels and to lead the business through a period of significant operational change whilst creating an environment where the wider Sky team is encouraged and equipped to do their best work. And finally, a thank you to you, our investors, for your continued support of Sky. With that, I'd like to pass the meeting over to Sophie Moloney. Sophie?

Thank you, Philip. Good morning, everyone. [Foreign Language] It's my privilege to present to you today in my third year as your Chief Executive. I'll begin with our key performance highlights for FY '23 and the achievements of the last 3 years. I'll then walk through our new strategic story on a page, and I'll conclude with our FY '24 priorities and an overview of the new 3-year targets, as Philip said. But first, I want to reflect on the incredible moments of excitement that we have shared with New Zealanders in recent months. How amazing to be able to share the thrill of the Football Ferns' historic win, in the opening match of the FIFA Women's World Cup; the Warriors very tail run to the NRL elimination finals Up the Wahs; and of course, the epic final for our All Blacks, even though it didn't quite turn out as many of us in the room wanted. And in the last couple of weeks, we've also had the Black Ferns performing in the new Women's XV competition. And our Black Caps fighting it out in the ICC Cricket World Cup. What an incredible round of content we've been able to share with all of Aotearoa, New Zealand. Over 2.5 million New Zealanders tuned into coverage of the Rugby World Cup on Sky and Sky Open. And there were 7 million streams across Sky Go and Sky Sport Now. The combination of our unrivaled content, multi-platform approach and 100% coverage across the country continues to set us apart. And I'm extremely proud of the Sky team and of the compelling market position we've continued to carve out together. Turning then to FY '23 results. We were pleased to see progress against our strategy translates into solid financial and operational outcomes for our shareholders, including growth in our customer relationship numbers, which rose by 2.5% to over 1 million, and revenue growth of 2.4%. Importantly, on a like-for-like basis, revenue rose by 4.5%, a strong signal of Sky's resilience in the current economic climate and with increased average revenue per user across all product lines. After adjusting for one-offs, the underlying EBITDA of $156.4 million was 1.8% higher than the previous period. Similarly, adjusted profit after tax of $56.7 million was 15.2% higher than 2022. This result demonstrates our ability to deliver to our customers and shareholders today while investing in the initiatives that will drive future value. The continued growth trends in customer relationships sees us connecting more New Zealanders with our great content in ways that work for them. The Sky Box continues to be valued and loved in hundreds of thousands of Kiwi homes. And while Sky Box numbers were slightly down year-on-year, disconnections remained stable. In looking at Sky Box revenue, we finished the year just 0.8% lower than in 2022, with increased average revenue per user and lower foregone revenue as we sharpened our focus on quality and margins. Turning to streaming. In FY '23, Sky Sport Now delivered an impressive 37% increase in customer numbers, and we achieved 8% growth in our entertainment service, Neon. These increased customer numbers, combined with recent price rises have delivered a 50% increase in Sky Sport Now revenue and a 19% rise for Neon. Sky Broadband has also delivered a steady performance in FY '23, growing to 26,000 customers nationwide and offering additional value for our loyal Sky Box subscribers. A key achievement by the team during FY '23 was becoming the preferred broadband partner for 8 Summerset retirement villages with an impressive 76% of those residents choosing our service. And a pleasing acknowledgment of our focus on customer care, Sky Broadband won the Canstar people's choice, Most Satisfied Customers Award for its quality performance during the year. Our commercial business has returned to pre-COVID levels, with revenue growth of 13% and, as Philip mentioned, Sky's advertising revenue is bucking the sector trends with 9% growth on a like-for-like basis in a market that contracted by 5%. Our highly motivated team is delivering green shoots that supports our growth ambitions to secure a greater portion of advertising budgets and has already achieved an exceptional Q1 performance supported by the Rugby World Cup opportunity. And as Philip shares, while the advertising market continues to be challenged, we believe we can command a greater share of revenue by offering advertisers new digital products and deeper integration opportunities. The launch of our new Sky experience was a key milestone in FY '23 with the introduction of our new Sky Box and the Sky Pod, both of which bring together a new experience for greater content discovery for our customers. Now as a wee reminder, the Sky Pod provides access to Sky's full range of content just without the need for a dish. After only 3 months of promotion, by the close of FY '23, we had 35,000 new Sky Boxes and 13,000 Sky Pods in use in customer homes. Now while there were early teething problems with the rollout for some customers, these have been addressed on a prioritized basis by the team. Because we can continually update and refine the software, we've been able to resolve initial issues such as split recordings and navigation responsiveness as well as reintroducing valued features like the ability to remote record. At the same time, we've been working to support customers adapting to what we acknowledge is a new and different experience. Our attention now turns to delivering on our program of continuous improvement, which is already seeing much higher levels of satisfaction from our customers. Now for all of those of you in the room, I do encourage you to take a look at the end of this presentation at our showcase stands. We've got lots of helpful crew with their Sky t-shirts on, who'll be able to help show you the excellent features of these new products. We aim to accelerate the rollout of the new Sky experience in FY '24, so that more customers, both existing and new, can take advantage of these new features. Customer care has also been a key area of focus, and the 40% boost to capacity in our call centers is delivering early benefits and significantly improved response times. I'm delighted that the days of average wait times of over 20 minutes are behind us. And over the last 3 months, our speed to answer is averaging at 1 minute. We're extremely pleased with these results so far. Attracting and retaining customer care staff in our market was incredibly challenging. And having our in-house care team working with our partner, Probe, has allowed us to strengthen our result -- our response. Changes to the way we access technology capability through our international partner, TCS, is also having a positive impact. The relationship enables us to access specialist capability and capacity and key areas of technology and content operations in a more efficient and cost-effective way. And again, the collaboration between TCS and our in-house team is coming together well to deliver improved experiences for our customers. Alongside delivering great outcomes for customers and shareholders in FY '23, we have remained committed to making a positive contribution to our country and community as a company with deep roots and relationships throughout Aotearoa, New Zealand. So what does that look like? We've tangibly demonstrated our commitment to the environment through an ambitious recycling program for older Sky Boxes that are being retired from the fleet. At the same time, the new Sky Boxes and Pods that replace them are significantly more energy efficient, which is a win for our customers and the environment. We have included additional disclosure in this year's annual report that shows the continued emphasis on our very strong approach to corporate governance. And we've also been paying -- we've also been active in playing our part in the corporate social responsibility space. It's a privilege to be in the lives and homes of many New Zealanders every day, and we take our role as a responsible and trusted broadcaster very seriously. We're very proud to be championing diversity on screen through our See Your Possible initiatives, and also recognize the importance of the tangible support we provide to our charity partners in ways that make a difference for them. As I reflect on the past 3 years, I'm proud of what's been achieved while also being upfront about where things haven't gone to plan. We were late in delivering our new Sky Box experience. Which has had flow-on impacts into our overall subscriber numbers, associated revenue lines and our CapEx profile as we now look to accelerate the rollout in FY '24 and FY '25. So yes, not everything has gone to forecast, and we've had to adapt and learn along the way. But with that acknowledged, at this point in the journey, I am pleased to confirm that we're now in a very strong position. Customer relationships are over 1 million as a year-end high. We have market-leading positions in our high-tenure, high-value Sky Box base, our Commercial business and in our Sports lineup as well as in our ability to deliver to the entire country by satellite and IP. We have locked in unrivaled content that sees us well positioned as New Zealand's leading aggregator for customers, it makes us even more compelling to partners, including those in the advertising space. We have built our multiproduct suite, delivering the new Sky Box and Sky Pods and added new features to our streaming products. We successfully launched Broadband back in '21 and, more recently, we have reinvigorated our free-to-air offering through the launch of Sky Open. At the same time, we have reshaped the business to align our organizational design with our strategic priorities and progress key initiatives to make Sky a great place to work. Perhaps most importantly, Sky has returned to revenue growth. After many years of revenue decline, we've delivered 2 consecutive years of growth, reflective of the portfolio effect of our multiproduct business. This is a significant achievement and one we will continue to build on. At the same time, our focus on removing costs throughout the business has allowed us to reinvest in areas such as content and technology that drive future performance. And as Philip mentioned, we end the financial year with a very strong balance sheet with no debt and access to $150 million facility while continuing to pay a healthy dividend. With this backdrop in mind, I'd like to share with you our refreshed strategic story on a page, starting with our purpose and ambition statement. As many of you will be aware, a company's purpose describes its reason for being, its why, and is thereby intended to be a higher order description about the unique contribution that an [ MC ] makes for the country and communities in which it operates. And then in the case of Sky, when we reflected on our origin story and what this company has done since that inception, we recognize the privileged and unique contributions to Aotearoa of being able to share stories, to share possibilities, to share Joy. No other entity in this country can deliver the plethora of live and on-demand programming across the number of platforms that we do every day. And every day, we see the impact of this -- of doing those for New Zealanders and the refreshed articulation of our purpose has been a wonderful motivator for our crew in recent months. Now some of you might be thinking well that's all well and good, but how does support the continued delivery of the profit and the return to shareholders? Well, leaving to one side the benefits of a highly motivated crew, it's a fair question, and that's where our ambition statement comes in. It's a statement about how we see our competitive advantage in the market and intentionally has more edge to it. Like the destination of our purpose into a simple set of words, I'm really happy with the simplicity and depth of our ambition, which is simply this. To be Aotearoa NZ's most engaging and essential media company. Let me share a little bit more context. We are of this place. We are grounded in Aotearoa New Zealand. Our primary focus is our local market, and it's important for us to reflect the full diversity of this country, including the bedrock of Tihei Mauri, and to make sure we reflect that back to the full community. Our Sky Originals program is part of this expression, and we're proud of the special local content that our team and creative partners produce for and about the stories of New Zealanders. We deeply engage our customers. They are fans of the game and of the story, and we fuel their fandom. We're not like a news site or just a social media feed; our customers come to be deeply engaged, to be enthralled, choosing to give us their full attention. Our platforms and our content are essential to our customers and to our partners. We are the privileged access point in the lives of many New Zealanders with more to come, and our partners value the insights we can share about our customer base. We are a media company not just a satellite TV broadcaster. We are inside and outside of the paywall and we are with our customers every day. So that's our ambition statement. We've been on this journey for some time, and I'm confident we're heading in the right direction. Being clear about how we're going to achieve our ambition is also vital and this is where our strategic pathways come in. We have 5 of these pathways in place to achieve this ambition: making Sky a great place to work; giving our customers content they love; meeting customers where they are with a range of products; giving customers the experience they expect; and providing innovative solutions for our partners and clients on the advertising front. Now, in the interests of time, I won't go into more detail here and have simply note that we've been making significant progress against each of these strategic pathways. More specifically, for the current financial year, we have 3 key priority areas of focus: lifting employee engagement; as you've heard, we're accelerating the rollout of the new Sky Experience; and third, we're building out new revenue streams. Looking further ahead at our results announcement in August, we shared our new 3-year targets through to FY '26. These targets, as signed off by our Board, demonstrate the confidence we have in the future of Sky as we continue to execute on our strategy and realize the return on the investment we're making into the future of the business to deliver free cash flow and dividend growth. We have a clear line of sight on revenue across our portfolio of products and expect to build on the trend we've established in recent times, to deliver growth of 3% to 4% per annum through to FY '26. We're focused on achieving EBITDA margins of 21% to 23%. This will come through that revenue expansion and our ability to moderate costs, allowing that to fall to the bottom line. Putting this into perspective, on the current revenue target, every percentage point of margin increase would deliver between $8.2 million and $8.5 million to the bottom line by FY '26. We're well positioned to reduce programming costs as a percentage of revenue given our strategic investments to date. By FY '26, we're targeting for this to be within 47% to 49% of revenue. We value what our customers value and have deep insights into what really matters to them. And we know we don't need to have everything, and we also know where it makes sense to pay for that exclusivity premium. CapEx is expected to return to between 7% and 9% of revenue after we have invested the amount required to accelerate the rollout of the new Sky experience. Once we're through the new Sky Box phase, this will again drop to the bottom line as free cash. We're also aiming to increase our employee and customer Net Promoter Scores, both important sectors, and delivering on our purpose in growing a successful and sustainable business. The combined effect sees us doubling the FY '23 dividend of $0.15 per share by FY '26. To finish, I'm extremely proud of the achievements we've made against our strategy to date and the results this has delivered for our customers and for all of you, our shareholders. To the Sky crew, including my executive leadership team, thank you, as always, for your dedication to delivery that has enabled this positive progress. To Philip and the Board, thank you for your commitment, your guidance, your good governance and your unwavering support for me and the Sky team. And I'd also like to thank you, our owners, for your ongoing dedication and support. We're very excited about the opportunities in front of us and look forward to delivering on these to unlock further shareholder value. Shareholder, thank you for that.

Sophie, thank you very much. Ladies and gentlemen, we will now move on to the formal business of the meeting. There are 4 ordinary resolutions for shareholders to consider. The ordinary resolutions relate to authorizing the Board to fix the auditor's remuneration and the reelections of Keith Smith, Mike Darcey and Belinda Rowe as Directors. The resolutions were all set out in the Notice of Meeting, and you will also find them in the voting section of the online platform as Kirstin Jones described earlier in the meeting. There'll be an opportunity to ask questions on each of the resolutions. And a reminder that only shareholders and proxyholders are entitled to ask questions. Kirstin's already outlined the process for submitting questions online. But for those of you in the room, we ask that you raise your hand and wait for one of our team to bring you a microphone. Please state your name and whether you're a shareholder or a proxyholder. As mentioned at the beginning of the meeting, voting today will be conducted by way of the poll. 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 our registrar, 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 been concluded, members of the Computershare team will collect voting cards in the room. For those online, I will give you notice shortly before voting will close. Now the first resolution to be considered by the meeting relates to auditor remuneration. And I now move as an ordinary resolution that the Board be authorized to fix the auditor's remuneration for the ensuing year. Do we have any questions on this resolution? Kirstin, have there been any questions online in relation to Resolution 1.

There were no questions submitted for Resolution 1.

Thank you, Kirstin. Thank you, ladies and gentlemen. There being no questions, I would now ask to cast your vote on Resolution 1. [Voting]

Resolution 2 relates to the reelection of Keith Smith as a Director. Keith was first appointed on the 21st of April 2020 and was reelected by shareholders on the 13th of October 2020. He serves as an Independent Director and also as Chair of the Audit and Risk Committee and a member of our Content Rights Committee. Keith retires in accordance with NZX Listing Rule 2.7.1 and ASX Listing Rule 14.4. Being eligible, he offers himself for reelection. The Board has determined that Keith is an Independent Director, and unanimously supports his reelection to the Board. I'd now like to invite Keith to address the meeting.

Thank you, Philip, and good morning, ladies and gentlemen and fellow shareholders. It is a pleasure to address you in support of my reelection as a Director of Sky Television. My background is well documented in the annual report and in the Chair's introduction just now. But I would like to take this opportunity to add a little more context as to why I seek your support for my reelection. My career has been as a chartered accountant, specializing in financial and corporate reorganization together with an extensive governance experience covering 20-plus years in public, private and government-controlled entities. These have covered a diverse range of industries, including media, manufacturing, retail, property and agri businesses, to name just a few. This wide range of involvements adds a different dimension, in my view, to the discussion and debate that I can provide around the boardroom environment. I have led companies during economic downturns and unusual economic cycles. As Chair of the Audit and Risk Committee, I have the ability to draw on my wide experience as chair of other such committees in other organizations. In an ever-evolving world and associated business environments, there needs to be a keen focus on identifying, monitoring and maintaining appropriate levels of risk. Risk cannot just be an add-on or seen as an add-on to business processes, but must be top of mind in all decisions made. And I know it is in Sophie and her executive team's minds as well. This is an important focus of the Audit and Risk Committee. It is a journey that will never end, but increasingly become more complex over time. For the past 3 to 4 years, as you have heard from Sophie and Philip in their addresses, Sky has been on a transformational change, ably led by Sophie and her executive team to enable the company to be nimble and fit for whatever the future may throw at us. This includes delivery of entertainment content, which is relevant and across every type of delivery mechanism. It is a privilege to be able to work with my fellow colleagues in Sophie's team and contribute and add value to the robust discussions and ultimate decisions required to be made over the short and medium term, which will then provide certainty for the long-term benefit of all stakeholders. Thank you in advance for your support of my reelection, and I'm happy to take any questions.

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

Do we have any questions on this resolution? Please?

[ Correlly Vankemp ], shareholder. In general, about the directors, I didn't find it easy to work out from the annual report if any or how many of the directors are not resident in New Zealand.

I think the answer to that, if we go down the road: Joan Withers, the far end there, is resident in New Zealand; Mike Darcey is resident in the U.K.; Belinda is resident in Australia; Keith is resident New Zealand; Mark is resident in Australia; and I am resident overseas.

So I'm sorry, I've lost count, is that 4 of you that are resident overseas?

Indeed.

Well, that's not right. Sorry.

Could you explain why?

Well, for a starter, you must spend an awful lot of money on airfares flying everyone back and forth.

The reality is for most companies now, with the changes in technology, that large numbers of meetings take place electronically. They take place virtually. And particularly in the aftermath of COVID when during COVID for a period of 18 months, thanks to government policy, we were unable to hold physical meetings, Boards developed the ability to operate effectively using electronic means. The result of that is that we hold only a limited number of board meetings in New Zealand. We hold those for a longer period of time than we would have normally; rather than holding them for a day, we hold them for 2 days or maybe more than 2 days at that time. Also, each of us who lives overseas probably has other business commitments, and it's possible to defray the costs by sharing costs across businesses.

Not quite convinced, sorry, Mr. Bowman.

Well, I would also say to you that we are operating in a global market in this industry. And the insight that people are able to bring from different countries, the nearest country being Australia, where there are some significant parallels with what we see in New Zealand and also from the U.K. where Mike Darcy was involved with Sky in the U.K., is still heavily involved in the media world, brings enormous benefits from that perspective. And I think it's an important question for all New Zealand companies. I think you do need diversity in terms of experience for what our industries or companies operate in a global environment. The world has become much smaller, but there are still differences.

I would like to comment.

Yes.

I'll just make a comment as a New Zealand-based Director. I think in this particular company, Philip's just touched on it, that it's an extremely reliant on international trends and international product and a raft of different things in the composition of the Board which has been through a big change over the last -- since I've come on, the last 3 or 4 years. We have got expertise that is unavailable in a number of areas in New Zealand in a company such as Sky. So I think not having the current group of directors in the mix would be detrimental to all stakeholders.

Thank you, Keith. Are there any other questions on this resolution? Yes, please?

My name is [ Hayley Ching ], yes, shareholder of this company. And I agree totally with Philip about sharing the cost because you are a Director of Kathmandu as well. And I'll meet you at that meeting on Friday.

Thank you very much. I look forward to seeing you there. Very good. Any other questions in the room on this resolution? If not, Kirstin, have we received any online?

Thank you, Philip. There are no questions online.

Very good. Thank you for that, Kirstin. I don't know what's gone wrong with the auto cue, but there we are. Okay. There are no further question questions, and I would ask you, please, to vote on that resolution. [Voting]

Resolution 3 relates to the reelection of Mike Darcey. Mike Darcey was first appointed on the 19th of September 2017 and was reelected by shareholders on the 13th of October 2020. Mike serves as an Independent Director and also as a member of the People and Performance Committee and the Content Rights Committee. Mike retires in accordance with NZX Listing Rule 2.7.1 and ASX Listing Rule 14.4, and being eligible, offers himself for reelection. The Board has determined that Mike is an Independent Director and unanimously supports his reelection. And I'd now like to invite Mike to address the meeting. Mike, over to you.

Thank you, Philip, and good morning, everybody. Having grown up in New Zealand, most of my executive career has been based in London, particularly 15 years at Sky UK, initially as Director of Strategy and then more laterally, as Chief Operating Officer. I then spent 3 years as the CEO of News International, publishers of The Times, The Sunday Times and The Sun, before transitioning fully to the portfolio stage of my career. I've served on several boards across media, telecoms, tech and retail and am currently the Chair of Arqiva, the main operator of media distribution infrastructure in the U.K. working with all the major local and global content businesses. And after being a representative gymnast for New Zealand in my youth, I'm now also the Chair of British Gymnastics, the governing body of the sport in the U.K. Alongside my board roles, I've worked as a strategy adviser for a long list of media companies, including Comcast, and OSN in the Middle East and other major rights owners and media companies that sadly I am not at liberty to identify. And I seem to have a growing list of followers for my regular media strategy articles on LinkedIn. Of course, more followers are always welcome. There's always an advertising opportunity.

Don't waste it.

Yes. My background represents an array of useful experience for the Sky Board. At a high level, my media, strategy and commercial work both from my time at Sky UK, and in my work since, has considerable ongoing resonance for the Sky New Zealand situation. As to specifics, probably most relevant is my direct experience of rights negotiations and other commercial deals with a range of global media companies, including the fact that I've worked on both sides of the deal, never at the same time, though, just to be clear. More generally, the Sky New Zealand story in recent years and going forward, has many parallels with the challenges and opportunities being navigated by others around the world. In this context, I think there is merit in bringing to the Sky Boardroom direct experience of what is happening elsewhere and why and how we can translate those learnings for our particular New Zealand circumstances. In recent years, I'm particularly proud of the direct contribution I've been able to make to our dealings with the likes of the Premier League and with Warner Bros. Discovery. Our highlights have been navigating the challenge of Spark Sport with its uncanny echoes of the battle between Sky UK and British Telecom. More broadly, I'm proud of the evolution that Sky New Zealand has undergone, becoming a strong player in the local streaming market with an increasingly diversified revenue mix while retaining and reinforcing its traditional linear base. Going forward, I'm looking forward to capitalizing on the recent transition work delivered by our colleagues in the wider Sky team with guidance and support from the Board. Together, we've built a strong base as the leading media business in New Zealand and anyone looking at the territory from outside can see plainly that Sky is the company you want to be in business with. Our recent progress means we have an exciting opportunity to grow revenues across our many lines of business, all the while bringing down content costs as a share of revenue as we use more data to make smarter decisions about how much content we need and what choices we might make. Putting that together, we have the opportunity to deliver strong financial performance at the bottom line. Exciting times indeed. So I value the opportunity to continue serving on your Board and appreciate your support for my reelection. Thank you. And I also am happy to take any questions.

Very good. Thank you, Mike. Do we have any questions in the room? Kirstin, do we have any questions online?

Thank you, Philip. We have no questions online.

Thank you, Kirstin, for that. Accordingly, I would ask you please now to vote on Resolution 3. [Voting]

Resolution 4 relates to the reelection of Belinda Rowe. Belinda, as I commented earlier, was first appointed to the Board on the 1st of March 2023. She serves as an Independent Director, and Belinda retires in accordance with NZX Listing Rule 2.7.1 and ASX Listing Rule 14.4, and being eligible, offers herself for reelection. The Board has determined that Belinda is an Independent Director and unanimously supports her reelection. With that, I would now like to invite Belinda to address the meeting. Belinda?

Good morning, everyone. It's an absolute pleasure to be here. I'm Belinda Rowe, and I'm here to ask for your support for my reelection to the Sky Board in order to actively contribute to the next stage of Sky's transformation and the growth targets that Sophie presented just before with my fellow colleagues. I have extensive experience in leading companies in marketing, digital and the media industry for a number of global U.K. and Australia and New Zealand companies. I serve as a director on several publicly listed companies, including ARN Media, an Australian media entertainment and digital audio company, Temple & Webster, an Australian scaled and unique e-commerce company in furniture and homewares and 3P Learning, an education technology company operating across 4 regions. I'm also on the board of the Sydney Swans, a highly successful AFL football hub, which gives me unique insights into the commercial opportunities of sports and entertainment. My executive career spanned a number of marketing and advertising roles, and I bring deep experience in unlocking revenue growth through markets and customers and digital transformation. I held senior executive roles at Telefonica O2, now Virgin Media O2, leading its brand and marketing communications with a strong focus on customer transformation. Prior to this, I was on the Global Executive Board at Publicis Media and leading Zenith Media globally based in the U.K., one of the largest media and communications company, where I partnered with significant global consumer-based companies and B2B companies like Nestlé, L'Oreal, Telefonica, 21st Century Fox, the content business, Reckitt Benckiser, Oracle and UBS. I also launched and led a unique global content and sports marketing business at Publicis Media, bringing together content, technology, data and digital across 32 markets, integrating several content marketing acquisitions. I believe my extensive experience and insights in international media, technology, consumer and telecom markets enable me to actively contribute to the current and future strategy of Sky. It enables me to provide strong support to the commercial and revenue opportunities of content, advertising, data and technology as well as the operational effectiveness of Sky's customer focus. I'm passionate advocate for professional development and supporting leadership and capability building, which I do with a number of different companies, and an example of this is where I chaired the Diversity and Inclusion Action Plan at the Sydney Swans, which goes deep into the communities of the country. One of the key reasons I'm attracted and committed to Sky, in addition to the things that I have already mentioned, is to work with people that are super talented like the CEO, Sophie Moloney and her management team and the crew that really are dedicated to the development of Sky. I'm impressed by the culture and the values of the company and the leadership, hard work, the smarts and the deep commitment to providing New Zealanders with outstanding entertainment and sports content as well as compelling services. I'm really keen to contribute to the next strategic phase and intelligent approaches to content, data, technology and advertising and importantly, to deliver the 3-year target and the value creation for shareholders. I value the opportunity to continue serving on your Board and appreciate your support with the reelection. Thank you.

Thank you, Belinda. I now move as an ordinary resolution that Belinda Rowe, who was appointed by the Board on the 1st of March 2023 and retires at the Annual General Meeting, be reelected as a Director of the company.Do we have any questions on this resolution in the room?

Yes, please. Just wait for the microphone, please.

[ David Greave ], shareholder. Belinda, welcome to the Board. The 1 question I'd like to ask you, are you likely to become a shareholder and owner of this business in the next 12 months?

Absolutely. I've only just joined, and so it's been very difficult with the window…

I appreciate that.

Yes. But I absolutely will be. Yes.

Thank you very much. Very pleased to hear that.

Thank you for your question. Any other questions in the room? If not, Kirstin, any questions virtually.

Thank you, Philip. There are no questions online.

There being no further questions, I'd now ask that you cast your vote on Resolution 4. [Voting]

Ladies and gentlemen, that concludes our discussion on the items of business. Would you please ensure that you have cast your vote on all resolutions and Computershare representatives will now collect votes from within from the room, and following this, online voting will be closed. [Voting]

Thank you, ladies and gentlemen. The outcome of the voting will be released to the NZX and the ASX later today. We will now open the meeting to questions of general business and we'll begin with any questions from the room before moving to online questions.So do we have any questions from the room, please?

[ Christoper McKave ], shareholder. Question on -- Congratulations for 1 million customers. According to my school cert maths, that's about 20% of the people in this room potential. How do you tabulate? If I have a motel complex with 20 units, is that 1 customer or 20 customers?

Thank you for your question. Sophie, should I pass that one to you?

It's just 1 customer in our books. So yes, that's just 1 customer on the Commercial side of the business, obviously.

Okay. Do we have any other questions. Yes, please, in the second row.

[ Scott Pattison ], proxy for shareholder [ George Pattison ]. Just in light of the bid for the company, you stated in your opening address about the -- you've come to an intrinsic value for the business. What price per share is that? And when will it -- the current share price of $2.70 get to that intrinsic value that you stated?

I think the first thing I would say is that the approach that we received was a confidential approach. So I'm not able to talk to that. In terms of the intrinsic value of the business, the Board has been through a process of looking clearly in response to the approach of the business plan of the company. It has had external review of the business plan of the company. And it has concluded on the value. The value is not something that we will share because I don't think that would be in the interests of all shareholders. In terms of a price, I think what is, to my mind, interesting are 2 things. The first one is that we received the approach. And therefore, clearly, somebody believes that the business is undervalued. And secondly, the response a number of shareholders, both individuals, but also large institutional shareholders when we made the announcement about the approach and their view as to the value of the business. But in terms of putting actual numbers on the table, it's not something, I think, that would be helpful. Next question in the front row here, please.

Yes. Two questions. You're forecasting by 2026 to double the dividend. It seems a little surprising to me that you're indicating at least 15% this year, at least 15% (sic) per share rather than a higher forecast because I'm certain the Board wouldn't have agreed to these forecasts unless they thought they could achieve doubling the dividend. Second question, with the change at government and improved immigration, do you think the immigration rises will have a big impact on your business? There's been serious numbers in the last few months.

Thank you for the two questions. The second one, I'm going to pass to the Chief Executive. The first one, firstly, the comment that we made at the time of the Annual General Meeting today, but also at the results, was that the dividend for this year, fiscal '24, would be at least $0.15 per share, not 15%, so $0.15. Secondly, I think the comment I would make is that this is a year of very heavy capital expenditure. We took the decision to speed up the rollout of the new technology, the new Box, the new Pod and there was clearly a significant cash cost to doing that. And I think the reason we said $0.15 was the fact that, that was what we paid in fiscal '23. And the reason we said that at least would depend on the cash flow profile of the year, but the reason fundamentally related to the percent of the investment that we are making this year. In terms of your question about immigration, which I think is a very interesting one, Sophie.

Yes. Great question. No is my immediate response, it doesn't concern me. We still have a huge opportunity for customer growth in this country. I think that we've done very well with our Sky Box business, but we're really excited about the new Sky Pod, particularly, and T?maki Makaurau Auckland, where we are now, a huge opportunity, many multi-dwelling units, lots of new New Zealanders who we'd love them to see the opportunity to engage with us in a way that they haven't been able to before, if they haven't been able to have a dish wired in to their building. So look, we just see significant opportunity. But at the same time, we have our locally curated Neon service, which is available. Great deal at the moment, just a little bit of marketing on behalf of the team, and, of course, Sky Sport Now. So no, my overall -- I only see opportunity with any migration figures. And there's a lot more for us to do. I definitely want to see Sky at Auckland Airport, as I've noted to Dan a couple of times so that people can actually see that we're the home of the best content in this country.

Sophie, thank you very much. Yes, [ Correlly ].

Well, first of all, on a positive note, I am still enjoying my Sky content. Thank you.

Wonderful. Thank you.

Now just getting the dividend into perspective, with 90% of my shares canceled or bought back, my dividend was actually $22.98 net. Now that -- just the hype about how much you're paying in a dividend when you canceled all the shares, you've just got to get it into perspective. The other thing, where are you ever going to get lowball offers? So I don't know why you keep them confidential because we're never going to get a good offer on our shares while things are getting back up again. And the last thing is actually a question. If you resume the share buyback, will that again be compulsory because you just wouldn't leave me with anything?

Okay, [ Correlly ]. I mean the question of dividend and the share consolidation, we addressed last year. And I think all I can say is that I note your comments, but all I would say is that the amounts you receive will grow as we increase the dividend, as it will be the case for all shareholders. In terms of the NBIO and these approaches, the reality is that if you are a listed company on a public market, you are up for sale every day. Someone can always put an offer on the table. They can make a code offer or they can make an approach. Generally, when they make an approach rather than a code offer, they would be -- it would be subject to confidentiality requirements. Those are not something we impose, but they would be something put by the person who approached and that would be the reason that we are not saying anything. I think in terms of share buyback, the way the share buyback is different to the capital return we did, we stand in the market on a daily basis, and we buy shares from those shareholders who are selling and we then cancel those shares. So.

Those I'm selling?

Yes.

I want to…

No, no, I said that is the difference between the capital return we did where all shareholders were effectively participating in it. And the share buyback, which we're doing at the moment, as I said, we stand in the market and we buy shares that other shareholders are offering to sell. So the number of shares you have is safe unless you decide to tender them into the market because you want to realize them. Any other questions? Yes, please. Just wait for the microphone, please.

[ John Walker ], shareholder. Could you give us a bit of an update on this ESG, the environment or social governance?

Yes, indeed. I'm very…

Because apparently, I was told everybody's got to do this.

Don't know, Kirstin, if you'd like to make a couple of comments?

I can leap in. You're right, ESG is -- you're going to see a lot more commentary going forward. I talked about in my presentation around the environment and our commitment to recycling Sky Boxes in a way that -- in having new products that are better energy efficient. We've done a full review of our carbon footprint. And we're on target with the support of some external help to make sure that we can report in the right way so that as investors, you're making considered choices and wanting to work with companies who understand their impact on the environment. From a governance perspective, I think we have great disclosures. We'll be doing more on that front. And then from a social perspective, See Your Possible, seeing amazing talent on screen and helping individuals to see beyond themselves is absolutely something we're committed to. So overall, it's actually about just being a good corporate citizen. And so that's what we're doing. And we're going to be absolutely in compliance with all of our obligations. But as a team and as a company, we do take it very seriously. Thank you.

Thank you, Sophie. Any other questions in the room? Yes, please?

[ John Hulme ], a shareholder. With that unsolicited offer, the price of the shares increased quite considerably. Do you have a limit to what you're prepared to pay for them on market than the share buyback?

We've not published any limit as to what we would be prepared to pay. It's a matter for the Board to consider on a periodic basis. Clearly, the Board was very comfortable at purchasing the shares during the first half of this financial year. We've said in the announcement today that we will recommence the buyback. So that suggests that the Board is comfortable with the share price that prevailed at the close of business yesterday. Okay. Kirstin, online questions, please.

Thank you, Philip. We have several questions from [ Mariano ] and [ Jacqueline Cassillo ] regarding Water Bros. Discovery. I'll read them together as they're all related.

Okay.

The first one is, when does the new agreement take effect? And how will it impair programming cost margins? Secondly, do you see Warner Bros. launching their Max streaming service in New Zealand in the foreseeable future? And are there any risks? And finally, how secure do you feel the partnership is beyond the current agreement? And how dependent is Sky's future on this content?

Sophie, one for you. I think.

Great. So first up, the agreement's already in effect. We don't disclose the end date of our entertainment deals for competitive reasons, and it's confidential. So we're -- that's already in place. But as we've communicated, we did secure a better deal on commercial terms, and we're really excited about being able to continue to deliver all of the Discovery channels as well as a lot more on-demand content through that deal. It is a really important contract for us. It's probably one of the bigger -- it's the biggest entertainment deal we have. We have been partners for many, many years, and I remain really confident of that partnership going forward. To their question about HBO Max. Yes, we -- they haven't launched any -- talked about their specific plans for launching in Aotearoa New Zealand, but we are looking forward to having the conversation with Warner Bros. Discovery. As you may or may not appreciate the new Sky experience, both the Box and the Pod, Max can happily sit there as one of the apps like Netflix does. What we want to do is find a way commercially and through technology to make it really easy for New Zealanders to actually find the content they love. Coming back to the program rights cost line though, in the event that HBO do want to launch their app here, and we get comfortable with it, obviously, that will shift how much we're actually paying because we'll no longer be paying an exclusivity premium. We're very, very well placed to have this conversation. Our last deal with Discovery, we agreed a co-exclusive arrangement in terms of we had the linear channels, they could surface that content in an app. They haven't actually launched it here. And we secured a decent saving on that deal. So a long way of saying, it's a great partnership. We're excited about it, and we'll be having some great conversations going forward, as Philip said, because this ultimately, we do want to deliver and some of the directors, the best viewing experience for New Zealand.

Sophie, thank you. Kirstin, next question, please.

We have another question from [ Mariano and Jacqueline Cassillo ]. How do you see the global streaming wars playing out? And how do you see them impacting on Sky?

Sophie?

So as Philip shared, the streaming wars to date have resulted in quite significant losses, over 9 billion in 2022 for the big studios. And so I think they're all revisiting their plans. We know that Disney of late and a significant deal in the U.S., which Mike, on the LinkedIn commentary, talked about with the cable operator there have agreed a deal effectively to talk about rebundling. Because the commercials and the way they're trying to go to market just didn't make sense because if you think about it, they not only had the content cost and all the delivery and distribution costs, but at the same time, they said to subscribers, "You know what? Just dip in and dip out and pay for titles that you like," so suddenly you completely disrupt your revenue model. So we're really interested to see what's happening abroad. But ultimately, here, that's why our new Sky experience is so vitally important. We've gone with the Google Android operators here. Android is the key word there. Every app is built either in Android and Apple iOS. So customers can happily bring any apps that they want into their ecosystem. The opportunity, it's a bit of a [ take ] challenge, but the opportunity for us is to make sure that we can actually then help surface the content in the right way in the years to come. So it's not to be blithe about it. It's just to say that we're really alive to it, and we see real opportunity going forward to also make sure our loyal Sky Box customers who may not be wanting to consume via apps, can still see the content they love through the linear channels and through the new interface. So we only see opportunity from that perspective.

Sophie, thank you. Mike, any comment you'd like to make in addition?

No, I think Sophie covered it pretty well.

Very good. Thank you very much. Kirstin. Next question.

Thank you, Philip. We have a written question from a shareholder in Australia. I'm wondering why your share price has been in a skydive since I bought them. I've lost over $10,000 from an investment of $13,630. I'm very unhappy about your management. Are your shares ever going to recover?

Thank you, Kirstin. Well, I mean, the first thing I would say, as an investor myself, is it's never much fun when you invest in a company and you lose a lot of money. So I have a lot of sympathy for this shareholder. What I don't know is enough about the personal circumstances, when the shares were bought, what the situation was. I think I can do little better than point to the data that was in my presentation earlier today, where I showed the shareholder return for Sky over 1 year and 2 years and compared that with the NZX50 Index where clearly, we are performing very well against other companies there. No, we are certainly a long way back from where Sky shares traded in the heady days before there was any competition and before we had streaming emerge. Clearly, the management team and the Board are very focused on generating as much value as we can for shareholders. And I would point to the results of the last 2 years to say that we have made significant progress over that time. Reality is we will continue doing that over the course of the next several years. Kirstin, anything else?

No, there's no further questions online.

Okay. Any further questions in the room before I call time?

Actually Philip, there's one more. Sorry.

Yes. That's all right.

It's just come through. I'm appreciative -- this is from -- I don't have the details of this shareholder. Her question is -- their question is I'm appreciate of the efforts of the team at Sky. That said, in the spirit of brutal honesty, I would like to raise an issue concerning Sky Box subscriber numbers. FY '23 Sky's Box subscriber losses of 2.7% were flattered by the Vodafone TV migration. Absent this, the decline would have been 6%. Yet, in the annual report and presentation, you chose to trumpet the 2.7% number in the leading pages whilst burying the Vodafone TV impact in the middle pages. A cynic might wonder if this is reflective of the culture at Sky. Could you please comment on the decline?

Thank you, Kirstin. I'll pass that one also to Sophie to respond to.

No, I don't think it reflects any reflection on Sky. We take our disclosure very, very seriously. We did make it clear that the Vodafone TV customers, who are Sky customers, they just happen to be subscribing through a Vodafone TV platform and so migrated across to us. Would I have preferred it was more than 18,000? 60%, not really a pass mark for me, but we were very happy to welcome them across. I think that we've made it very clear in our disclosures that they -- where they sit. And so we certainly didn't mean to cause anyone to think that we were trumpeting something that wasn't there. On the overall Sky Box numbers, we look at the revenue. We talked about the fact we're no longer doing deep discounts. We're very focused on margin. Our foregone revenue is significantly down. And so overall, I'm really comfortable with the disclosure, but very happy to connect directly with the shareholder to make sure they've got everything they need to have that confidence going forward.

Thank you, Sophie, very much. Kirstin, nothing further?

Yes. We have a question from [ Jason Fullerton-Smith ]. Are you seeing much cannibalization with regard Sky Box customers transitioning to Sky Sport Now given the significant price differential? And who are your respective target customers for each of these segments?

Sophie.

No, cannibalization is not a word that exists when you've got a portfolio of products. And if you think about the way that we have priced Sky Sport Now, $44.99 a month, and you look across at Sky Box, $37.99, actually, you get a lot more benefit on the Sky Box, if you choose to as a customer. So I'm not sure whether that review that there's a healthier on Sky Sport Now. We're really comfortable with where both products are at. It's all about customer choice. And so I'm not concerned more broadly going forward, and that's not a word that exists anymore. Is there nything you would add? Or was there a part of the question I didn't cover off?

Respective target customers for each of the segments?

Yes. Great, great question. We are actually doing quite a significant deep dive at the moment around segmentation. What does that mean? It just means understanding the different customer cohorts. We all know we're individuals. We're a category of one, all of us, but what you want to try and do as a business is deliver the right experience. And ultimately, it is about customer choice. So, there's more to come in that space. But if you like sport, there really is no better place than Sky. Anything that you would add, James?

I think probably the most important thing to reflect on is actually the total customer numbers. And the total customer numbers and the growth that are coming through, if you go back 5 or 10 years, a customer who was -- who chose to leave Sky had nowhere to watch the sport. Now they've actually got a range of options. And so I think it just reflects the evolution of the marketplace. And actually, it's a positive thing that our customers can choose exactly what they want to watch. And one of my big reflections on looking at Sky is actually the relatively low levels of churn as a percentage overall is actually a very, very strong performance overall. Thanks.

Thank you very much. Kirstin?

There are no further questions.

Well, no further questions. I see no further hands in the room. So before I close the meeting, I would like to thank you for your attendance today, for taking the time to come here, for some interesting questions and for your continued support of Sky. As we've outlined today, there are exciting times ahead for Sky as we continue to transform the business. And the Board and the executive team look forward to reporting to you on the company's continued progress. I now declare today's meeting closed and invite those in the room to join the Board and management for morning tea. Thank you all very much, indeed.