Market Update: SKY’s Retaining Possession of the NZRU

By David Turner (Head of Investment)

SKY Television have been the subject of plenty of discussion over the past week, but early Monday morning, they made their most important announcement: they’ve retained the NZRU/SANZAAR contract through to 2025.

Forget all the press about local cricket contracts and the Rugby World Cup broadcasting rights – the NZRU contract is New Zealand’s most important contract by a significant margin. Yes, the loss of the local cricket rights will be a bitter pill to swallow for SKY, but it’s the consumers who are worse off: 2020 will be the most expensive year to date for cricket fans, with access to the Black Caps’ local and offshore matches requiring two separate subscriptions (similar to All Blacks fans’ experience this year).

SKY’s deal with the NZRU is a one-of-a-kind, and makes it clear that some contracts (the ones that place a significant focus on the growth and development of the game) are more than just a money grab; they’re a partnership. It’s been known for some time that SKY focus on the greater good of the game: between broadcasting high school and women’s rugby matches, and becoming the naming rights sponsor for Wellington’s stadium, SKY have established themselves as heavily invested in rugby’s grassroots.

When it comes to contracts like the RWC, cash is king and the highest bid will always win – I just hope that NZ Cricket have looked beyond the sizable cheque they will be receiving from Spark, and at what they can deliver back to the local game.

With the NZ Cricket announcement, SKY have been hit hard and will lose subscribers, but they have an opportunity with SKY Sports Now. Previously, viewers needed to buy a full SKY package (around $100/month) to watch the rugby, but SKY Sports Now allows access to rugby (and all their sports channels) at a lower entry cost (just $39.95/month), which could bring viewers back. What’s interesting is that they can’t compete with the expense accounts of Spark, who make money from a vast array of products and operate with a market share far exceeding their competition.

What does this mean for SKY? They will likely re-enter discussions with Vodafone (who also need help to compete with Spark) so they can diversify their offering, work to grow total revenue and consequently increase their bids come contract negotiation time. Watch this space.

Date: October 17, 2019