Commercial reality has overcome sporting rights rivalry between Sky TV and Spark. The sports rights rivals have effectively called a truce in entertainment streaming to combine efforts against global giant Netflix and a rash of new studio offerings as well as Apple+, and to compete together against Vodafone, which once wanted to merge with Sky TV.

Sky is buying Spark’s entertainment streaming service, Lightbox, for an undisclosed sum. The amount, minus the content costs, is likely to be minimal as Lightbox has been a money loser for the telco. Sky will merge Lightbox with its own streaming service Neon, although it hasn’t said which brand or platform it would use.

The deal, which was closed last night, makes sense for both companies as the competition from Netflix, Disney + and TVNZ on-demand increases.

It probably would’ve happened sooner if war hadn’t broken between the two local players for the rights to high profile sports like rugby and cricket.

Sky won rugby and Spark won cricket

Spark succeeded in winning the rights to domestic cricket before Sky shut them out of the rugby with a monster deal that ended with NZ Rugby getting five percent of the pay tv company’s equity.

It’s clear that Sky TV CEO Martin Stewart and Spark CEO Jolie Hodson have moved past the immediate battle and done a deal that is in the interests of their shareholders.

The combined Lightbox/Neon platform will have a realistic chance of footing it with the big guys, particularly if it is bundled with other Sky/Spark products. Continuing the standalone services would have seen both lose market share as neither had enough critical mass.

Spark’s Marketing Director, Matt Bain, says: “We’re really pleased to have found an ongoing home for Lightbox with Sky as part of a new combined SVOD platform with Neon. Following completion of the deal, we’ll be working closely with Sky to ensure that all existing Lightbox fans have a positive experience through this transition period, and we look forward to partnering with Sky to offer the enhanced new service to Spark customers.”

Sophie Moloney, Sky’s Chief Legal, People and Partnerships Officer says: “Sky will bring our Neon service together with Lightbox during 2020 to offer New Zealanders an outstanding range of entertainment content from New Zealand and around the world in a proudly kiwi way.”

“With the increasing arrival of the mammoth global players in the New Zealand market, the purchase of Lightbox allows Sky to offer an enhanced, highly appealing and competitive entertainment service, delivered by kiwis to kiwis,” she said.

“We’re excited at the possibilities it presents, and the opportunity to attract new customers to Sky and continue to grow our streaming services.”

Sky said the deal was conditional on commercial, legal and regulatory approvals as required, and Sky and Spark anticipate completion by early 2020.

There would be a transition period once the deal is completed, during which Lightbox and Neon customers will continue to be able to use their respective services in the same way they do now. Spark said it would contact Lightbox customers today to let them know that nothing would change immediately.

Truce in sports rights battle?

Industry watchers will be interested to see if this deal leads to greater cooperation between Spark and Sky in other areas. Both CEOs must be concerned about the escalating cost of the battle for sports rights and the production costs of covering local matches.

Sky’s first priority though, will be securing enough compelling content for the Lightbox/Neon service. The big US studios are withdrawing more and more content from the open market as they develop and push their own entertainment streaming services.

Mark Jennings is co-editor of Newsroom.

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