Spark said this morning it has reached a deal with TVNZ, which “will become the home of the majority of Spark Sport content, subject to rights holder agreement, from July 1, 2023.”
Formula 1 won’t be part of the deal, however. Spark is losing its rights at the end of this month. The motorsport has been snapped up by Sky.
NZ Cricket public affairs manager Richard Boock told the Herald that domestic cricket will be free-to-air on TVNZ and free-to-stream on TVNZ+. The public broadcaster will not paywall any content.
TVNZ will take over the production of domestic cricket, but that Spark will continue to pay NZ Cricket the rights fee over the remaining three years of its contract, which has been put at between $26m and $36m per year.
TVNZ will show and produce all Black Caps, White Ferns, and Super Smash matches, which are run by New Zealand Cricket, for three years from the start of the 2023/24 cricket season until the end of the 2025/26 season.
More than 300 international and domestic cricket matches will be screened live on a combination of TVNZ1 and Duke over the agreed three-year period.
Neither party has put a price on the deal, or the cost of associated rights, but Spark said in an NZX filing that it will write-off $52 million in a one-off charge related to Spark Sport’s closure and its pledge to keep picking up the tab for content rights - some of which extend through to 2028. The telco, which recently enjoyed a $911m windfall from the sale of 70 per cent of its passive celltower assets, said it would hit its full-year profit target regardless.
Agree streaming would have helped NZ Cricket tap a younger audience, but it also cost it viewers in rural areas with lousy broadband, and free-to-air will help with mass appeal and sponsorship. And TVNZ will stream thru TVNZ+, toohttps://t.co/4rZAf4GsAn
“Spark will be responsible for meeting ongoing obligations under content agreements that have been agreed with various rightsholders,” a Spark spokeswoman said.
Will any money exchange hands beyond that? “The details of the partnership are commercially sensitive. However, at its core this is a partnership agreement where TVNZ will be responsible for distribution of the content and certain production obligations, while Spark will be responsible for certain ongoing obligations under the existing content agreements,” a Spark spokeswoman said.
Beyond the lost Formula 1, discussions continue with other individual rightsholders.
It could not be immediately confirmed if Uefa Champions League and Uefa Euro 2024 and 2028 football would transfer to TVNZ, but Spark’s comment about picking up rights obligations until 2028 implies that will be.
A “definitive list” of which content is coming across will be released in the New Year, TVNZ says.
“Customers can continue to access Spark Sport as they normally do until July 1, 2023,” a Spark spokeswoman told the Herald.
Absolute Xmas present for New Zealand Cricket. NZ Herald (via @ChrisKeall) reporting Spark will continue to pay NZC the rights fee for the remainder of the 3-year term, but all domestic cricket from next summer will be free-to-air on TVNZ with no paywall for anything. Huge.
“We will be communicating with any customers who are still on a [$255] 12-month contract come July 1 and offering them a refund for their remaining term. If any customers have concerns about the changes to Spark Sport, we encourage them to get in contact with us to discuss their options.”
Spark CEO Jolie Hodson said while she was proud of what the service had achieved, “At the same time. it has been challenging to reach the scale we aspired to across the Spark Sport platform, with Covid causing major disruption to sporting codes globally just a year after launch. That slower-than-expected start, coupled with the escalating costs of content rights globally, makes it difficult to justify the type of investment Spark Sport requires when we have a wider range of investment opportunities across our broader business.”
Formula 1 is not part of the deal. Spark loses its rights at the end of this month, and F1 will not be transferring to TVNZ. Pictured: Mercedes driver Lewis Hamilton at the US Grand Prix in Austin, Texas in October. Photo / AP
Spark had already lost English Premier League and Rugby World Cup rights, both of which have reverted to Sky.
Yesterday, after the Herald broke news of the pending deal, Spark issued a statement to the NZX confirming it was in talks with TVNZ.
Earlier, Jarden analyst Arie Dekker told the Herald a sale would make sense. Streaming sport was a relatively high-risk, low-reward endeavour for the telco, which copped brand damage when a key 2019 Rugby World Cup clash between New Zealand and South Africa stuttered, with second-half coverage simulcast through TVNZ.
Dekker said Spark — which earlier sold its Lightbox entertainment-streaming business to Sky in a $6m deal in 2020 — would be better off ditching the distraction of sports streaming in favour of focussing on its much larger core business, where it was performing well.
Spark has never released subscriber numbers or financials for Spark Sport, which is included in an omnibus “other” category in its results that includes several business units.
But the Herald understands the service is a money loser.
“Spark has been struggling to build a platform with sufficient recurring content to attract a broad audience,” Dekker said.
The Herald understands there’s been a push to get the TVNZ-Spark Sport deal through before the state-owned broadcaster’s pending merger with RNZ (notwithstanding that it now seems to be on the rocks).
Another factor: In an industry driven by global trends, telcos are blowing the whistle on their sports-broadcasting ambitions.
Mid-year, British Telecom said it would receive £93m deal that would see BT Sport become a wholly-owned subsidiary of Eurosport (part of Warner Bros. Discovery).
It was the creation of BT Sport in 2012 that kicked off the global craze for telcos getting into sports streaming when it seized a chunk of Premier League rights. At the time, sport was seen as a loss leader that could be used to sell broadband plans, or keep current customers loyal. But telcos’ very entry into sports rights — followed by the likes of Amazon and Apple — has seen content costs spiral.
“BT has been wanting to exit sports for some time, and this is its get-out-of-jail-free card,” media analyst Paolo Pescatore told the FT.
Across the Tasman, Telstra last year stopped streaming AFL and NRL games in favour of offering its customers discounted Foxtel access. And although Optus recently renewed its EPL contract, earlier this month it gave up rights to UEFA football matches to Stan — a unit of traditional broadcaster Nine.
Sports bodies themselves are also experimenting with direct-to-consumer streaming services.
The latest is Fifa’s streaming service, which has the potential to evolve into a global Netflix of football, but England’s Premier League has also talked-up plans for a possible global “Premflix” service.
Under a US$2.5b deal, Apple is making American Major League Soccer available worldwide, including in New Zealand. While it’s fair to say few in Godzone care about the fortunes of LA FC, the deal creates something of a template for the global streaming of any given competition.
Meanwhile, two Disney direct-to-the-consumer properties — Disney+ and ESPN+ — continue to grow strongly, proving the potential of cutting out both old-school and digital-era middlemen.
Some traditional broadcasters — including Sky in NZ — at first seemed to be teetering with streaming, but have now got their technical and commercial act together with digital technologies.
Spark shares were down 0.10 per cent to $5.23 in early trading, while the NZX50 was down 0.53 per cent. The stock is up 15.8 per cent for the year.
