Sky confirms massive All Blacks, Super Rugby deal

Sky has today confirmed its acquisition of the All Blacks and Super Rugby rights until 2025.

In an announcement posted to the New Zealand Stock Exchange, the broadcaster told investors it had finalised the major deal.

The company did not say how much the deal was worth, but sources suggested Sky tabled an offer of $400 million back in September.

The company confirmed that the cost of the rights materially increased from its current arrangements.

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News of the deal first broke last week Friday, when sources told the Herald the deal was in the final stages.

Sky said today the deal was reached on the evening of October 13 and was subject to shareholder approval.

The new deal will see Sky deepen its investment in all levels of rugby and New Zealand Rugby (NZR) to become a shareholder in Sky.

"This is a great result for NZR," said the organisation's chief executive Steve Tew.

"We not only have a vastly experienced broadcast partner, but we have a partner prepared to work and invest with us in initiatives that will help grow the game over a prolonged period of time.

"For rugby in New Zealand, this is a hugely significant agreement that secures the long-term financial health of our game."

The deal extends Sky's existing Sanzaar broadcast rights to 2025. The five-year agreement includes:

• The rights to broadcast rugby in NZ from 2021 to 2025
• A record investment by Sky in New Zealand and Sanzaar rugby
• NZR becoming a 5 per cent shareholder in Sky.

If Sky shareholders approve the Special Resolution in the Notice of Meeting for the Sky AGM, the 5 per cent equity stake will involve Sky issuing 21,801,325 fully paid ordinary shares (ranking equally with Sky's existing ordinary shares) to NZR on 1 November 2019.

This will strengthen the ties between Sky and the New Zealand rugby body.

No further specific shareholder approval will be sought in connection with the proposed share issue.

The broadcast rights include exclusive coverage of all Investec Rugby Championship, Steinlager Series, Investec Super Rugby, Mitre 10 Cup and all New Zealand's other domestic competitions.

Winning the rights is a huge boost for Sky, whose share price has fallen by more than 20 per cent following news that Spark has won rights to domestic cricket, including Black Caps matches in New Zealand.

Sky chief executive Martin Stewart told Newstalk ZB's Mike Hosking this morning that he was disappointed at losing the cricket rights.

"I was pretty gutted, actually, to be honest," he said.

"I didn't expect that, if I'm being completely frank. We went right to the limit for that cricket deal - in fact we probably went beyond it and we got beaten by miles, and that's just one of those things. I think it's a fantastic result from a cash point of view for New Zealand Cricket, and I wish them well."

Stewart called NZR's 5 per cent equity stake in Sky "a special part of the deal".

"We have long known that there is mutual benefit when each of us succeeds, and we're pleased that NZR is becoming an investor in Sky."

This comes at a time when Sky competitor Spark currently holds the rights to the Rugby World Cup 2019.

In early September, Sky was said to have put a $400m offer on the table to NZ Rugby and Sanzaar for the next five-year cycle, once its current rights deal ends in 2020.

The deal could help to lift Sky shares, last week plunged below $1 for the first time in its 21 years as a listed company.

Sky TV's share price dropped by 18c (16.22 per cent) to as low as 87c - a new record low - on the NZX this morning. The pay-TV operator had held the cricket rights since 1995.

Pay-TV broadcaster Sky has never specified what it paid for its current five-year contract with Sanzaar, which runs from 2016 through to the end of the 2020 season.

But an insider says it runs to $70m per year (close to Forsyth Barr's recent estimate of $65m), or $350m in total.