Whether the deal represents great value for shareholders depends...

Whether the deal represents great value for shareholders depends on how much Sky paid. On that we can only speculate.

I think Sky would have just paid for the value of the content, as they are likely to ditch the platform (so it is worthless to Sky). Spark may not have worried about getting the absolute top dollar for Lightbox if Sky agreed to decent wholesale terms. Plus, I don't think there were any other buys for Lightbox realistically. I mean, who would want to enter such a crowded market with such a small population?

Assuming Sky TV management paid a 'sensible' price, then I think this deal is incredibly valuable to Sky in a number of ways, including:

1. It removes a competitor from an increasingly crowded landscape. Lightbox did have some decent content, and Spark subscribers who get this and Netflix for 'free' would be less likely to also sign up for NEON currently as they feel their entertainment needs are already covered.
2. The deal includes a wholesale agreement with Spark. As the new service is going to include a huge amount of great content, I imagine many Spark broadband and mobile customers will go for the entertainment bundle Spark offer. This will lift subscription numbers significantly*. ARPU for Sky will continue to fall, so to grow they need to significantly increase subscription numbers.
3. If they can make a sensible deal on entertainment, then why not do something with Sport later? It makes no sense to me that Spark and Sky should keep slugging it out for sport. In the process Spark and Sky shareholders become poorer and only the rights owners become richer. We have already seen a large transfer of wealth from Spark and Sky TV shareholders to sporting bodies. The new Spark CEO seems pragmatic and more muted on ongoing sports commitments than her predecessor, but we shall have to wait and see.

*One word of caution. I discussed this with the CFO...he has cautioned on how much of a lift in subs this will generate. In a previous media article it was reported that Spark have 360,000 Lightbox subscribers. Sky TV calculate subs differently to Spark it seems...so he has confirmed that the number for Sky is not 360,000 (though he did not say how many). The deal is only going to be wrapped up at the end of the month so the Lightbox numbers will not be included in the HY report anyway. Blair did confirm that they will release total subs (including Lightbox) as at the time of reporting though. Even there are only 200,000 legitimate subs - that will still be a significant increase for Sky.