Why Sky TV’s English Premier League football rights win matters

Sky TV winning back English football rights from Spark won’t come close to rocking the foundations of either company.

Jarden head of research says the impact of securing this “second-tier” sport will be neutral on Sky’s earnings. But the analyst sees wider impacts.

In the immediate term, Dekker sees possible “downward pressure” on Spark Sport’s monthly pricing (which was bumped from $20 to $25 after the telco secured domestic cricket rights; Spark’s phone and broadband customers get a $5 discount).

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  • $56m windfall for Sky TV

Looking out further, Dekker sees a Spark possibly exiting sport. But he says if it does, it probably won’t be a clean break, as was the case when Spark sold its Lightbox entertainment platform to Sky in 2019 (Sky merged it into Neon).

“Spark has been absorbing losses in media for a long time over several iterations in sport and entertainment.While the level of annual losses is not particularly meaningful for Spark, the cumulative investment is mounting.”

He added: “Further, we see this loss of English Premier rights as confirmation of the challenges associated with establishing a sports platform … While Spark’s largest sporting investment – cricket – is subject to a multi-year deal, we think the more interesting thing will be to see whether Spark is willing to reiterate its long-term commitment in this space.”

If Spark does throw in the towel with sport, “certainly for Sky that would be a significant event, leaving it as the only local player with future competition for sports rights”.

But Dekker notes Sky would not necessarily have the field to itself. Global players like Amazon – which has gained various football, tennis and other sports rights in the UK, US and other countries – could potentially enter the market here.

This morning, Spark Sport head Jeff Latch said he was “disappointed” to have lost the EPL, but rattled off some of the remaining competitions in the telco’s roster (see below).We may hear more when Spark reports its half-year earnings on Wednesday next week.

Dekker, who recently upgraded Sky to outperform, maintained that rating today. He also maintained his more long-standing outperform rating on Spark.

While sports rights are make-or-break for Sky, Dekker sees Spark’s growth coming from areas like mobile,and cloud computing.

That transfer news

Earlier today, Sky revealed it had secured rights to the English Premier League for six years from the 2022/23 season – which will begin this August.

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  • $56m windfall for Sky TV

The pay-TV broadcaster says it will show all 380 games per season live and on-demand on its sports channels and Sky Sport Now. Details on build-up shows and half-time panels will be released closer to August.

Spark – which already faced questions from wealth manager Jarden about its commitment to sport – will now have to lean heavily on its domestic cricket rights.

End of paying twice?

The EPL will join Sky’s existing football lineup, which includes the Wellington Phoenix and the A-League, FA Cup and Fifa World Cup games.

“Those of our Sky Sport customers who are fanatical football fans have had to purchase a second service to watch the Premier League in recent years, and it’s great to now be able to offer them the Premier League as part of their wide range of sport and entertainment viewing options on Sky,” the company’s chief executive Sophie Moloney said.

Some English and European football fans will still feel the need to shell out for a Spark Sport sub, however. The telco’s streaming service still has rights to Uefa’s Champions League, Europa League and Europa Conference League.

Deal will have run to tens of millions

Sky’s new EPL deal was on undisclosed terms and negotiated directly with the English Premier League. BeINSport – Sky’s partner when it last had EPL rights between 2016 and 2019 – was out of the frame this time.

Streaming English football first came to NZ in 2013 via PremierLeaguePass, launched in 2013 and bankrolled by rich-lister Peter Cooper. It partnered with Spark toward the end of its three-year rights period before it was outbid by beINSport, which partnered with Sky, for the 2016-19 cycle.

A PremierLeaguePass insider estimated beIN paid $10m for 2016 to 2019 rights.

It’s likely the price has headed sharply north since. The Premier League just jacked up its prize money to £176m for the winning 2021/22 team (from £153m last year). The 20th-placed team will still pocket an eye-watering £106m (from £98m).

The UK Government forced the EPL to roll over its current domestic rights deal amid the pandemic. The league said the increases were fuelled by new overseas rights deals – including US broadcaster NBC, which AP reports tripled its payments to US$2.7b to secure a new six-year deal.

The Premier League is the most viewed sports league in the world, attracting a global cumulative audience of 3.2 billion viewers, Moloney says.

In recent years football has grown exponentially in New Zealand, both in terms of participation and it is now the most popular team sport for 5– to 17-year-olds, she adds.

Spark: 'Disappointed'

“We are naturally disappointed that we were unsuccessful in renewing the rights for the Premier League,” head of Spark Sport Jeff Latch says.

“The nature of our business is that we both win and lose content rights as they come to market and over the past few months we have secured a range of rights including extended NFL action, UFC, FIBA, the United Rugby Championship and Diamond League World Athletics.

“We’re proud to be the home of New Zealand Cricket content – Aotearoa’s most popular summer sport – and we still have plenty for football fans to sink their teeth into such as the Uefa Champions League, Uefa Europa League, and Uefa Conference league and we’ve got some exciting announcements coming up in the coming months which we know football fanatics will love.”

Earlier, Spark chief executive Jolie Hodson said her company was committed to Spark Sport. Her company would pursue new deals – but it was looking for a commercial return.

Spark caused a stir when it grabbed 2019 Rugby World Cup rights, but Sky struck back by paying a reported $400m for a new five-year deal covering All Blacks and Super Rugby matches through to 2025. The pair split cricket rights as new deals were announced in 2020. And last year, Spark nabbed the Rugby League World Cup but Sky signed a new NRL deal running through to 2027.

Spark sold its entertainment streaming service Lightbox – launched in 2014 – to Sky in 2019.

Sky shares were down 0.4 per cent to $2.47 in early afternoon trading. The broader ZX50 was down 1.01 per cent.

The stock, which had a 10:1 consolidation in September, is up 38 per cent for the year.

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