All our media companies get into the act.

Everyone wants a new partner these days. NZME is eyeing up Fairfax while Vodafone woos Sky. Both expect the Commerce Commission to bless their unions.

The mergers make sense for the concerned parties and the business community is supportive. Breaking off NZME and Fairfax NZ will help their parent Australian companies clear themselves of debt.

The newly united firms will allow New Zealand to better compete with the digital invasion from companies such as Google and Facebook, which are soaking up local ad revenue.

But hardly ever mentioned in the debate about media's new world order are the downstream effects for consumers.


In the case of NZME joining Fairfax, it's likely to see some job losses and some people worry about the potential loss of multiple voices in the media.

The Sky-Vodafone merger has less of a direct impact on consumers. But the change shows storm clouds gathering for free-to-air TV as well as threats to local content and local programme-makers.

It has been hard for the Government to plan for a media revolution, but many believe funding agency NZ on Air needs to change. Broadcasting Minister Amy Adams said the Government was aware how changes in media were an issue for free-to-air TV and local content. She laid out some of the initiatives to back the changes.

"The Government's support of local content on television has adapted to the move to multi-platform broadcasting. For several years, the Broadcasting Act has allowed NZ on Air to support content intended for on-demand distribution."

Multi-platform distribution extends the value of public money put into local content by providing Kiwis with more convenient opportunities to view it, Adams said.

For instance: "NZ on Air now made it a condition that funded content is available free to access on demand for a minimum of one month after each broadcast transmission."

But the structure underpinning the industry is huge and in my opinion the Government is only tinkering at the edge. Production industry players I spoke to were seriously worried about how free-to-air TV will fare and how it can maintain production levels.

Even as lawyers and executives for NZME, Fairfax, Vodafone and Sky work for clearance by the Commerce Commission, other media companies are looking at shake-ups.

TVNZ, MediaWorks and Spark will be planning their own changes, which will create a massive impact on the TV and entertainment industry.

TVNZ chairwoman Joan Withers said she believed local content is TVNZ's defining characteristic. Local content separates TVNZ from Sky TV and new players such as Google and Apple TV.

But it is taxpayers who keep local content afloat. If TVNZ is going to get more local content, it needs more public money. That is in short supply and under intense pressure from new players in digital video such as NZME.

Spark and TVNZ

The most likely combination in the next round of mergers will be TVNZ and Spark. Both are at a disadvantage from the Voda-Sky deal and TVNZ is vulnerable to digitisation and the onslaught of competition from Google and Apple TV.

TVNZ needs distribution help from Spark. A question mark hangs over how Vodafone and Sky will work together but largely it will be about foreign content. There are no signs the merger will encourage the production or funding of local content.

Sky has a vault of programming rights, especially sport, which is likely to lead to more products for sport clips on digital devices. Sky chief executive John Fellet says Sky will be wholesaling content to internet service providers other than Vodafone.

But content is unregulated here. It's hard to comprehend that Sky would not give Vodafone some advantages. Otherwise what is the point of merging?

Spark chief executive Simon Moutter has played down the impact of Voda-Sky, saying its subscription video on-demand service Lightbox is not competing with Voda-Sky or newbies Google, Apple, YouTube and Facebook.

Withers acknowledges change is coming and says TVNZ is keeping the Government in the loop. I am hearing that the Government is encouraging TVNZ to get involved in the current shake-up and not be left stranded as a small player surrounded by giants.

But the Government is not going to spend taxpayers' money to protect TVNZ.

A political source suggested the obvious option would be privatisation of a 49 per cent stake to Spark, and that would not require legislation. Such a move would attract plenty of opposition, but TVNZ has had no public broadcasting roles for several years so it would not be a great loss. Withers confirmed TVNZ is looking at options, but declined to discuss them.


A deal with Spark would be a safety rope for TVNZ but it would make MediaWorks even more vulnerable. MediaWorks, owner of TV3 and half of NZ's commercial radio stations, has downplayed reports it is seeking an Australian buyer, beyond saying it wants to take advantage of mood for mergers.

While the radio operations are sturdy, TV3 is in a tough spot. Australian reports that TVNZ was negotiating to buy MediaWorks have been refuted by the NZ government, but some speculate about Spark taking a stake in Mediaworks.

A second option would see the merged Voda-Sky - when cleared by ComCom - buying all or part of MediaWorks.

Previous talks for Sky to buy MediaWorks broke down over the price, but that has now dropped to around $400 million.

If such a merger occurred, Sky might run the delayed free-to-air rights for key sports events on TV3 instead of Prime TV.

Prime, which has seldom made a profit since Sky bought it in 2005 would be closed down, said a source.

John Drinnan produces the media website