TVNZ shacks up with Sky in pay TV “co-opetition” – UPDATED

Sky and Television New Zealand have confirmed they are indeed launching a joint pay TV service.  Not wanting to say we told you so or anything, but we predicted this weeks ago. TVNZ will be taking 49 percent of a new pay TV platform called Igloo – with Sky holding the majority 51 percent, effectively freezing out the competition.

This alliance between the two dominant players in the free-to-air and pay television market will be seen as a blow to TV3 owner MediaWorks and to Freeview. It’s also a major strategic shift in New Zealand media and somewhat pushes New Zealand competition law. And as John Drinnan pointed out in his Herald column, the Government refused to consider regulation of Sky which is now a business partner of a state enterprise.

The unholy alliance allows TVNZ to get into pay TV without going head to head with Sky. TVNZ has been quoted as saying the relationship with Sky TV is one of “co-opetition” where it continues to compete for ad revenue.

Sky chief executive John Fellet said the new service would start in mid 2012 – in time for the start of the switch-off for analogue signals.  According to the NBR and the Herald, it is thought to cost about $25 a month, although this is yet to be confirmed, and with uptake slowing for the full Sky package, the cheaper offer will likely help Sky to revive growth.

TVNZ’s departing chief executive Rick Ellis, who’s off to head the new Telstra division Telstra Digital Media in Australia soon, said TVNZ wanted to secure a strong foothold for all channels to protect the network in the future.

“We want all our channels to be available on as many platforms as possible,” says Ellis.

“The introduction of regional breakouts for TV ONE will provide new opportunities for some advertisers, and incremental revenues for TVNZ,” he said.

Sky chief executive John Fellet said that he was pleased to have reached the new agreement with TVNZ which will deliver more viewing options to over two million New Zealand viewers.

“The new agreement increases the number of channels available through Sky, the addition of HD versions of TV ONE and TV2, and supports our strategy of providing subscribers with everything from one box” said Fellet.

Head of digital media and digital channels at TVNZ, Eric Kearley says the new venture is a natural progression of TVNZ’s 2006 strategy to inspire New Zealanders across every screen, and media’s move away from free to air.

“But this doesn’t mean diminishing support for Freeview,” says Kearley. “Freeview is not a commercial company. It was never positioned in media as a commercial organization. It was simply a brand to increase the push to digital before the analogue switch off.”

“People who buy this igloo digital decoding box will still be able to pick up all free digital channels,” says Kearley.

As to how much the investment had cost the state broadcaster, Kearley refused to be drawn, other than saying it would be visible in next year’s annual report, and that the figures he had seen bandied about in the media were “out by a long shot.”

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