Spark's "content rights inventory" costs rose from $13 million in its 2018 financial year to $35m in 2019. Photo / File
Spark's "content rights inventory" costs rose from $13 million in its 2018 financial year to $35m in 2019. Photo / File
As expected, Spark didn't offer any details on Spark Sport subscriber numbers or financials at its full-year report today.
The telco has long-maintained it won't reveal costs until its first half-year report after the 2019 Rugby World Cup.
But its annual report, also released today, included an intriguing hint atwhat Spark has spent to gain rights to the likes of the 2019 Rugby World Cup, Formula 1 and English Premier League football.
Buried on page 62 of the report is a line noting that Spark's "content rights inventory" costs rose from $13 million in its 2018 financial year to $35m in 2019.
That is a $22m increase since Spark moved from offering its Lightbox entertainment streaming service to Lightbox plus Spark Sport.
Speaking to the Herald today, new Spark chief executive Jolie Hodson confirmed the $35m was for Spark Sport and Lightbox content.
But she also noted that Spark Sport had multi-year deals, with payments required at different times. She would not say, at this point, whether payments were front-loaded or spread out.
And then beyond content rights, there is the cost of content delivery networks, new staff, marketing, support and plans for studio content and local outside broadcast next year.
One well-placed industry source said Spark had paid $13m for 2019 Rugby World Cup rights, or roughly double what Sky paid for the previous tournament, with $1m defrayed by free-to-air partner TVNZ.
In August 2014, Coliseum Sports Media boss Tim Martin (in the news this week as Sky bought his new Rugby Pass venture for $62m) revealed that his company had bid $6m for three years' of local rights to Formula 1 - only to be outbid by Sky.
A source directly involved in negotiations says beIN Sports paid $10m when it grabbed NZ English Premier League rights from Coliseum for the three seasons to 2018/19.
He says word around the industry is that Spark paid more to grab Premier League rights for the three seasons from 2019/20. His own estimate is $12m to $15m.
And while those might sound like big sums, Spark will have to reach a lot deeper into its pockets to achieve Spark Sport head Jeff Latch's aim to add season-long, top-tier sports content.
New Spark CEO Jolie Hodson. Photo / Jason Oxenham.
Forsyth Barr analysts Matt Henry and Matt Dunn recently released research estimating that rival Sky currently spends more than $106m per year - with rugby accounting for around $65m of that total, NRL around $30m and cricket around $10m.
Previous Sky boss John Fellet made it a central tenant never to bid an un-economic price.
But Stewart seems to be indicating he's willing to absorb some short-term pain to see off Spark. A battle of wills lies ahead.
Today (see video above), Hodson picked up Latch's theme of Spark Sport being a long-term play. But whereas Latch talked up acquiring rights to season-long rugby (and cricket) competitions to keep Spark Sport loyal after the Rugby World Cup, the new CEO put more emphasis on the appeal of the service's existing lineup of content.
As she assesses her company's options with streaming, Hodson at least has the benefit of standing on a strong financial base.
Sky reports tomorrow, and analysts will keep a keen eye on whether its dividend, which has already been subject to shrinkage, falls further as its subscriber numbers remain under pressure and over-the-top competition multiplies.
Earlier today, Hodson was able to report a 12 per cent bump in Spark full-year profit today to $409m.
Her company added customers, kept its full-year dividend at 25 cents per share - forecast it would stay at that level in 2020. And Spark's guidance is that operating earnings will increase.
But while keeping sports rights is a do-or-die fight for Sky, it is only one of several issues on Hodson's agenda, which also includes an increasingly tricky trans-Pacific cable war and a 5G upgrade complicated by Huawei's political troubles.
Sky investors will be hoping she ultimately focuses her energies elsewhere.
