Sky has revealed another restriction on the 21.8 million shares it granted NZ Rugby as part of its new Sanzaar deal.
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The deal, announced in October, gives Sky rights to All Blacks, Super Rugby and Mitre 10 Cup games through to 2026 for an undisclosed cash sum (the Herald understands it was $400m) plus a 5 per cent stake in the pay-TV broadcaster.
Sky previously revealed that NZ Rugby must hold its stake for a minimum two years.
An NZX filing today states that NZ Rugby must also give Sky at least 10 working days notice if it wants to sell its shares the restricted term expires - something that could serve as a canary-in-the-coalmine early warning for Sky's negotiators. NZR will also have to hold good-faith talks with Sky and give the pay-TV broadcaster the chance to line up a purchaser.
Sky also issued a capital charge notice today as it disclosed that the 21,801,325 shares were issued at a price of 92 cents - valuing them at $20.06m.
The deal - which will see a sporting code take a stake in a broadcaster for the first time in New Zealand - has been labelled as "revolutionary," entrepreneurial and innovative.
But the reality is companies typically include shares in a deal when they don't have enough cash to pay for it outright.
The two-year restriction crimps NZ Rugby, but not as much as some feared.
When the five per cent stake was first announced, one analyst even went as far as saying the deal effectively locked-out Spark Sport.
Sky and NZ Rugby would be "joined at the hip" as another analyst put it, with the sport code knowing that the value of its 5 per stake in Sky would crash if it handed post-2026 Sanzaar rights to Spark.
(And more conceptually, Dylan Cleaver worried the deal would "spread even more treacle on rugby's syrupy coverage.")
But the ability for NZ Rugby to offload its shares after two years - revealed later on the eve of Sky's AGM - gives the sporting body plenty of space to sell the shares before it has to renegotiate the five-yearly rugby rights again.
The 5 per cent shareholding will also make it very obvious when NZR sells out or even reduces its stake as any change in the holding will trigger a substantial shareholder notice to the stock exchange.
Analysts are bound to be watching out for this as a future indicator of whether Sky TV will continue to hold the rugby rights.
Sky shares were down 1.11 per cent to 89c in early afternoon trading.
The stock is down 60.18 per cent for the year.