Spark probably subsidising Fanpass pricing, analyst says

Revolving partnerships like this are a good thing for consumers, says InternetNZ outreach and engagement director Andrew Cushen

The last time Spark had a wholesale deal with Sky TV, the telco was called Telecom.

Now, confirming industry rumours, the pair are back in bed.

Spark said today it will offer Fanpass to its unlimited broadband plan customers for $30.

Fanpass, which offers streaming versions of Sky TV's sports channels, usually costs $56 a month if you buy a six-month pass, or a robust $100 a month no-contract.

First NZ Capital managing director Arie Dekker says Sky TV is probably wholesaling Fanpass to Spark for $40 a month, with Spark subsidising the service to get to that $30 price.

Mr Dekker says the deal suits Spark's latest thinking on streaming video, which is hostile to set-top boxes. 

One one level, Sky TV will be helping Spark, which of course recently bagged Rugby World Cup 2019 rights.

But Mr Dekker takes the broader view that it's good for Sky TV to broaden its customer base.

Could this be the start of a closer relationship between Sky and Spark that could lead to some kind of cosy accommodation over the World Cup?

Mr Dekker sees the deal as being the "start of something wonderful" or "short-lived" with nothing in between.

"Cannibalisation is the key thing Sky will be focused on," he says.

Neither side had commented on the timeframe of the deal.

Mr Dekker suspects it's based on a target number of vouchers.

Vouchers? Say what?

Mr Dekker notes that while it was recently upgraded, Spark's Lightbox service still can't accommodate third-party apps. That necessitates an old-world system where Spark customers who want Fanpass will be sent a voucher with a discount code.

Deal-making era
Was this the sort of deal that would never have happened had the Sky TV-Vodafone merger been approved?

"It indicates the Commerce Commission made the right call," InternetNZ outreach and engagement director Andrew Cushen says.

Mr Cushen says he can't predict if this particular deal will last but he says the Spark-Sky TV hookup is a sign that New Zealand is entering a new era that will see likely see a revolving series of partnerships.

For consumers, that will be a good thing, he says.

Investors were not stirred by the possible bright new future. Spark [NZX:SPK] and Sky [NZX:SKT] shares were both flat in early afternoon trading.

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