Connections
Work with your personal adviser to grow your wealth

Sky TV 'weren't going to drop the ball again' - Grant Davies talks to Stuff.co.nz

Sky TV has been dealt a body blow by Spark Sport's acquisition of the rights to broadcast New Zealand cricket for the next six years.

Sky Sport holds the rights for all domestic cricket until mid-way through next year, but when that deal ends in April 2020 Spark Sport will be the officials rights partner for all cricket matches played in New Zealand.

All Black Caps and White Ferns games, all men's and women's Super Smash games and the Ford Trophy one-day final will be streamed on the Spark platform.

The Thursday morning announcement had an immediate impact on the broadcaster's share price, which dropped from $2.86 two years ago to 92c.

When new chief executive Martin Stewart took over, he talked about his disappointment at the loss of the Rugby World Cup rights to Spark, telling media "we dropped the ball".

He said it was important to reposition Sky as the home of sport in New Zealand.

Grant Davies, an investment adviser at Hamilton Hindin Greene, said the latest news seemed like "death by a thousand cuts" for Sky TV.

"Spark Sport have come out swinging and secured something else close to many New Zealanders' hearts."

He said it would amplify the importance of Sky securing the Sanzaar rugby rights.

It will need shareholder approval to bid for the rights because the deal is worth more than half the company's value, at about $235 million. A vote will be held at its annual meeting.

It has held those rights since 1996 and told shareholders that content acquisition was a fundamental and essential aspect of the company's business.

"It's not great news for Sky," Davies said. "They were adamant 'we're not going to dropt he ball again'. You can make your own assumptions on whether they have."

He said anyone buying Sky shares would need to accept the fact that its business model was now much easier to replicate than it had been in the past. "The competitive advantage they did have is no longer there."

Business and technology commentator Paul Spain, chief executive of Gorilla Technology, said the announcement was a coup for Spark Sport.

"Spark have shown they are willing to spend money to solidify and say, 'hey, if you are interested in sport and you are interested in a lot of sport then you will need to have a subscription in Spark and Sky if you want to catch everything'," Spain said.

"This is the sort of thing that will, over time, allow Spark to increase their price or at least to grow their customer base. It will also lead to some people leaving behind their Sky subscription."

The expansion of Spark Sport reflected the rise of subscription models that could also include tech giants such as Amazon and Apple making a play for the New Zealand sport market, Spain said.

Sky Sport could struggle as it loses market share to an increasing number of competitors, he said.

In a press release following the announcement, a Sky TV spokeswoman said it would continue to broadcast some games through its partnership with Cricket Australia.

"While we would have liked to retain the local NZ Cricket rights from next season, we will continue to offer some of the best cricket the world has to offer, including exciting international fixtures involving the Black Caps on tour," she said.

Craig Stent, head of equities at Harbour Asset Management, said it would be a setback for Sky and heightened the importance of the remaining rugby rights but would have a limited impact on earnings.

He said Stewart was pursuing a good strategy for Sky but would be hamstrung without a solid supply of content.

Originally published by Debrin Foxcroft and Susan Edmunds of Stuff.co.nz

Filed under Grant Davies

Leave a comment

Fields marked * are required

Find An Advisor CONTACT NOW
Become A Client START NOW