John Drinnan on business
John Drinnan is a Herald business writer and media commentator

Media: Sky - Nice PR, shame about the shows


Sky Television is loading up with even more public relations firepower as it sniffs the scent of regulation and looks to snuff it out.

Smooth-as-silk PR man Tony O'Brien is bringing in senior commercial executive Kirsty Way to deal with media, so he can focus on his lobbying role.

Why? The Commerce Commission study touching on content as a barrier to uptake of ultra-fast broadband.

O'Brien has done a fantastic job convincing politicians of all hues that New Zealand is well served by an unregulated pay-TV monopoly.

Armed with research from Sky's law firm Buddle Findlay, O'Brien and the odd lunch tab for an MP must provide a fantastic return on investment.

It has kept Sky unregulated. But where does all this successful lobbying lead?

As Sky's coverage exceeds 50 per cent of the population, the TV firm seems to be ignoring the other obvious way to fend off regulation and discourage competition - making the product unassailably good.

Sky is not doing much about the content for its basic $47.88-a-month package.

Private enterprise does what it has to do - at the least price for the biggest returns. Nobody can criticise them for that, because there has been no incentive to do anything more.

In this market Sky is under no pressure and no threat, so it can take its time.

There is no contribution to local content apart from sport and Sky has shown no interest in local production.

Sky will argue its customers are happy and its churn rate is relatively low.

But this is a monopoly and there is nowhere else to go. Critics like TelstraClear say Sky will have the same hold over the wholesale market for internet TV.


In this market, New Zealanders are missing out on good television.

With advertising revenue down, free-to-air TV is only interested in shows that are taxpayer funded or have a mass appeal. TV One in particular has abandoned quality and left an unserved market. But Sky has ignored it.

A good example is the HBO series Treme (pronounced tra-may) created by David Simon and Eric Overmyer, who formerly collaborated on the astonishing DVD hit The Wire.

Set in a working class neighbourhood of New Orleans after Hurricane Katrina, it is smaller in scope than The Wire, which examined an entire city - Baltimore.

A second series premiered on HBO in May and a third series has the green light.

Phil Wakefield of the entertainment technology website said no New Zealand programmers - including those at Sky - had picked Treme up and it had gone direct to DVD. Other quality niche dramas were being ignored.

In Britain, on Sky's sister broadcaster BSky-B, such programmes were included in a quality drama channel called Sky Atlantic.

Meanwhile, on Sky's basic package New Zealanders are left trawling though some appalling dross.

Comedy Central - where the highlights are 29-year-old repeats of Cheers - may be the worst offender.


Reading International says it is still interested in cinema acquisitions for New Zealand but acknowledges it is a small market.

That is especially the case in Auckland, where Reading missed out buying SkyCity Cinemas, which was eventually sold to Australian Amalgamated Holdings and rebranded as Event Cinemas. Global chief financial officer Andrzej Matyczynski was in New Zealand this week unveiling a new accounting back-office centre servicing operations in the United States, Australia and New Zealand.

Reading has 60 screens in New Zealand - focused in Wellington and Christchurch - but it has sold out of its 50 per cent stake in a multiplex at Botany shopping centre to New Zealand entrepreneur Barrie Everard.

That leaves the cinema company unrepresented in the largest market, beyond its land investments near the Auckland International Airport.

SkyCity had prolonged discussions with Reading but became frustrated at financing arrangements.

Two years after the sale, Matyczynski says Reading is in the market but the cinema sector is tight.

"Where there are more opportunities we will move more quickly than we have done in the past," he said.

Meantime he insists that the exhibition industry remains buoyant with Reading International holding 462 screens - 232 in the US (including cinemas and off-Broadway theatres in central Manhattan), 170 in Australia and 60 here.

Reading's decision to operate all its global accounting out of New Zealand may be unique for a US-listed company but appears to be based on cost.

Based in Los Angeles, Reading had looked at putting global accounting in cheaper locations or outsourcing but the Wellington centre enabled it to create its accounting centre close to a cinema complex.

Matyczynski said costs were lower because there were fewer fringe benefits for 17 accounting staff who would be hired for the global accounting role.

Group revenue is about US$240 million. Ninety-two per cent of revenue is from cinemas, with half from the US, 40 per cent from Australia and 10 per cent here. About 70 per cent of Reading's assets are in property.


Back-office amalgamation is being depicted as behind a review of state-owned media standards regulators.

But some broadcasters believe the Government will use the review to meet broadcasters' gripes about the Broadcasting Standards Authority - eventually leading to self-regulation of broadcast programming standards.

The Government announced this week it would "work with the Broadcasting Standards Authority, the Advertising Standards Authority, the Press Council and the Office of Film and Literature Classification to look at opportunities for greater collaboration".

But neither the Press Council nor the ASA are government bodies and have self-regulatory regimes. The ASA is clearly on board and said it was happy to be the model for change - and many would argue it has performed well.

But the Press Council - overseeing newspapers - has no ideas about its role in the review.

In Labour's day such an initiative would be seen as a first step towards a super-regulator for the media - an idea that would put many in a grump - and that does not fit the profile for a Government that is against regulation and has no incentive to build quangos.

While the Government suggests the focus may lead to the BSA sharing back-office facilities with the ASA, broadcasters see it as an election-year first step towards making the BSA self-regulated.

Business supporters of self-regulation would welcome such a move - and the BSA has indicated that it needs changes so it can deal with online standards issues.

But sexual content on early prime time free-to-air TV has been in the news and politicians don't necessary have liberal views on journalistic independence.

It might draw cheers from TV networks but giving them more control over standards might not win widespread support.


Shaun Brown's retirement as chief executive of the Australian public broadcaster SBS illustrates the failings of this country's own dysfunctional broadcasting system.

Brown was a former head of TV One and then television at TVNZ in the early 2000s but was pushed out by Labour, which saw him as part of TVNZ's commercial past.

But as TVNZ sheds its remaining public service inclinations, as its standards continue to slide, and as the Government puts the squeeze on Radio New Zealand, Brown is exiting an organisation that provides broadcasting services for minorities.

Brown understands the role of a broadcaster beyond servicing advertisers.

Having been ejected by politicians in this country, he moved to Australia where he has provided strong leadership in a country that is committed to the public service broadcasters ABC and SBS and even expanding their role. Obviously Australia is a much richer country, but it has shown itself to be a more civilised one.

Brown returns to New Zealand occasionally but he says he is not looking to return to New Zealand broadcasting.

More's the pity because we could use some leadership as local TV producers scramble for some replacement for TVNZ7 - and marketers finally take over State TV.

This story has been changed from an earlier version which incorrectly referred to Barrie Everard as Barry Barclay.

- NZ Herald

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