Sky to acquire Discovery NZ

Sky New Zealand
PO Box 9059
Newmarket
Auckland 1149
New Zealand
10 Panorama Road
Mt Wellington
Auckland 1060
New Zealand
T. +64 9 579 9999
sky.co.nz
22 July 2025
Sky to acquire Discovery NZ
Sky today announces it has agreed to acquire 100% of the shares in Discovery NZ Limited
(Discovery NZ) from Discovery Networks Asia-Pacific Pte Ltd (a subsidiary of Warner Bros.
Discovery, Inc.) (WBD) for $1 on a cash-free, debt-free basis. Completion of the sale is
expected to take place on 1 August 2025.
Discovery NZ owns and operates:
•Broadcast-video-on-demand (BVOD) streaming platform ThreeNow
•Free-to-air linear channel Three
•And a range of other linear and free ad-supported streaming television (FAST) channels in
New Zealand.
Sky expects the acquisition of Discovery NZ to:
•Deliver Sky revenue diversification and uplift of c.$95m on an annualised basis, with
~25%from digital sources
•Add to Sky’s existing audience a growing digital audience via ThreeNow, a BVOD platform
that recently recorded its 12
th
straight quarter of viewership growth
•Grow Sky’s combined total linear television advertising revenue share to ~35%
1
and total
digital television advertising revenue share to ~24%
2
•Deliver material cost synergies primarily across Sky’s content and broadcasting
infrastructure
•Deliver a pathway to achieve incremental, underlying free cash flow from FY26 and
sustainable EBITDA growth of at least $10m from FY28.
Sky Chief Executive Sophie Moloney said: “This is a compelling opportunity for Sky that directly
supports our ambition to be Aotearoa New Zealand’s most engaging and essential media
company. It positions us to scale faster, accelerates our growth, and further diversifies our
revenue streams, particularly in advertising and digital. We are acquiring a business with
complementary operations that is a strong strategic fit for Sky, in an accretive way for our
shareholders.
“In particular, acquiring the established and fast-growing ThreeNow BVOD platform adds an
important missing component to Sky’s portfolio, without incurring the significant brand and
1
ASA Advertising Turnover Report 2024, noting Newshub restructure took place in mid-2024.
2
Based on actual Sky and DNZ data and ASA Advertising Turnover Report 2024.

platform development costs and inherent revenue risks associated with building a BVOD
service ourselves. The combined portfolio will give Sky significantly increased scale, diversity
and mass reach that will unlock more opportunities in advertising and maximise the return on
our investments in content through a strengthened, multi-platform approach.”

Michael Brooks, Managing Director Australia and New Zealand for WBD, said: “This is a
fantastic outcome for both WBD and Sky. The continued challenges faced by the New Zealand
media industry are well documented, and over the past 12 months, the Discovery NZ team has
worked to deliver a new, more sustainable business model following a significant restructure in
2024. While this business is not commercially viable as a standalone asset in WBD’s New
Zealand portfolio, we see the value Three and ThreeNow can bring to Sky’s existing offering of
complementary assets. The transaction includes a significant and ongoing content supply
agreement for WBD’s premium content, for the mutual benefit of both parties.”

Sophie Moloney said: “Notwithstanding the ongoing challenges faced by the Discovery NZ
business, Sky is uniquely placed to give effect to this opportunity to accelerate our growth
strategy.”

On completion, Discovery NZ’s balance sheet
3
will be clear of certain long-term obligations,
including property leases and content commitments, and will include assets such as the
ThreeNow platform, a portfolio of content rights acquired in the normal course of business and
clear of content payables, and a normal level of other net working capital (subject to a
customary post completion adjustment process).

This transaction structure enables a pathway to achieving positive underlying free cash flow
from year one. Longer term, the transaction is expected to deliver sustainable EBITDA growth of
at least $10 million by FY28.

A structured transition plan will be in place to facilitate a smooth integration. This includes the
provision of transitional services by WBD on commercial terms for 12 months post completion,
and a contribution towards integration costs. The net integration costs for Sky are expected to
be approximately $6.5m. Juliet Peterson, Vice President, Head of Networks, will continue to
lead the Discovery NZ business, reporting to Sophie Moloney.

Irrespective of this transaction, Sky remains confident in achieving its 30cps dividend target for
FY26.

Sophie Moloney commented: “I am excited by the possibilities this transaction unlocks for our
business, by delivering transformative scale in advertising and digital, and significantly
advancing our revenue growth strategy. We look forward to welcoming the excellent and highly-
regarded Discovery NZ team to Sky, and to working together to deliver on the opportunities this
transaction presents for our customers, partners and shareholders.”

Sky and Discovery NZ gave the Commerce Commission confidential advance notice of the
transaction. The Commission looked at the commercial circumstances and advised the parties
that it did not intend to consider the acquisition further.


3
The DNZ balance sheet will be subject to fair value acquisition accounting, to be completed in due course.

An investor presentation has been released to the NZX and ASX with further detail on the
acquisition.

Ends
Authorised by: Kirstin Jones, Company Secretary


Investor queries to: Media queries to:
Amanda West Maree Wilson
Head of Investor Relations & Corporate Sustainability Corporate Communications
Amanda.West@sky.co.nz Maree.Wilson@sky.co.nz

---

© SKY 2021
Sky Network Television
Acceleration of growth strategy
through the acquisition of
Discovery NZ

© SKY 2021
Page 2
Acquisition of Discovery NZ │22 July 2025
Acquisition of Discovery NZ enables Sky to go further,
faster
✓Sky is uniquely positioned to realise this opportunity, which delivers a step
change in its growth strategy
✓Expected to deliver underlying incremental free cash flow in year one, and
long-term sustainable EBITDA uplift from FY28
✓Strong strategic fit from a highly complementary business creates
immediate scale in Advertising and Digital in a cost-effective way
✓Sky’s balance sheet remains strong, and the transaction does not change
our confidence in achieving our 30cps dividend target in FY26

© SKY 2021
Acquisition
Summary

© SKY 2021
Page 4
Acquisition of Discovery NZ │22 July 2025
Financial
✓Nominal cost acquisition of 100% of Discovery NZ for $1
on a cash free, debt free basis
✓Immediate revenue uplift of c.$95m p.a., including 25%
from digital sources
✓Underlying free cash flow positive in year one; confidence
in 30 cps dividend target in FY26 remains
✓Future earnings and integration de-risked through pre-
structuring actions and robust synergy due diligence
✓Significant financial synergies available, primarily in
content and broadcast infrastructure
Strategic
✓Creates significant audience presence, aligned with Sky’s
ambition to be Aotearoa NZ’s most engaging and
essential media company
✓Delivers immediate Advertising scale in linear and in the
growing digital category, further diversifying revenue
✓Accelerates digital reach through established, high-growth
BVOD
1
, strengthening Sky’s multi-platform approach
✓Connects to a younger, more diverse audience through
established brands, creating opportunities for growth
✓Increases return on content investment, leveraging Sky’s
portfolio-based strategy across a broader audience
Compelling strategic and financial rationale underpins
the transaction
1. BVOD: Broadcast Video On Demand, free to access streaming platform ThreeNow

© SKY 2021
Page 5
Acquisition of Discovery NZ │22 July 2025
NEXT
Sky is uniquely placed to realise this opportunity to
accelerate its growth strategy
Transaction expected to deliver positive underlying free cash from FY26
NOW
•Purchase price of $1 on a cash free, debt free basis
•Pre-structuring provides: a clean balance sheet largely clear of long-term obligations,
including property leases and content commitments, and will include assets such as
the ThreeNow platform, a portfolio of content rights, acquired in the normal course of
business and clear of content payables, and a normal level of net working capital
•Structuring gives a high level of confidence in FY26 outcome, with low reliance on
synergies
Sustainable EBITDA uplift of at least $10m expected from FY28
•Content on completion reduces net working capital requirements in the first 12-18
months providing a runway to rollout Sky’s content strategy and realise synergies
•Content supply agreements provide cost certainty along with mutually beneficial
revenue share arrangements, while the transitional services agreement enables a
smooth transition pathway
•Significant cost synergies, primarily in content and broadcast infrastructure, identified
through robust due diligence
Actions taken over the
past 12 months,
including the closure of
Newshub, have
substantially reduced
the cost base, creating a
leaner, more digitally
focused business
Revenue has stabilised
at a new level, delivering
improved margin
Significant
Discovery NZ
transformation
✓DONE

© SKY 2021
Strategic
Rationale

© SKY 2021
Page 7
Acquisition of Discovery NZ │22 July 2025
•Lifts total combined audience reach to 2.2
million linear and 1.2 million digital viewers
per week
1
•Adds established and much-loved brands
with complementary strengths in audience
and content genres including local news and
reality
•Boosts Sky’s position in digital through
established and fast growing ThreeNow
BVOD, missing from Sky’s portfolio, without
incurring the significant development costs
of building from scratch
1. Digital – Nielsen CMI AP15+. Weekly. Linear TV - Nielsen TAM, Jul 2024-Jun 2025, 18+.
Creates significant audience presence
with powerful reach

© SKY 2021
Page 8
Acquisition of Discovery NZ │22 July 2025
Revenue Share
2
1. ASA Advertising Turnover Report 2024. 2. Linear Revenue Share: ASA Advertising
Turnover Report 2024, noting Newshub restructure took place in mid-2024.. Digital Revenue
Share based on 2024 Sky and DNZ data and ASA Advertising Turnover Report 2024.
•A step change for our advertising ambitions,
delivering immediate addressable audience
scale that would be difficult to achieve
organically
•Increase in linear revenue share delivers scale
in the largest TV category (linear makes up
approx. 80% of TV Ad spend of $490m
1
)
•Significant increase in digital revenue share
drives scale in this growing segment
•Creates ability to sell across a multi-
platform suite and enhances appeal to
brands and agencies
Delivers immediate Advertising scale and
a strong market position

© SKY 2021
Page 9
Acquisition of Discovery NZ │22 July 2025
Expands Sky’s reach to a more diverse audience
•Significantly increased reach, to younger,
more diverse viewers, particularly in digital
•Unlocks opportunities for cross-platform
marketing and content windowing
strategies to drive long-term margin growth
•Delivers advantages for partners
-Attractive opportunities to grow
exposure and fan base through broader
free to air reach
-Unlocks powerful advertising offer to
broader segments complementing Sky’s
existing strengths
Incremental weekly reach
1
1. Incremental to Sky’s current audience reach, by age and gender groups. Linear: Nielsen
TAM July 2024-June 2025, Digital: Nielsen CMI Q2 2024-Q1 2025

© SKY 2021
Page 10
Acquisition of Discovery NZ │22 July 2025
Summary of key deal terms
Key deal terms
•Acquisition of 100% of Discovery NZ Limited for $1 on a cash
free, debt free basis
•Balance sheet largely clean (property leases and certain content
commitments cleared prior to completion)
•Three and ThreeNow brands and BVOD platform are acquired
assets
•Content on completion acquired in the normal course of business
and clear of payables reduces net working capital requirements
and provides a cash flow benefit in the first 12 – 18 months as
Sky executes its content strategy and synergies are unlocked
•Content supply agreements provide cost certainty along with
mutually beneficial revenue share arrangements
•TSA agreement in place for 12 months on commercial terms to
support a smooth transition
Transaction cost estimates:
-Transaction fees: $3.0m
-Net integration costs
1
: $6.5m
Timetable
Completion expected 1 August 2025
Note:
Acquisition accounting is subject to a PPA
process to be completed within 12 months of
acquisition
1.Includes a contribution from WBD towards integration costs

Page 11
Acquisition of Discovery NZ │22 July 2025
Disclaimer
This presentation has been prepared by Sky Network Television Limited and its group of companies (“the Company”) for informational purposes. This disclaimer applies to this
document and the verbal or written comments of any person presenting it.
Information in this presentation has been prepared by the Company with due care and attention. However, neither the Company nor any of its directors, employees,
shareholders nor any other person give any warranties or representation (express or implied) as the accuracy or completeness of this information. To the maximum extent
permitted by law, none of the Company, its directors, employees, shareholders or any other person shall have any liability whatsoever to any person for any loss (including,
without limitation, arising from any fault or negligence) arising from this presentation or any information supplied in connection with it.
This presentation contains projections or forward-looking statements regarding a variety of items. Such projections or forward-looking statements are based on current
expectations, estimates and assumptions and are subject to a number of risks, and uncertainties, including material adverse events, significant one-off expenses and other
unforeseeable circumstances. There is no assurance that results contemplated in any of these projections and forward-looking statements will be realised, nor is there any
assurance that the expectations, estimates and assumptions underpinning those projections or forward-looking statements are reasonable. Actual results may differ materially
from those projected in this presentation. No person is under any obligation to update this presentation at any time after its release or to provide you with further information
about the Company.
The information in this presentation is of a general nature and does not constitute financial product advice, investment advice or any recommendation. The presentation does
not constitute an offer to sell, or a solicitation of an offer to buy, any security and may not be relied upon in connection with the purchase or sale of any security. Nothing in this
presentation constitutes legal, financial, tax or other advice.
Page 11