Sophie Ryan is online editor for the Business Herald

Sky/Vodafone merger will hurt sports fans, says Spark

If the Commerce Commission dismisses the application for the merger, Sky would be forced to put all sports online and on demand, says Spark. Photo / File
If the Commerce Commission dismisses the application for the merger, Sky would be forced to put all sports online and on demand, says Spark. Photo / File

Telco giant Spark says any merger between Sky TV and Vodafone will hurt consumers and only entrench further Sky's monopoly on sports broadcasting.

Spark has told the Commerce Commission that if it rejected the proposed merger then market pressures on Sky TV would force it to make all sports content available online and on-demand.

Sky TV plans to buy Vodafone New Zealand for $3.44 billion in cash and shares in a reverse takeover which would see Vodafone's British parent group own 51 per cent of shares.

Vodafone NZ boss Russell Stanners would be chief executive of the company with Sky chief executive John Fellet head of the media and content arm of the merged company.

The company will have nine directors, five from Sky and four from Vodafone.

Spark's submission to the Commerce Commission says the proposed merger is not in the best interests of New Zealand sport fans.

"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," said Spark's GM regulation John Wesley-Smith in a statement released this morning.

"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.

"Sky's business model seems increasingly focused around sports, which underlines how effective their monopoly is in this space. The proposed merger with Vodafone is likely to entrench that monopoly, and that's something all New Zealanders should be concerned about."

Watch: Sky - Vodafone announce merger plan in June


Wesley-Smith said Spark's concerns were based on the limited, unattractive wholesale options currently offered by Sky. The arrangements for reselling Sky boxes was "outdated", he said, and doesn't work for consumers who want more choices in how they watch sports.

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".

"We believe 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 help distribute this content to New Zealand consumers.

"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.

"A merged Sky/Vodafone will 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."

2degrees also opposed the proposed merger in a submission to the Commission, saying international experience showed it would be bad for consumers.

The merger would create a company with the ability and incentive to use premium live sports content to stifle competition, 2degrees said.

A spokeswoman for Vodafone said the company intended on formally responding to all submissions before the commission.

The Commerce Commission is expected to make a decision on the merger application by November.

A public copy of Spark New Zealand's submission can be found on the Commerce Commission's website.

TVNZ calls for Prime to be left out

TVNZ has called for Prime to be removed from any merged Sky/Vodafone operation.

TVNZ asked the Commerce Comission in its submission to review the impact that Sky's ownership of Prime played in reducing competition in the media.

A merged Sky/Vodafone would lessen competition by creating an entity with the ability and incentive to bundle content rights across free-to-air, pay TV, subscription video on demand and TV on demand, TVNZ said.

TVNZ CEO, Kevin Kenrick said that "since acquiring Prime, SKY has purchased bundled pay and free-to-air rights and increasingly put premium content behind its pay walls."

"As a result, the cost of premium entertainment and sporting content has significantly increased, and what New Zealanders can view free-to-air has significantly reduced."

Kenrick said Prime showed 240 hours of Rio Olympics coverage, most of which is delayed, compared with TVNZ's 800 hours of Beijing Olympics coverage.

"It's clear that SKY's purchase of free-to-air rights is being used to drive subscribers to its pay TV service," Kenrick said.

"Divestment of Sky's free-to-air business, Prime, would remove Sky's incentives to buy bundled pay and free-to-air rights."

- NZ Herald

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