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Sky NZ claws back NZ$9m in ‘satisfactory’ sports rights compensation talks

Pay-television broadcaster Sky New Zealand made a saving of NZ$9m ($6m/€5.1m) following the re-negotiation of its sports rights payments as a result of the calendar shutdown prompted by the Covid-19 pandemic.

The figure was revealed by the broadcaster as it published its full-year financial results and was accompanied by a saving of NZ$9m in production costs with various domestic sports events either postponed or cancelled.

The broadcaster said that it continues to “work constructively with key sport partners, and negotiations around Covid-impacted sports payments for the 2020 sports calendar have been completed satisfactorily”.

Sky said that only 8 per cent of its satellite customers cancelled their sports subscriptions when the pandemic decimated the sports calendar, with counteractive measures such as offering free entertainment channels proving “very effective”.

Sky continued: “The return of premium live sport starting in May 2020 demonstrated the importance of sport to New Zealanders as the majority who downgraded sport packages renewed their subscriptions in the final five weeks of FY20.”

Sky generated revenues of NZ$747.6m in the 12 months to the end of June, down by 6 per cent but including a 35-per-cent increase in streaming revenue. The broadcaster reported a net loss after tax of NZ$156.8m, although operating profit before impairment was NZ$44.9m.

The broadcaster has forecast full-year 2020-21 revenue between NZ$660m and NZ$700m and net profit after tax of between NZ$10m and NZ$20m given “improved trading conditions driven by the faster than expected return of sport”.

During the last financial year, Sky has signed a host of new sports rights agreements, including a new deal with New Zealand Rugby and Sanzaar, which operates the Super Rugby and Rugby Championship competitions, on increased terms. Deals have also been struck for ICC cricket rights, domestic netball, Supercars motor racing, LPGA Tour golf and the Commonwealth Games (in 2022 and 2026).

In August 2019, the broadcaster acquired a 100-per-cent stake in RugbyPass, the OTT streaming service, in a $40m (€33.7m) deal that expanded Sky’s sports business internationally and in a further nod to its plans to develop its streaming operations.

However, an impairment figure of NZ$27.5m has been recognised due, in part, to the “uncertainty of access to, and the nature of, content being delivered, especially sport content and future rugby content”.

Sky’s total subscribers rose by 27 per cent in the year to June 2020, thanks chiefly to the acquisition of RugbyPass and the purchase of the Lightbox entertainment service from the telco Spark.

The number of streaming customers increased by 153 per cent to 404,000. However, average revenue per streaming customer was just NZ$19.80 per month, compared to NZ$82.08 per month for the average satellite customer.

Sky recently generated additional funds through the sale of its sports production subsidiary Outside Broadcast (OSB) to international outdoor broadcasting specialist NEP. As part of the sale, NEP will be Sky’s technical production partner in New Zealand for the next decade.

Sky acquired OSB from Australia-based Prime Media Group in a NZ$35m deal back in 2010. After liabilities, the net amount was NZ$13.5m.