The deal came with an unexpected kicker: NZ Rugby was given a 5 per cent stake in Sky - a clever move that tied the sporting body's fortunes to those of the pay-TV broadcaster.
"Spark Sport is effectively locked out of rugby," declared Craigs analyst Adrian Allbon.
But in a note this morning, Morningstar Research analyst Brian Han sees several problems ahead for Sky - and streaming providers in general - that led him to downgrade his rating.
Han says Morningstar has reduced its fair value estimate on Sky by 30 per cent to $1.30 per share on higher content cost assumptions.
The analyst said it would have been "fatal to its intrinsic value" for Sky to lose Sanzaar rights (covering All Blacks, Super Rugby and Mitre 10 games through to 2026) on the heels of domestic cricket rights going to Spark.
And he gives Sky dibs for throwing in a 5 per cent stake as part of the deal - a development, he says, that leaves the pay-TV broadcaster and NZ Rugby "tied at the hips."
But while Sky succeeded in keeping Sanzaar onboard, it was at a price estimated at $400m for the five-year contract as the cost swelled from around $70m to $80m per year.
And Han, like many analysts and pundits, was caught on the hop by Spark's "aggression" as it made a successful play for domestic cricket rights.
He sees the telco making a grab for NRL and Olympic rights next - which at the very least will drive up pricing.
"Spark appears hell-bent on dismantling Sky's position as the 'House of Sport'," he says.
More probably, Han sees consumer confusion as the market becomes more fragmented amid a move to a more streaming-centric market.
"The likely confusion among consumers, having to choose between so many platforms to access different sports and programming, will impact all operators. But as the incumbent aggregator, Sky has the most to lose," Han says.
The Morningstar analyst focussed on sport, but earlier the Herald noted that Sky also faces that Sky faces challenges on the entertainment front from direct-to-consumer streaming services such as Disney+ and HBO Max.
Disney is launching the $9.99 Disney+ in New Zealand next month, and Sky will shutter its two Disney channels at the same time.
In the US, Disney is set to bundle three streaming services - Disney+, ESPN+ and Hulu (a Netflix competitor in which Disney owns a 50 per cent stake) for just US$12.99 per month - a development noted by Sky CEO Martin Stewart as his company recently revealed a massive fair-value writedown.
Sky shares jumped 19 per cent to $1.06 yesterday and were up close to 1 per cent in midday trading today - yet the pay-TV provider is still down 50 per cent for the year and yet to fully make up its dip after Spark claimed domestic cricket rights last week.
