Some interesting numbers have merged around what it will cost Spark to fulfil its ambitions to tackle Sky TV head-on in the fight for top-tier sports rights.
The telco has so far played its cards close to its chest about Spark Sport. As the app launched early this year, it said 9000 had signed up ahead of its first stream (a Formula 1 race at the end of March, still within a 30-day free trial period).
At a briefing this week, the company refused to update on subscriber numbers, or comment on any costs - maintaining its longstanding position that it will not reveal any numbers until its first financial results after the Rugby World Cup (which should mean around February).
But nature abhors a vacuum, of course, and some numbers are starting to be bandied around - and it's looking possible that Spark could have to stump up more than $105 million per year to fully realise its sports streaming ambitions.
One well-placed source told the Herald this week that Spark had paid $13 million for 2019 World Rugby for the World Cup rights, or almost double what Sky is thought to have paid in 2015.
And there's a hint that Spark clawed back $1m from TVNZ (which will show the All Blacks' pool games and assumed quarter-final on a one-hour delay, plus the semis and the final live).
With Spark and TVNZ refusing comment, those numbers are only speculative (for what it's worth, a Sky staffer said they sounded on the low side).
Regardless, analysts have started to join in - and they're looking beyond September, in keeping with what we learned this week as Spark Sport head Jeff Latch said the profit Spark would realise after the RWC would depend on how many Tournament Pass customers decided to stick with Spark Sport long term.
"What we're far more interested in is acquiring competitions that will run for a long period of time and therefore be useful for us to build subscriptions over time," Latch said.
"We're interested, obviously, in securing tier-one content, and some of the other major sporting codes rights are coming on to the market this year."
ForsythBarr's Matt Henry and Matt Dunn note that several five-year sports rights contracts are on the immediate horizon.
They include NZ Cricket (at the end of this season), NZ Rugby (at the end of next year) and NRL (at the end of 2021).
Henry and Dunn estimate Sky TV's current sports line up costs it $105m a year for rights - with rugby accounting for around $65m of that total, NRL around $30m and cricket around $10m).
Then there would be millions more for a punt on netball, plus the costs of Spark Sport's existing lineup, which includes significant tier-two sports including English Premier League football and Formula 1.
Note those costs are for rights only. Production could come on top. Sky TV no longer has a near-monopoly on outside broadcast facilities, thanks to Spark Sport hooking up with the multinational NEP, which has recently set up shop in NZ. But it will still cost Spark millions to move into the live production game - as Latch has indicated it will from next year (having dipped its toes in schoolboy rugby this year).
And, of course, new Sky TV boss Martin Stewart has pronounced that his company will fight harder to retain sports rights.
"I think there's no doubt it's leading to an escalation in rights costs," Latch said on Tuesday when asked about the growing competition between Spark and Sky.
Henry and Dunn note some of the cost could potentially be defrayed. Some sports bodies might be up for a revenue risk model, they say, accepting less money upfront for a potentially bigger payoff down the track if subscriber targets are exceeded.
And if New Zealand follows the same trends as Australia, the UK, India the US and elsewhere, it's likely that sporting bodies will split rights to milk as much as they can from both Spark and Sky (and whoever else emerges; Amazon still lurks).
Broadcast, online and mobile rights could be sold separately, and even the broadcast rights to the same competition could be broken up into parcels to make sure all bidders are bled dry. In the UK, for example, a fan who wants to watch every English Premier League football game next season will need subscriptions to Sky, BT Sports and Amazon's Prime Video.
Who will blink first?
But at the end of the day, it's going to come down to a Mexican standoff. Will Spark's new chief executive Jolie Hodson or Sky TV's new boss Martin Stewart blink first in the sports rights bidding war to come.
Or, even if they do hold their mettle, will their boards and shareholders?
Spark hold the advantage that its a larger company (after big gains over the past few years, the telco now has a market cap of $7.2b, while Sky TV has lost 80 per cent of its value over the past five years to a recent $451m). But Sky might have more stomach for the fight - or, at least its boss, board and shareholders are keenly aware that keeping A-list sports rights will be a death or glory mission. Spark has lots of other fish to fry.
There is more to streaming than sports of course, but as the market for entertainment is going global as Netflix and Amazon Prime Video increasingly seek worldwide rights to third party content, and the likes of HBO experiment with apps to cut out both pay TV and streaming services. Sensibly, Spark said in March that it was looking for a partner for its entertainment service, Lightbox, which some see as a precursor to flicking off the service (today, Spark had no update on the Lightbox front).
In the immediate future, Henry and Dunn see Spark's special dividend under threat. They see the telco likely to halt payouts - but they also add that likely escalating Spark Sport costs are only one reason. Spark also needs a warchest for the upcoming 5G spectrum auction and its share of a planned new trans-Pacific submarine cable, dubbed Southern Cross Next.
One things for certain. Events at Spark will be anything but dull over the next 12 months.
Henry and Dunn rate it neutral, with a 12-month of $3.90. Shares were recently trading at $3.91. The stock is up 2.22 per cent for the year.