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NZ Rugby gets skin in media game in new Sky broadcasting deal

Monday 14th October 2019

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New Zealand Rugby will get a 5 percent stake in Sky Network Television as part-payment for a five-year broadcasting rights deal, provided the pay-TV operator's shareholders back the deal at this week's annual meeting. 

The national sporting body and media company reached a deal on Sunday night, granting Sky rights to broadcast rugby in New Zealand from 2021 to 2025, covering domestic and international competitions. 

"Rugby is a core and significant part of our offer as the home of sport. We know it attracts customers to Sky, who then also discover and enjoy the deep range of local and global sport that we offer," Sky chief executive Martin Stewart said. 

The cost of the deal is confidential, but Sky said it was materially higher than its current arrangement and includes the rugby union getting 21.8 million shares, or 5 percent of Sky, worth $19.4 million at Friday's closing price of 89 cents. 

Sky's 6,487 shareholders will have to ratify the deal at Thursday's annual meeting in Auckland. While the deal hadn't been cut when the notice of meeting was issued, Sky's board sought approval for management to "take all actions and do all things including negotiating terms and executing all documents and agreements necessary or desirable" to secure the rights. 

The company hasn't needed shareholder approval in the past, but because Sky's share price has more than halved in value this year the deal would cross the 50 percent major transaction threshold. 

NZ Rugby chief executive Steve Tew is in Japan for the Rugby World Cup, which is being broadcast by Spark New Zealand's livestreaming service, Spark Sport. The telco trumped Sky when it secured the event's broadcasting rights and last week signed up New Zealand Cricket. 

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

Earlier this year, the rugby union noted the broadcasting rights negotiations and advances in digital technology would offer short-term revenue gains, but that the costs of administering the national game were continuing to rise. 

NZ Rugby received $73.3 million in broadcasting rights revenue in calendar 2018, down from $104.6 million a year earlier when the British & Irish Lions tour bolstered its income. 

Sky put dividend payments on hold this year to help build a war chest to outbid increasingly competitive rivals for premium sports rights. Stewart's new management team see rugby as a lynchpin in preserving its future, and this year bought online rugby platform RugbyPass for up to US$40 million in cash and shares.


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