Sky shares keep pointing upwards despite Murdoch re-hire
Ken Odeluga January 29, 2016 7:39 PM
<p>So Murdoch the Younger makes a (not so) triumphant return to the top table at Sky Plc., chastened, older and perhaps wiser. The Returner has […]</p>
So Murdoch the Younger makes a (not so) triumphant return to the top table at Sky Plc., chastened, older and perhaps wiser.
The Returner has fortuitous timing.
Murdoch’s reappointment on Friday may or may not be related to Europe’s No.1 satellite TV group having solid H1/Q2 figures to report.
- Operating profit rose 12% to £747m for six months to end Dec. (consensus: £727m)
- 337,000 new customer additions in Q2, with strong growth in TV, broadband; highest customer additions in UK & Ireland for 10 years
The immediate reaction of many shareholders was to ask: will Murdoch Jr. and Sr.—CEO and chairman respectively of 21st Century Fox—attempt to seize Sky entirely again?
An earlier bid collapsed in 2012, when James Murdoch had to resign as Sky chair (though he remained a director) after being tarnished by the ‘phone-hacking scandal at Murdoch-controlled News of the World.
Murdoch Snr. has made clear in the past 21st Century would prefer to own all of the company he essentially founded 26 years ago, rather than the current 39% (still a majority).
However the reinstatement of his son first isn’t in keeping with the logic of another attempted buy-out.
Speculation has pushed up the price.
What is clear, however, is that Fox still regards European satellite broadcasting as ‘core’.
That makes some sense.
Sky continues to generate sector leading free-cash flow from consolidated annual revenue growth that has yet to be matched by rivals like Vivendi, ITV, or if we adopt a broader definition of ‘media’ WPP.
Just don’t expect the US group to flatter the share price of its European holding skyward any time soon, unless it’s forced to.
For now, a wide-angle view shows Sky shares continue to make solid progress off late 2014 lows, notwithstanding a significant pause last summer, along with almost every other global stock.
Friday’s news provided a spring board to lift the price into the neckline (N) of a probably defunct head (H)-and-shoulders (L, R), albeit, not a very pronounced one.
In the quite near term, surpassing, said line (around 1074p) would confirm further steady progress was the likeliest scenario.
As would resumption of activity above 100/200-day moving averages (light blue, dark blue; dotted line=21 day Exponential MA).
Failure to confirm a support zone from prior resistance (say 1056p-1062p) would suggest further delays in Sky’s share price advance.
Still, the fundamental picture remains about as solid as an investor could wish for.
Please click image to enlarge