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Current as of 02/12/16 07:39PM NZST

John Drinnan: Spark turns up the music volume

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The Auckland Museum exhibit showcases Kiwi acts such as Dragon (pictured).
The Auckland Museum exhibit showcases Kiwi acts such as Dragon (pictured).

Spark, and its predecessor Telecom, have always been lead singers in the sponsorship arena.

Now, sponsorship of an impressive exhibition on Kiwi popular music illustrates Spark's growing alignment with entertainment.

The Auckland Museum exhibition, called "Volume: Making Music in Aotearoa", traces the history of New Zealand pop.

After starting its five-month run last week, the exhibition is already winning applause and there is even talk of it one day becoming a permanent display.

Spark has been involved in Volume since planning for the exhibition started two years ago.

Content strategy

The sponsorship, and a growing association with music, is a part of a strategy for Spark to move into media.

It's a global trend: right now, attention is on the US, where telecommunications company AT&T is trying to take over the US media giant Time Warner.

In this country, Vodafone is seeking clearance to buy Sky TV.

Access to Sky content would create a major threat for Spark and for the TV industry,
and is a major factor in where Spark goes next.

Music, music, music

In February 2014 Spark linked with the music streaming service Spotify, making it free as part of all its mobile plans.

Next April Spark will take over naming rights for Auckland's Vector Arena venue, in a tie-up with arena shareholder and promoter Live Nation.

And Spark's content division recently sponsored music coverage in a deal with the pop culture website The Spinoff, which is already heavily sponsored by its subscription video on demand service, Lightbox.

Content partners

Beyond the Volume exhibition and increasing association with music, Spark is keeping quiet about its wider strategy for content and entertainment.

Video is still king, and the role of new relationships with media partners seems to be a work in progress.

In my opinion, Spark needs a media partner, and the two TV broadcasters are the obvious contenders.

TVNZ has done a good job of introducing customers to its on-demand offering and has established relationships with Hollywood and other programming suppliers.

As a state-owned broadcaster, any relationship would be a joint venture and is unlikely to involve equity.

The reaction to claimed breaches of the Act point to the difficulties in establishing oversight of broadcasting in an unregulated market.

But TVNZ has come out the worse for wear in three ventures. It closed down TVNZ6 and TVNZ7, made an ill-fated investment in the Igloo pay TV service with Sky TV, and also wrote off $14.8 million in 2011 from its failed investment in the TiVo media device. Spark predecessor Telecom was involved in that venture.

If TVNZ is successful with plans to dominate and expand Freeview into payTV - as reported by this column - it would be more appealing to Spark.

In my opinion, Oaktree Capital - the owner of MediaWorks - would be willing to sell TV3 to Spark.

Spark has had mixed results in media in the past. Going back to the Telecom days, it toyed with media and content despite what it has described as anti-competitive wholesale programming contracts from Sky.

The digital Telecom e-commerce site ended in failure.

Lightbox, meanwhile, started out with a hiss and a roar in August 2014, but nowadays seems to be on hold while Spark sorts out its content strategy.

Spark vs VodaSky

The proposed $3 billion merger of Vodafone and Sky is not a fait accompli.

On Monday the Commerce Commission upset the applecart by warning Vodafone there were "unresolved issues", including questions about whether past anti-competitive behaviour will continue.

Few expect the merger to be halted, but in my opinion, the new level of transparency from the ComCom indicates that it wants Vodafone and Sky to offer concessions to appease competition concerns.

For VodaSky, these apply to the wholesale content market and the ability to shut out competition, which would subsequently have an impact on the retail market.

The ComCom can't set conditions for merger proposals - just clear or reject them.

And once a merger is approved, it does not have the power or resources to police the resulting operation.

An illustration of that was a finding in a 2013 review of Sky TV wholesale programming contracts. In October 2013 the ComCom found Sky was likely to have breached section 27 of the Commerce Act, according to documents obtained under the Official Information Act.

The ComCom warned it would seek documents from Sky to ensure this was no longer happening, but stopped after just two requests.

It told Sky it would continue to monitor its contracts and conduct with telecommunications retail service providers.

But in my opinion, the reaction to claimed breaches of the Act point to the difficulties in establishing oversight of broadcasting in an unregulated market.

See IOA response below:

- NZ Herald

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John Drinnan has been a business journalist for twenty years, he has been editor of the specialist film and television title "Screen Finance" in London, focussing on the European TV and film industry. He has been writing about media in New Zealand since the deregulation of the television industry in the late 1980s.

Read more by John Drinnan

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