With its rejection of the Sky/Vodafone deal, it feels that the commerce commission is in step with the mood of the people but potentially out of sync with the realities of the current media landscape.
Commission declines clearance for Vodafone/Sky merger | https://t.co/78iRVmppII
— Commerce Commission (@NZComCom) February 22, 2017
Core to refusing the agreement was that approval would leave the other telecommunication companies unable to compete with a merged entity, particularly around the availability of live sport. I would argue that this ignores the relatively level playing field around sports content (you pay the money, you get the rights) as well as third party wholesale deals that Sky has shown a transparent willingness to sign with other ISPs.
A quick look at the comments around the announcement this morning shows an overwhelming sense of schadenfreude for SKY and Vodafone which should be pretty concerning for both companies.
Sky, in particular, gets a beating for a general sense of monopolistic profiteering over the last 20 years (perhaps justified) and also for not making available online services. This is slightly perplexing as Sky’s cutaway OTT products – Neon and Fanpass – have been available for over 18 months.
So, what does this mean for both companies? Well, they both have plenty of thinking to do.
Without the merger, Vodafone’s current strategy seems to start and stop at moving to a new office. There have been persistent rumours the New Zealand subsidiary is up for sale and I’d imagine that it will take a lot of convincing to persuade them to continue to invest in a non-core asset. A sale to another global provider might be an option in the longer term.
Regardless, the telco’s relationship with Sky is still strong and the companies will no doubt continue to work together on new products, it will be a busy time for the TV team.
For SKY, there’s no time to waste. It remains an incredibly well run and profitable company but the lag between reality and perception in the availability of its online services shows they are failing to communicate with New Zealand. I’d expect the evolution of the service offering to continue at pace with new bundles and new products, but the biggest piece of work should be in reconnecting with customers. Fair or not, Sky has a brand problem and it will need customers on its side as it continues to deal with the impact of cord-cutting on the business.
And for the customers, I’m not sure this will make much difference to the longer-term trends. Global players will continue to enter the market as video continues to become more fragmented, Sky will remain powerful and sport content will still sit behind a paywall. We’re living in a golden era of TV production, which is becoming a golden era for the customer experience as we get ever more choice and freedom around how we pay for it.
- Sam Aldred is the director of Receptive.tv. He regularly writes for StopPress on issues relating to the television industry.