The state broadcaster is already Spark’s free-to-air partner for cricket coverage. TVNZ has previously said it is open to the possibility of paid-streaming content.
An insider says there’s been a desire to push a deal through before the TVNZ-RNZ merger, which could now be dead in the water.
Earlier this year, Spark Sport relinquished English Premier League football rights to Sky. And recently, Sky took back rights to the Rugby World Cup, with a multi-tournament deal running through to 2029.
Its highest profile remaining assets are Formula One rights, and domestic cricket rights — on a contract with three years left to run at what the Herald understands is around $36m per year.
There has been market chatter around a possible Spark Sport sale for several months.
In May, Jarden analyst Arie Dekker told the Herald a sale would make sense. Streaming sport was a relatively high-risk, low-reward endeavour for the telco, which copped brand damage when a key 2019 Rugby World Cup clash between New Zealand and South Africa stuttered, with second-half coverage simulcast through TVNZ.
Dekker said Spark — which earlier sold its Lightbox entertainment-streaming business to Sky in a $6m deal in 2020 — would be better off ditching the distraction of sports streaming in favour of focussing on its much larger core business, where it was performing well.
Spark has never released subscriber numbers or financials for Spark Sport, which is included in an omnibus “other” category in its results that includes several business units.
But the Herald understands the service is a money loser.
“Spark has been struggling to build a platform with sufficient recurring content to attract a broad audience,” Dekker said.
“In our view an exit from Spark Sport makes sense given the difficulty getting traction and questions around the size of the profit pool in pay-tv sport given competition and the power of rights holders.”
At the time, Spark CEO Jolie Hodson said the telco was committed to building a content-strong portfolio, adding the qualifier that deals had to make commercial sense.
Telcos around the world offload sport
Another factor: In an industry driven by global trends, telcos are blowing the whistle on their sports-broadcasting ambitions.
Mid-year, British Telecom said it would receive £93m deal that would see BT Sport become a wholly-owned subsidiary of Eurosport (part of Warner Bros. Discovery).
It was the creation of BT Sport in 2012 that kicked off the global craze for telcos getting into sports streaming when it seized a chunk of Premier League rights. At the time, sport was seen as a loss leader that could be used to sell broadband plans, or keep current customers loyal. But telcos’ very entry into sports rights — followed by the likes of Amazon and Apple — has seen content costs spiral.
“BT has been wanting to exit sports for some time, and this is its get-out-of-jail-free card,” media analyst Paolo Pescatore told the FT.
Across the Tasman, Telstra last year stopped streaming AFL and NRL games in favour of offering its customers discounted Foxtel access. And although Optus recently renewed its EPL contract, earlier this month it gave up rights to UEFA football matches to Stan — a unit of traditional broadcaster Nine.
Sports bodies themselves are also experimenting with direct-to-consumer streaming services.
The latest is Fifa’s streaming service, which has the potential to evolve into a global Netflix of football, but England’s Premier League has also talked-up plans for a possible global “Premflix” service.
Under a US$2.5b deal, Apple is making American Major League Soccer available worldwide, including in New Zealand. While it’s fair to say few in Godzone care about the fortunes of LA FC, the deal creates something of a template for the global streaming of any given competition.
Meanwhile, two Disney direct-to-the-consumer properties — Disney+ and ESPN+ — continue to grow strongly, proving the potential of cutting out both old-school and digital-era middlemen.
Some traditional broadcasters — including Sky in NZ — at first seemed to be teetering with streaming, but have now got their technical and commercial act together with digital technologies.
Spark shares were down 0.38 per cent in midday trading, pacing a fall in the broader market.
With reporting by Gregor Paul.
