Sky Television is not the preferred bidder to broadcast the 2019 Rugby World Cup.
The Herald understands Spark and TVNZ have made a joint bid and are the leading bidder.
When contacted by the Herald, neither Spark nor TVNZ would comment.
If successful, it is expected Spark would stream matches over the internet, with TVNZ providing free-to-air coverage.
It is understood that the announcement from Sky came as a surprise to those involved in the bidding process.
The Rugby World Cup event will be held over six weeks in Japan between September and November in 2019.
Sky said it would let the market know if things changed but as negotiations were still underway, it could not comment further.
"We have been informed that negotiations are underway with the preferred party, and our bid remains in play should those negotiations fail," Sky said.
"We are not at liberty to provide further detail of the bid process at this stage."
The rights to the World Cup are separate to the SANZAAR rugby rights which would be negotiated in the coming months.
Sky said sports broadcasting was a competitive business and while they were disappointed to not be the preferred party, their bid would remain in case other negotiations failed.
"While the Rugby World Cup is great content and we put forward a strong bid for it, it is an incredibly expensive event that plays once every four years for six weeks," they said.
The company said its business was built on offering sports fans content across the year.
"For 52 weeks of the year they will also watch the Warriors and the NRL, the Cricket, Netball, Supercars, Golf, Cycling, Football, Basketball, Moto GP and Boxing, to name a few," they said.
Rugby World Cup rights are sold by IMG Media on behalf of Rugby World Cup. Sky has the SANZAAR rights through to 2020, including All Blacks tests, Super Rugby and the Mitre 10 Cup.
Chorus announced this week that it was looking to trial 4K broadcasting directly to customers homes, which would mean higher definition streaming.
"A strength of the proposed Chorus service is that it can provide guaranteed capacity, which would ensure major cultural events such as sports could be broadcast to all viewers, live and concurrently, in 4K or even 8K," Chorus said.
"As such, Chorus anticipates the service will be of interest to local broadcasters who are looking for a way to provide their content to viewers without requiring an ISP partner or developing an over the top application that runs over the public internet and therefore makes quality control more challenging."
Sky said the fibre broadcasting could be good for its business, however this would also benefit Spark or other streaming companies.
Rugby is a major drawcard for Sky consumers and analysts have said securing the upcoming rights would be crucial for the company going forward.
Hamilton Hindin Greene investment advisor Jeremy Sullivan earlier told the Herald more competition would put pressure on Sky but as long as they could retain the rugby rights, they had the upper hand.
"If Sky did lose the rugby rights though... watch out," he said.
Speculation has been growing in recent months that international players such as Amazon and Australian-based Fetch may bid for the rugby rights.
For more than 20 years, Sky has been the sole TV rights holder of All Blacks tests and have spent about $1.5 billion to secure exclusivity.
The market responded immediately to the news, with Sky's seven percent down this morning.
The current price is at $2.25, down from $2.43 at the close of the market yesterday.
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