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Home / Business / Companies / Telecommunications

Spark boss on the Lightbox sale, the future of Spark Sport

Chris Keall
By Chris Keall
Technology Editor/Senior Business Writer·NZ Herald·
20 Feb, 2020 04:36 AM4 mins to read

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Spark chief executive Jolie Hodson. Photo / File

Spark chief executive Jolie Hodson. Photo / File

SPARK
SPARK

Spark reported a strong first-half result, with underlying earnings up 2.2 per cent to $500m and revenue up 4.0 per cent to $1.82b.

READ MORE:
• Spark profit jumps 9 per cent to $167m, buoyed by mobile gains
• Premier League plans Netflix-style service - which would cut
the likes of Spark and Sky out of the loop

But after all the hype and heartache, Spark Sport turned out to be something of a footnote for the multibillion-dollar company, in financial terms.

Chief executive Jolie Hodson and CFO Stefan Knight refused to disclose the number of Spark Sport subscribers, or profit/loss or capex numbers around the service - but Knight did note on a conference call that Spark Sport fell into a $19m "other revenue" bucket that also included various Internet of Things initiatives and data analysis unit Qrious.

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That is, Spark Sport would have accounted for less than 1 per cent of revenue for the first-half, and with no $90 RWC passes to sell in the second-half (though domestic cricket could provide a bump), it will likely be a lot less for the full year.

The result underlined that for Spark Sport to make any meaningful contribution to the telco's bottom line, it will need to land season-long Super Rugby and All Blacks rights.

But Hodson pulled her punches when asked if Spark would make a play for Sanzaar rights when they next came up, for the period after 2025.

She wouldn't say if Spark would bid, pleading that it was too far away.

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Wealth manager Jarden recently told clients that Spark's sale of its Lightbox entertainment streaming service to Sky for $6m is as "a likely precursor to its eventual exit from Sport as well".

Spark chief executive Jolie Hodson. Photo / File
Spark chief executive Jolie Hodson. Photo / File

And Sky shareholders might be tempted to count their chickens, given Hodson's reticence about Sanzaar, or at least whether it will be worth a punt several years out.

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But Hodson also says, "Sport is something that we'll continue to stay in," as she references the telco's recent deal for domestic cricket rights.

Spark is open to bidding for more sports rights, she says, "But I'll always use the dual lenses. Is it desirable for customers, and does it make commercial sense for us as an organisation."

Why was it strategic to offload Lightbox (in a deal that closed January 1, a day after the reporting period) but keep Spark Sport?

"Entertainment has changed a lot over the last five years [since Lightbox launched]," Hodson says. Netflix - and now Amazon's Prime Video - have become global forces, and the likes of Disney+ and HBO Max are selling directly to the consumer.

"When we look at general entertainment, we don't think we're the natural owner of it," the CEO says.

"There's a lot more local investment within sport. We've identified the rights we think are valuable and we have a wide range already."

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One of Spark Sport's key franchises is English Premier League football (or soccer, if you must).

What did Hodson make of Premier League CEO Richard Masters' statement last week that the EPL will trial a Netflix-style service, possibly as soon as 2021, that sells and streams all games directly to fans around the world, cutting both old-school middlemen like pay-TV providers and new-school aggregators like Spark Sport out of the loop?

Is "Premflix", as Masters' project has been nicknamed, the future of all sports coverage, just as Disney+ has proved such a disruptor on the entertainment side of the fence?

"Maybe. Markets evolve quickly, so over time that could be [the case]," Hodson says.

"But there will still be a connection to local sports and local teams, whether that's cricket or other sports, it certainly has a role to play - at least in the foreseeable future for us, anyway."

For its part, Jarden maintained its underperform rating on Spark following yesterday's result, but analysts Arie Dekker and Grant Lowe raised its 12-month target price from $3.42 to $4.05. The pair say Spark enjoys a competitive environment for now, but have raised the prospect of Sky entering the broadband market to fight the telco on its own turf.

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