Spark formally opposes the proposed Sky/Vodafone merger

  • Media
  • August 16, 2016
  • StopPress Team
Spark formally opposes the proposed Sky/Vodafone merger

Spark has expressed its concerns over the proposed merger between Vodafone and Sky by making a submission to the Commerce Commission, New Zealand’s competition regulator.

Spark’s submission formally opposes the proposed merger, which commenced with formal talks between the media companies as far back as June.

Spark New Zealand general manager of regulation John Wesley-Smith said in a release Spark had already gone on the record and said that it was ready to compete with a merged Sky and Vodafone.

“We’re generally supportive of market consolidation where it leads to better outcomes for consumers,” he said.

“However, we’ve told the Commerce Commission that 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.”

Sky had a monopoly on rights for premium ‘national sports’ in New Zealand, he said. “Given Kiwis’ love of these sports, they are ‘must have’ rights for media content providers. As it stands right now, there isn’t a proper wholesale market for access to premium sports, and as a result New Zealanders have very few options for how they access that content.”

He said Sky's business model seemed increasingly focused around sports, which underlined how effective their monopoly was in this space and the proposed merger with Vodafone was likely to entrench that monopoly, and was something all New Zealanders should be concerned about.

Spark’s concerns were based on the limited, unattractive wholesale options currently offered by Sky, he said.

“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 We’re not interested in being tied to this outdated distribution model as it doesn’t work for our customers who want better choices that let them watch their sports whenever and wherever they want to.”

He said Spark walked away from an earlier reselling deal with Sky three years ago because it wasn’t commercially viable “and nothing has really changed since then”.

Spark believed if the Commerce Commission blocked the proposed merger, Sky would be forced by commercial realities to make all of its sports content available online and on-demand – and via wholesale arrangements with lots of parties that helped distribute this content to New Zealand consumers, he said.

“By making premium sports content available to more New Zealanders in more ways, through a viable and credible wholesale market, consumers will be better served – and the market will grow for Sky’s content rights. That is not going to happen if the merger goes ahead in its current form without such a wholesale market.”

He said a merged Sky/Vodafone would be able to leverage its monopoly power in the sports market, to the detriment of consumers. “That's why we’re asking the Commerce Commission to reject the proposed merger in its current form.”

A public copy of Spark’s submission can be read here.

  • Read Sam Aldred’s opinion piece on the danger of the proposed merger for Spark here.
  • Read questions answered by Sky and Vodafone executives on the proposed merger here.

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