Spark announced this week that 186,000 subscribers had signed up for the Rugby World Cup. However, keeping those subscribers loyal has always depended on the company winning other sporting events beyond the Rugby tournament.
Spark Sport boss Jeff Latch has made no secret of his intention to nab season-long A list sports, like cricket, in a bid to keep viewers hooked onto the service.
With the two giant slogging it out, the cost of sporting rights look set to escalate as the rights owners look to get the best price in the bidding war.
Spark is said to have paid $13 million for Rugby World Cup rights (the telco won't confirm or deny), with $1m defrayed via its partnership with TVNZ.
And a recent Forsyth Barr research report estimates Sky spends at least $106m a year on sports rights - around $65m on rugby, $30m on league and some $10m on netball.
It's unclear at this stage what the company has paid for the cricket rights, but they wouldn't have come cheap.
And as the cost of securing rights continue to escalate, it is at possible that some of that could eventually be passed on to customers.
One thing that's clear is that today's announcement has already hit Sky, with the company's share price dropping to a record low immediately after the market opened.
Sky TV boss Martin Stewart previously drew a line in the sand, saying that the company would not allow itself to be outbid again.
"If someone outbids us, they're going to go broke," he said.
Stewart previously told the Herald that Sky had "dropped the ball" in losing the Rugby World Cup rights to Spark and that it would not happen again.
It has now happened again and it shows that Spark is taking its sports play very seriously.
The Sky is falling
Sky TV shares are plummeting after Spark Sport nabbed the rights to New Zealand Cricket, a move analysts are describing as a game-changer for sports broadcasting in this country.
Sky shares tumbled 19c, or 17 per cent, to 92c in early trading on the NZX this morning following Spark's announcement, which follows the company's audacious winning bid for the Rugby World Cup rights, which has not gone smoothly.
New Zealand equities manager at JB Were, Rickey Ward, said the cricket deal was further confirmation of Spark's commitment to streaming sport content.
"They are saying 'just because we've had the odd glitch in the Rugby World Cup, doesn't mean we've given up on this'."
Ward recalled Sky TV CEO Martin Stewart's comments to the Herald that the company was still going to be the home of sport.
In that interview, Stewart indicated he would bid til it hurt to keep rights to key sports - then bid some more.
"Well that doesn't appear to be the case," Ward said today.
"The bigger picture here is that most people thought there was going to be a more commercial approach to content from Spark – this is a commercial approach, but it's clearly not the one people were expecting where they thought it would be more toward Sky TV offering or extending the rights to broadcast through other mediums, a la Spark.
"Spark has built a platform under [former CEO] Simon Moutter and [new CEO] Jolie Hodson and they are going to carry on developing that because in their minds it's the distribution model of the future."
Ward said Sky needs to reinvest back into its platform the same way Spark is doing.
"They also need to pay up for content if they are reliant on rugby. Therefore the dividend got removed in anticipation for that."
"This doesn't help, which is why the share price is under pressure again."
- With Chris Keall
