The stalemate that has arisen is believed to be frustrating Sky, as it had signalled to shareholders late last year that a deal was close but then had to provide a less-than-positive update last week when it unveiled its half-year results.
Sky’s chairman Philip Bowman made specific reference to the ongoing negotiation with NZR in the company’s interim report.
He wrote: “The second key priority for Sophie [Moloney, Sky CEO] and her team that I mentioned at the annual shareholder meeting was the negotiation of a new rights agreement with New Zealand Rugby and Sanzaar.
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“It is disappointing that I have no substantive news on this to report, but we acknowledge that governance changes at NZR, including the appointment of a new board with effect from 1 February, have necessarily slowed down the process.
“Whilst the agenda for the new NZR board is doubtless wide-ranging, we will continue to discuss renewal options in good faith, against the backdrop that the financial terms of any renewal must make economic sense for our customers and our shareholders.”
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Sky is aware that NZR is talking to DAZN – the exclusive window to renegotiate as the current rights holder expired late last year – but sources say it is unperturbed by the development as it is not convinced that an acquisition of standalone rugby rights in New Zealand aligns with the strategic aims of the new owner of Foxtel.
DAZN, which has genuine and realistic aspirations to build the world’s best sports content portfolio – it is bankrolled by Ukrainian billionaire Len Blavatnik, with additional money now coming from Saudi Arabia’s sovereign wealth fund – recently snapped up the rights to France’s top professional football league.
But the acquisition has failed to deliver subscribers, highlighting that it remains difficult for streaming platforms to reach profitability when only offering a singular product.
DAZN has cash at hand, but most analysts believe that if it is going to make a play in New Zealand, it would be more likely to try to buy the undervalued Sky rather than rugby rights.
This view has been strengthened by its decision to buy Foxtel – a traditional satellite broadcaster – as it signals that DAZN may be conscious that some fan bases remain wedded to older technology.
This point was made recently by Sky independent director Mike Darcey on Linkedin, where he said: “Some reports have argued that this deal was all about DAZN buying Kayo, the successful sports streamer in Australia, how this is a shortcut to taking control of rights deals that would take five or 10 years to win in the market, and emphasised the other streaming angles in Binge and Hubbl.
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“But it’s hard to ignore that DAZN has also bought into a large, set-top-box-based, traditional linear distribution business.
“Perhaps there is a radical plan here to shut it all down and force-migrate everyone over to streaming solutions. But I doubt it. More likely, DAZN will continue to discover just how sticky some of that traditional linear base tends to be and become more deeply enmeshed in a hybrid world.”
And it’s this same argument around New Zealand’s readiness to fully embrace streaming as its only means to consume rugby that is leading Sky to believe NZR won’t do a deal with DAZN.
Sky’s aging infrastructure has been in the news in recent weeks for failing to deliver, but paradoxically, its technology, however dated it may seem, is its trump card in the chase for rugby rights.
Rugby’s core audience remains older and rural, based in areas with patchy and slow Wi-Fi, and NZR would be taking an enormous risk to partner with a streaming platform with little brand recognition.
Gregor Paul is one of New Zealand’s most respected rugby writers and columnists. He has won multiple awards for journalism and written several books about sport.
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