The Spark Sport streaming service was launched in March 2019, becoming the first major pay-TV sports competitor to incumbent Sky Sport in New Zealand.
Major sports rights acquired by the telco included the Rugby World Cup 2019, New Zealand Cricket, soccer’s English Premier League, basketball’s NBA, motor racing’s Formula 1 and World Rally Championship, and FIH (International Hockey Federation) events, including all Black Sticks men’s and women’s competitions.
Less than four years later, Spark announced the exit of its streaming platform in the second half of 2023. The company cited escalating content rights costs and a broader range of investment opportunities across its business as the key drivers of the decision.
Spark chief executive Jolie Hodson said: “It has been challenging to reach the scale we aspired to across the Spark Sport platform, with Covid causing major disruption to sporting codes globally just a year after launch.
“That slower than expected start, coupled with the escalating costs of content rights globally, makes it difficult to justify the type of investment Spark Sport requires when we have a wider range of investment opportunities across our broader business.”
The closure of Spark Sport resulted in the telecoms firm recognising a one-off provision of NZD52 million ($32 million) in the 2023 financial year (FY), which includes ongoing obligations under content rights agreements that extend to FY28.
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In Ireland, Eir made a push into sports broadcasting in 2015 with the acquisition of Setanta Sports, which was rebranded as Eir Sport the following year.
The Eir sports channels were offered for free with its broadband packages as an incentive to drive subscriptions. Key sports rights held by Eir Sport included GAA football and hurling, soccer’s League of Ireland, rugby’s Pro14 and 2019 World Cup, and tennis’ Wimbledon and Roland Garros grand slams.
In May 2021, Eir made the decision to shut down Eir Sport in October of the same year following an in-depth review of the subscription offering, with sport no longer considered a priority.
Eir specified that the impact of the pandemic and the accompanying closure of pubs had fundamentally changed the commercial model for Eir Sport, with premium broadcasting rights becoming increasingly expensive and the company refocusing its resources on the core business of providing the best mobile and broadband networks and services to its customers.
Eir’s results for the second half of 2020 underlined the difficulties faced by Eir Sport with TV and content revenue decreasing by 47% from €22 million ($23.3 million) to €12 million, mainly because of Covid-19 and the loss of content rights.
This represented 2% of the company’s overall €590 million revenue for the same period, highlighting the relevance of its sports channels, or conversely lack thereof, to the parent company.
BT launched BT Sport in 2013 to establish its own subscription sports TV service and defend its core broadband business against Sky, the leading pay-TV company, which had been offering free broadband to its sports subscribers and gaining market share from BT.
For BT to build a viable sports business alongside its TV service and challenge the dominance of Sky, it amassed an enviable collection of sports rights including the English Premier League, UEFA Champions League, English Premiership Rugby, Cricket Australia, basketball’s NBA, and mixed martial arts promotion UFC, to name a few.
However, the Financial Times reported that the aggressive foray into sports broadcasting has cost the telecoms company £2 billion ($2.4 billion) in operating losses.
The decade-old sport business, which was losing £400 million a year initially, began to break even, had around 2 million subscribers, and was costing about £800 million a year to run but contributes little to no profit.
It was widely reported that BT was seeking to exit from its sports broadcasting activities – either via a full sale of the sport business, a joint venture partnership, or by selling a stake – and planning to refocus on its internet and broadband arms.
In September 2022, BT and Warner Bros. Discovery (WBD), the multinational media and entertainment giant, completed their transaction to form a 50/50 joint venture that combines the assets of BT Sport and Eurosport UK.
Last month (February), the two parties announced that BT Sport will be rebranded as TNT Sports from July. Eurosport will be rolled into the brand before 2026.
BT will retain a 50% interest in the joint venture and confirmed it is committed to its sports broadcasting business with no plans to pull out. However, it would appear the company is staging a managed exit.
As part of the transaction, WBD has the right, but not the obligation, to exercise a call option to acquire the entire shareholding of BT at specified points during the first four years of the joint venture, which is subject to certain conditions and arrangements.
Table 1: Telecommunications Company’s Sports Business
|COUNTRY/TELCO||LAUNCHED||KEY SPORTS RIGHTS||CLOSED|
|New Zealand Spark||Spark Sport March 2019||New Zealand Cricket Premier League Formula 1||Mid-year 2023|
|Ireland Eir||Eir Sport¹ July 2016||GAA Pro 14 League of Ireland||October 2021|
|United Kingdom BT||BT Sport² August 2013||Premier League UEFA Champions League Premiership Rugby||September 2022³|
¹ Eir acquired Setanta Sports in December 2015.
² BT acquired ESPN’S UK and Ireland TV channels business in February 2013.
³ BT Group and Warner Bros. Discovery closed their deal to form a joint venture that combines BT Sport and Eurosport UK.
Other examples of telecoms companies exiting sports broadcasting or content markets include Orange in France and Slovakia, and AT&T in the US.
French telecoms operator Orange stopped broadcasting its Orange Sport channel in 2012, with the telco strengthening its job as content aggregator and distributor.
Orange Slovakia closed its sports channels Orange Sport and Orange Sport 2-4 in 2021, with the company offering 20 specialized sports channels from various broadcasters through its Orange TV service.
In 2022, AT&T spun off WarnerMedia, its content business featuring premium entertainment, sports (NBA, NHL, MLB, and NCAA Basketball) and news assets, in a merger with Discovery.
The transaction will allow AT&T to invest at record levels in its growth areas of 5G and fiber.
For telcos entering sports markets with a well-established, dominant sports broadcaster, the intense competition drives up the cost of sports rights, making it difficult to accumulate the premium content portfolio required to attract enough subscribers to make the sports offering profitable or to break even.
These resources invested in sports broadcasting for little or no return can be refocused on their core business of connectivity – in expanding and upgrading their fixed and mobile network infrastructure and increasing capacity, which requires major investment, and in new ventures such as data analytics or ecosystem businesses, to capture value beyond connectivity.
For telcos that offer a pay-TV service, such as BT TV or Eir TV, they can focus on their role as a distributor of channels and aggregator of streaming apps by agreeing distribution deals with broadcasters and streaming platforms.