Sky TV merger to give Vodafone strangehold on internet TV 16 Aug 2016
Related articles
- Brownlee Leads Aviation Mission To Shanghai News
- Knowles quits as CEO of KiwiBank Business
- Sludge Report #192: The Naked Budget Columns
- NZ manufacturing activity reaches highest since 04 Business
- Licensing To Cut Out Cowboy Advisers Migration
- Government Widens Drought Assistance News
- Young People Take Over Parliament News
- Actions For Young Driver Safety Get Green Light News
Sky TV merger to give Vodafone strangehold on internet TV, objectors say
By Pattrick Smellie
Aug. 16 (BusinessDesk) - Allowing Sky Network Television to merge with the New Zealand operations of Vodafone will entrench Vodafone's control of premium content, particularly major sports events, and stifle competition in the internet and streaming TV markets, say a chorus of objectors to the proposed tie-up.
Submissions published on the Commerce Commission website this morning show virtual unanimity among major players in the telecommunications and broadcasting sectors, who say Sky would do better if it offered its sports and entertainment packages to the whole telecommunications market rather than to one player.
Among those arrayed against the $3.44 billion merger proposal, announced in June, are Vodafone's primary telecommunications rivals Spark New Zealand and Two Degrees, along with state-owned broadcaster Television New Zealand, utility company Trustpower, which offers broadband bundled with electricity and gas, and the lobby for the online sector, InternetNZ.
"Based on Sky’s current wholesale market arrangements for premium sports content, we don’t believe the proposed merger is in the best interests of New Zealand consumers and so should not go ahead in its current form," Spark New Zealand’s general manager of regulation, John Wesley-Smith, said in a statement. “Sky has a monopoly on rights for premium ‘national sports’ in New Zealand. Given Kiwis’ love of these sports, they are 'must have' rights for media content providers."
A submission prepared for third-ranked national telco 2Degrees and TVNZ says while the net present value of the merger to Sky and Vodafone is calculated at $770 million, there would be a $1.09 billion NPV uplift for the market as a whole if Sky were instead to become a content wholesaler with no ties to any particular provider.
"Revenue synergies would be much larger because the wholesale offer would be extended to Vodafone's rivals who serve 60 percent of the market collectively," says the report from Auckland-based consultancy Covec. While there would be none of the $435 million of estimated cost savings from the Voda-Sky merger, the pair would also avoid integration costs.
"Sky's share of the counterfactual revenue synergies would be materially lower than $1.09 billion because it would need to share this gain with telecommunications firms," Covec's John Small says. "Nevertheless, any positive share of the extra $1.09 billion would be better for Sky than the status quo.
"On the applicants' own analysis, wholesaling content to all (or most) telecommunications providers is a financially attractive alternative for Sky."
The 2Degrees and TVNZ submissions focus on the importance of access to time-sensitive major sporting events to spurring competition in the converging markets for telecommunications services and online entertainment.
"The success of ... new services and the extent to which competition in the retail pay TV markets grows will depend on the extent to which entrants can gain access to premium content and especially premium sports content," says a report from London-based Plum Consulting in supporting documentation to the 2Degrees submission.
There were "numerous examples from around the developed world, including in New Zealand, of entrants in the pay-TV market which have failed commercially due to a lack of premium content."
The 2Degrees submission quotes a submission from Vodafone's UK operation to the regulator in that country about the dangers of "ignoring the effects of 'key content' across wider and traditionally unrelated markets such as mobile or broadband only customers" to have "an enduring and irreversible effect".
In the October 2015 submission to Ofcom, Vodafone warned that "a variety of telecommunications markets will be severely harmed" unless such content could be secured on "fair, reasonable and non-discriminatory terms".
In its submission, 2Degrees says the proposed New Zealand merger would give the merged entity "both the incentive and the ability to leverage its substantial market power in content markets to lock-up premium content for exclusive delivery over its own platforms, foreclosing competition in the residential fixed-line and retail mobile markets."
The Covec report notes that while Sky has always offered its existing services to any of New Zealand's 80 to 100 telecommunications retail service providers, "only Vodafone has taken up this offer".
"Our analysis concludes that the reason all but one of many RSPs are not offering Sky's full suite of content is that they cannot afford to do so on the terms offered" and that most of the expected revenue gains for the merged Sky-Vodafone would be achieved by Vodafone being able to "up-sell" Sky services to its customer base, with such increases only possible by Sky giving Vodafone a "lower input price".
Spark's submission says Sky offers "limited, unattractive wholesale options".
“Sky's current wholesale arrangements are essentially about reselling Sky boxes. We’re not interested in being tied to this outdated distribution model as it doesn’t work for our customers who want better choices that let them watch their sports whenever and wherever they want to,” said Spark's Wesley-Smith.
(BusinessDesk)
News
Hilary Timmins' Award-Winning UK Documentary Series To Inspire NZ Students
29 Jun 2020 Education
Dream Catchers, produced and directed by Hilary Timmins, celebrates the success stories of more than thirty inspirational New... more
New Zealand reaffirms support for Flight MH17 judicial process
7 Mar 2020 News
Ahead of the start of the criminal trial in the Netherlands on 9 March, Foreign Minister Winston Peters has reaffirmed the need to... more
Business
NZ Government's Economic package to fight COVID-19
17 Mar 2020 Business News
The Coalition Government has launched the most significant peace-time economic plan in modern New Zealand history to cushion the... more
NZ Government announces aviation relief package
19 Mar 2020 Business News
Transport Minister Phil Twyford today outlined the first tranche of the $600 million aviation sector relief package announced earlier... more
Living
Diversity was Key at New Zealand Trade Tasting in London
6 Jun 2022 Food & Wine
New Zealand Winegrowers Annual Trade Tasting was recently held in London, on Wednesday 4 May, in Lindley Hall.
It was the first... more
Kiwi author stuns Behind the Butterfly Gate
12 Jan 2022 Arts
Hidden behind the Butterfly Gate is where the secret has been kept for 76 years...
New Zealand writer Merryn Corcoran’s... more
Property
Fairer rules for tenants and landlords
17 Nov 2019 Property
17 NOVEMBER 2019
The Government has delivered on its promise to the over one million New Zealanders who now rent to make it fairer... more
New Zealand Government will not implement a Capital Gains Tax
17 Apr 2019 Property
The Coalition Government will not proceed with the Tax Working Group’s recommendation for a capital gains tax, Jacinda Ardern... more
Migration
Boosting border security with electronic travel authority – now over 500,000 issued
19 Nov 2019 Migration
19 NOVEMBER 2019
We’ve improved border security with the NZeTA, New Zealand Electronic Travel Authority, which helps us to... more
Christchurch reinstated as refugee settlement location
18 Aug 2018 Migration
18 AUGUST 2018
HON IAIN LEES-GALLOWAY
The announcement that Christchurch can once again be a settlement location for refugees... more
Travel
Gallipoli Anzac Day services cancelled
19 Mar 2020 Travel & Tourism
The New Zealand and Australian Governments have announced this year’s joint Anzac Day services at Gallipoli will be cancelled... more
New Zealanders advised not to travel overseas
19 Mar 2020 Travel & Tourism
New Zealanders advised not to travel overseas
more
Sport
The Skipper's Diary: Sir Richard Hadlee honouring his father and NZ's Forty-Niners
27 Oct 2019 Cricket
NZNewsUK London Editor Charlotte Everett spoke to Sir Richard Hadlee about why he’s chosen to publish his father’s... more
PREVIEW: All Blacks v England semi-final
26 Oct 2019 Rugby
The two most convincing quarterfinals winners are set to square off in a semifinal showdown for the ages when the All Blacks meet old... more
Columns
Gordon Campbell on the Gareth Morgan crusade
11 Nov 2016 Opinion
Gordon Campbell on the Gareth Morgan crusade
First published on Werewolf
The ghastly likes of Marine Le Pen in France and Geert ... more
Gordon Campbell on the US election outcome
10 Nov 2016 Opinion
Column - Gordon Campbell
Gordon Campbell on the US election outcome
Well um.. on the bright side, there (probably)... more
Kiwi Success
Congratulations to Loder Cup winner
26 Sep 2018 People
25 SEPTEMBER 2018
The Loder Cup, one of New Zealand’s oldest conservation awards, has been awarded to Robert McGowan for 2018... more
Appointments to New Zealand National Commission for UNESCO
16 Aug 2018 Appointments
16 AUGUST 2018Appointments to New Zealand National Commission for UNESCO
HON JENNY SALESA
Associate Education Minister Jenny Salesa is... more
Recruitment
Historic pay equity settlement for education support workers
14 Aug 2018 Recruitment
14 AUGUST 2018Historic pay equity settlement for education support workers
RT HON JACINDA ARDERN
HON CHRIS HIPKINS
Prime Minister
The... more
Historic pay equity settlement for education support workers
22 Aug 2018 Recruitment
14 AUGUST 2018Historic pay equity settlement for education support workers
RT HON JACINDA ARDERN
HON CHRIS HIPKINS
Prime Minister
The... more