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Sky shares slumped as much as 17% to 92c on Thursday, valuing the company at just $381 million, a fraction of the $2.7 billion market capitalisation it commanded at its peak in mid-2014.
The stock dropped after Spark said it secured all New Zealand Cricket matches played domestically for the next six years in a deal that includes state-owned broadcaster Television New Zealand providing a free-to-air element.
"While we would have liked to retain the local NZ Cricket rights from next season, we will continue to offer some of the best cricket the world has to offer, including exciting international fixtures involving the Black Caps on tour,'' Sky said in a statement.
The slump in Sky's share price means it needs shareholder approval to bid for the Sanzaar rugby broadcasting rights. At today's market value, a bid of more than $190 million would trigger the 50% threshold needing shareholder approval.
That would effectively strand the pay-TV operator should a bidding war result, even after its decision to can dividend payments in order to build a war chest after being scooped by Spark for the Rugby World Cup this year.
Shareholders will vote on freeing up the management to pursue the rights, which end late in 2020, at next week's annual meeting. They have been warned that failing to win the Saanzar rights "represents a significant threat to shareholder value''.
Spark's contract with NZ Cricket starts in April next year and will cover all Black Caps and White Ferns matches played in New Zealand, the domestic T20 Super Smash competition and some domestic one-day cricket.
"This partnership with NZC is another major step towards Spark's strategy of building a profitable sports media business that offers viewers a range of premium domestic and international sporting events over Spark Sport at an affordable price and across an array of devices,'' Spark chief executive Jolie Hodson said in a statement.
The expansion of Spark's sports coverage comes during the Rugby World Cup, an event it has used to draw a line in the sand as it builds a premium sports live-streaming service. The Spark Sport coverage has attracted loud criticism from those users whose experience has been disrupted, but has attracted 186,000 subscribers.
No price was disclosed for the cricket contract.
New Zealand Cricket generated commercial income of $50.8 million in the year ended July 31, 2018 from broadcasting, sponsorship, and its share of International Cricket Council member distributions. That was up from $46 million a year earlier.
Chief executive David White said the deal future-proofed the sport's future and prepared for an audience that wanted more control over when and how it watched games.
"It's timely that we make this move now, at a time when more New Zealanders than ever - and especially young Kiwis, consume their sports content through digital devices,'' Mr White said.
The response from Spark investors was lukewarm and the stock was unchanged at $4.615, largely matching the flat opening to the day's trading.
- By Paul McBeth