Sky shares jump after it extends rugby rights for 5 years

Monday, 14 October 2019

Sky Television has walked away with the rights to show Super Rugby and All Blacks matches until 2025, after Spark was unable to make a competing bid.

NZ Rugby will take a 5 per cent stake in Sky as part of its renewed arrangement with the broadcaster.

Spark spokesman Andrew Pirie said Spark had not bid for the rights.

Sky spokeswoman Kristy Martin said Sky had a period during which it had 'first dibs' to exclusively negotiate a new deal with Sanzaar, the body that manages South African, New Zealand and Australian rugby.

**READ MORE:

* Sky v Spark: Sky TV set to win All Blacks, Super Rugby rights in $400 million deal

* Cricket just the start as Spark Sport eyes up other sporting codes

* Sky TV would need to be sure of what it wanted to achieve in broadband market**

If Sky had not struck a deal by Sunday, the rights could have been opened up to other bidders. 

Pirie said Spark would have liked the opportunity to bid, but it couldn't know if it would have outbid Sky as it didn't know what the terms of its deal were.

'We accept and understand it is the prerogative of any sports content owner to make the decision as to what processes they follow,' he said.

NZ Rugby spokeswoman Juli Clausen said it had discussions with Spark earlier in the year during a non-exclusivity period 'but assessed that the deal on the table from Sky was positive enough to continue negotiations with a long-standing partner'.

Sky's shares were trading up 19 per cent at $1.06 shortly before 2pm, after investors expressed their relief at the deal.

It extends Sky's coverage all Investec Rugby Championship, Steinlager Series, Investec Super Rugby, Mitre 10 Cup and all New Zealand's other domestic competitions for a further five seasons after the end of next year.

Because the deal is worth more than $235m, shareholder approval will be required for the agreement, with a vote to take place at Sky's annual meeting on Thursday.

Sky chief executive Martin Stewart declined to confirm media reports that the deal was worth $400 million, saying people should 'forget about numbers put out there in an unauthorised way'.

But the company said the cost of the rights had increased 'materially' and represented a record investment by Sky in New Zealand and SANZAAR rugby.

Stewart said Sky had planned for that in its forecasts but would provide updated earnings guidance around the time it released its interim results in February.

'We are very comfortable with the recent guidance and the future guidance we are going to be giving to investors,' he said.

NZ Rugby's decision to take a 5 per cent stake in Sky recognised 'the increased alignment and strengthened relationship between Sky and NZR and their mutual support for one another and shared commitment to develop and promote the game', Sky said in a statement to the NZX.

Stewart told Stuff he did not feel Sky had invested too much in rugby rights at the expense of losing the rights to broadcast domestic cricket to streaming rival Spark.

Spark announced last week that Spark Sport had won the rights to show New Zealand cricket matches for six years, once Sky's existing deal concludes in April.

'We went right to the limit on cricket and to be honest we went beyond it, and we got outbid by miles,' Stewart said.

'I think it is a fantastic result from a cash point of view for New Zealand Cricket. We are disappointed that we lost but we have got a very detailed understanding of what different rights are worth to us and we went beyond that level for the cricket and we came up a long way short, so it is just a great result for NZ Cricket.'

Pirie brushed off the implicit suggestion that it had overpaid for the cricket, saying it was very comfortable with its partnership with NZ Cricket and the commercial arrangements.

Stewart said the agreement for NZ Rugby to take a 5 per cent shareholding in Sky was probably a 'one off' that he did not expect to see replicated in other sports rights deals.

'I think you have to look at the importance of rugby within New Zealand and the 'DNA' of what it means to be a Kiwi and I think it is a pretty unique situation.'

The agreement with NZ Rugby was essentially a continuation of the existing one, Stewart confirmed.

'In broad terms it is the same deal as before. We have got exclusive rights to all platforms including streaming, satellite and of course free-to-air as well.

'This is a very important part of the future we are building for Sky. We want to make sure that we are a fully multi-platform media operation and that we can be accessible to all Kiwis.'

There has been a feeling among some rugby fans that Super Rugby has been losing its appeal.

Sky TV had been talking to NZ Rugby about what they jointly needed to do to try and drive the growth of the game, Stewart said.

'That is from the grass roots all the way to high performance teams and that is for mens, womens, boys and girls rugby.

'A big part of what we are going to be doing with NZ Rugby over the next six years is about deepening investment at all levels of the game – engagement, participation, viewership and general enjoyment of the game of rugby is something that we need to work together to nurture.'

Stewart, who replaced John Fellet as chief executive of Sky in February, said people had told him 'literally every single day' since he started the job that he had to keep the rugby.

'I am very glad that bit is behind us but the real work starts now.'

Hamilton Hindin Greene investment adviser Martin Davies said NZ Rugby's decision to take a stake in Sky was 'more symbolism' to show the two organisations were wedded together, but it lessened the amount of cash Sky would have to pay upfront for the rights.

It was hard to imagine Sky Sport continuing without the rugby, while NZ Rugby was aware it had a good partner in Sky, he said.