Kingfish exits Sky TV investment, citing costs, new rivals

Wednesday 16th December 2015

Kingfish, the NZX listed investment company managed by Fisher Funds Management, sold its stake in Sky Network Television because of concerns about the increased cost of delivering new services and the arrival of on-demand rivals such as Netflix and Lightbox.

In its interim report, senior portfolio manager Murray Brown and managing director Carmel Fisher say they had already reduced their holdings in Sky TV to below 2 percent prior to the broadcaster's annual shareholder meeting in October. At the meeting the company gave an earnings downgrade, citing the rising cost of new services such as Neon and Fanpass, higher programming costs and customers cancelling subscriptions when the Rugby World Cup ended.

Kingfish, which focuses on investing in New Zealand companies, subsequently exited its investment in Sky. Brown and Fisher said they "would prefer to watch from the sidelines while the subscriber on-demand model plays out and see if Sky TV can return to earnings growth again".

The investor also sold down holdings in Opus International Consulting, which made up 1.1 percent of its portfolio at the end of March 2015. Kingfish said it has been a "frustrating" investment, because it believes the market for infrastructure consulting remains strong. The company is underperforming in this context, hence the sale, it said.

Kingfish reported a net loss of $2.9 million for the six months ended Sept. 30, from a profit of $4.2 million a year earlier. Management fees were cut by $180,000, or to 1.05 percent of gross asset value, from 1.25 percent, because the portfolio under-performed the 90-day bank bill index. It did better than the S&P/NZX 50 Index in the period, with a 1.7 percent decline in the value of its portfolio against the NZX 50's 4.1 percent drop.

Kingfish stock rose 0.8 percent to $1.25 and has fallen 10 percent this year, against a broader market rise of almost 4 percent.

BusinessDesk.co.nz

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