Spark's decision to bundle Sky Sport Now, at a discount, with its own Spark Sport could be "the first white flag" in its media strategy, Jarden head of research Arie Dekker says.
In Dekker's view of the six-month deal, "there is a distinct possibility that this is the first step in a process in which Spark can offload its sporting rights".
Dekker has been a long-time sceptic of Spark's push into content. When Spark reached a $6 million deal to sell its Lightbox entertainment streaming service to Sky earlier this year, he predicted it would be the start of a full withdrawal from streaming.
The $39.99 price-point for Spark's Spark Sport/Sky Sport Now bundle - a saving of up to $15 per month for Spark customers who have previously bought the two services separately - "suggests no positive incremental economics for Spark in bundling Sky Sport Now. If anything, Spark might be giving a bit up against the $24.99 per month standalone pricing as it attempts to increase the penetration potential of its sports offering," Dekker told the Herald.
He added, "In putting Sky's old sports line up back together at a $50 price point on a standalone streaming basis, we [Jarden] are sceptical that there will be meaningful positive take-up. And with Spark highly likely losing money and Sky not making much, it continues to underscore the distinct lack of profit pool in pay-TV in NZ currently."
Dekker sees "Sky bidding strongly to get Formula 1 and English Premier League football back. He thinks Spark could ultimately offer cricket back to Sky, "and they're more likely to get at a discount if that does happen."
Fat Prophets head of research Greg Smith saw the bundling deal favouring Sky.
"I think it shows that Sky is prepared to put aside traditional rivalries to widen the net as much as possible and look at other avenues to grow streaming customers," he told the Herald.
"For Spark, it's an acknowledgment that Sky is very much out some way in front as number one in terms of high-quality sports content."
Asked to respond to Dekker's "white flag" comment, a Spark spokeswoman said, "Offering our broadband and pay-monthly mobile customers a sports bundle as a value-added service is totally consistent with our approach for several years now. We use value-added services to differentiate our mobile and broadband services - other offers include Spotify, Netflix, Lightbox, Spark Sport and more recently Neon.
"We are committed to our sports-streaming service and excited about the beginning of our six-year partnership with New Zealand Cricket beginning next month, alongside the wide range of high-quality sports content already on the platform."
Previously chief executive Jolie Hodson has said the telco is committed to Spark Sport - although also saying it its too early to say if Spark will bid for Sanzaar rights next time around. Spark has recently expanded Spark Sport into pay-per-view boxing, partnering with Duco Events and NZ Herald publisher NZME on the next Joseph Parker bout.
Spark Sport began with English Premier League football and Formula 1, then made a splash by seizing 2019 Rugby World Cup rights, plus domestic cricket.
Dekker has a neutral rating on Spark on a $4.38 12-month price target.
Outside of streaming, Dekker has been broadly positive about Spark, and its solid execution in areas such as mobile and cloud computing. His neutral rating is based on the telco being fully valued after its resilient performance on the NZX this year.
Dekker has Sky on neutral with a 17c target.
Smith is bullish on Sky - where he thinks the worst-case scenarios are already baked in, and then some. He seeks the stock going to 35c.
The shape of the bundle
Spark Sport costs $24.99 per month (with some Spark mobile and broadband customers able to claim a $5 rebate), while Sky Sport now costs $39.99 per month (although it can fall to $24.92 per month if a customer pays $299 to commit to a 12-month bundle). That means someone who buys both services together will save up to $15 per month.
Spark said the bundle would only be available to any broadband or mobile customer on contract. It won't be available for those on pre-pay.
The initial period of the deal is six months.
Neither side would comment on commercial terms.
At this stage, Sky is not offering a Spark Sport bundle for its customers.
Sometimes friends, sometimes foes
No one had been picking that the two competing sports-streaming services would be offered in a single bundle.
But it's not the first time Spark and Sky have cooperated.
Spark offered Sky's earlier sports-streaming service, Fanpass, to its own customers at a cutprice rate under a wholesale deal.
Sky hosted a 2019 Rugby World Cup channel for its commercial customers, providing Spark with an at-cost way to provide pubs and clubs with easy access to the tournament.
After Sky bought entertainment-streaming service Lightbox from Spark for $6m, the telco's qualifying customers still got free access under a wholesale deal for six months until June this year, when Lightbox was merged into Sky's Neon.
And, recently, Sky boss Martin Stewart said he was open to Spark Sport available on Sky's new box, which will feature Netflix and other third-party apps.
In other areas, head-to-head competition continues - or is even expanding.
Sky fell 0.7 per cent to 15.4c in Wednesday trading as the broader market finished 1.98 per cent down. The stock is down 70.1 per cent for the year.
Spark was down 0.8 per cent to $4.59. The stock is up 3.27 per cent for the year.