SKY TV’s game plan is not too hard to understand: hold onto rugby at all costs!! SKY has approximately 800,000 subscribers and about 70% of those subscribe to sport... in NZ that means rugby. In other words, sport equates to $400m of SKY’s revenue (i.e. 50% of all revenues) because you have to buy the basic package to get the sport package and if we assume profit is split evenly across revenues, half of SKY’s $175m NPAT relate...s to their ‘ownership’ of rugby broadcasting.
Simplistic... sure, but it shows the importance of rugby to SKY’s bottom line.
The other half of the picture is likes of Netflix, Lightbox, Amazon, iTunes, etc., all now competing with SKY for video on demand (movies and TV series), plus TVNZ and Media Works (TV3 and Prime) competing in the reality and news space. In summary, SKY is going to lose market share in the movies, TV series and news space and so must control live sports to drive revenues across their distribution mediums. And if you want to own live sports in NZ, that means rugby.
So, what does the future look like for SKY? Not good. A little over a year ago, Spark entered into a 50:50 JV with Coliseum (the guys who pinched the EPL off SKY a couple of years earlier and are backed by NZ billionaire Peter Cooper). Some serious horsepower in this JV and if they really want to go after rugby sports rights in New Zealand, they have a financial resources to do it.
In late 2014, SKY secured the NZ rugby rights through to the end of 2020. Given the speed at which the entire cable-satellite-internet space is changing, SKY will want to secure a new deal well before the end of 2020. The question we are left with is how will New Zealand Rugby financially take advantage of having at least two big players duking it out for their broadcast rights?
The answer is not simply running a tender, which is what NZ Rugby currently does. What NZ Rugby needs to understand is how much SKY and the Spark/Coliseum JV will pay, and how do they package the rights to deliver most value?
For the reasons noted above, the answer to the first question is that SKY (at least) will pay way more than they pay now.
The answer to the second question is to break down the rights into a series of complimentary packages across different mediums (both live and delayed) and that deliver ongoing content via lifestyle programming, all with the objective of delivering a bigger revenue pie to NZ Rugby.
Simplistic... sure, but it shows the importance of rugby to SKY’s bottom line.
The other half of the picture is likes of Netflix, Lightbox, Amazon, iTunes, etc., all now competing with SKY for video on demand (movies and TV series), plus TVNZ and Media Works (TV3 and Prime) competing in the reality and news space. In summary, SKY is going to lose market share in the movies, TV series and news space and so must control live sports to drive revenues across their distribution mediums. And if you want to own live sports in NZ, that means rugby.
So, what does the future look like for SKY? Not good. A little over a year ago, Spark entered into a 50:50 JV with Coliseum (the guys who pinched the EPL off SKY a couple of years earlier and are backed by NZ billionaire Peter Cooper). Some serious horsepower in this JV and if they really want to go after rugby sports rights in New Zealand, they have a financial resources to do it.
In late 2014, SKY secured the NZ rugby rights through to the end of 2020. Given the speed at which the entire cable-satellite-internet space is changing, SKY will want to secure a new deal well before the end of 2020. The question we are left with is how will New Zealand Rugby financially take advantage of having at least two big players duking it out for their broadcast rights?
The answer is not simply running a tender, which is what NZ Rugby currently does. What NZ Rugby needs to understand is how much SKY and the Spark/Coliseum JV will pay, and how do they package the rights to deliver most value?
For the reasons noted above, the answer to the first question is that SKY (at least) will pay way more than they pay now.
The answer to the second question is to break down the rights into a series of complimentary packages across different mediums (both live and delayed) and that deliver ongoing content via lifestyle programming, all with the objective of delivering a bigger revenue pie to NZ Rugby.
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