Sky TV’s free-to-air channel is competing in a crowded market

Sky TV will be showing off its makeover of Prime TV from this weekend, with new imagery on screen.

On Saturday the channel is making the move from from standard definition to high definition for Sky customers only, and on Sunday it launches the first of its new season programming, the crime drama Unforgotten.

It has been 10 years since Sky bought Prime for $30 million. In that time there has been some tweaking, but the channel has come to look a little tired.

Sky TV chief executive John Fellet says the rebrand shows Sky is committed to Prime, Sky's free-to-air channel.


The investment is symbolic at a pivotal time for the TV business, with Sky's core pay TV operation facing big new competitors such as Netflix and Lightbox.

Why is Sky sticking with a non-core asset that is only expected to break even after picking up its share of TV ad revenue?

Room for five?

Prime's revamp comes nearly 10 years after a Commerce Commission inquiry found Sky's purchase of Prime was not anti-competitive, as some claimed.

That case made waves because the inquiry was a rare example of intervention - examining Sky, which had come to dominate New Zealand's unregulated broadcasting market.

MediaWorks, owner of TV3 and Four, was most animated in that case, warning of the danger that Sky would shut off access to programming.

The costs of the Prime makeover will be comparatively small - Fellet is no spendthrift. Some say he has been too cautious when it comes to investing in new technology. In the past, Fellet has acknowledged those claims, but said it is no use having the most advanced proposition if it loses money.

I am told he has never been generous with Prime, and is under no illusions it will ever be a big earner.

As far back as 2004, there was a reminder that the Prime brand was on a different scale to the big free-to-air channels - TV One, TV2 or TV3.

The Australian Nine network had managed Prime New Zealand with the intention of taking a stake; it was seen as the Nine empire's entree into Kiwi TV.

Under Nine management, Prime hired Paul Holmes for a talk show, but despite high ambitions he was unable to attract a big audience.

Strategic asset

At the time it purchased Prime, Sky claimed that if it had not stepped in, the channel would have closed.

Today, Fellet says Prime "probably broke even" in the 2015 calendar year, one of its best years yet for ad revenue. However Sky's investment in Prime is strategic.

Fellet says the value of Prime is in negotiating sports rights. Some big sports events - the Rugby World Cup, for example, or the Olympics - require that the pay TV rights should be allocated only where there is also a free-to-air broadcaster.

Fellet says the other free-to-air channels have been unwilling to make joint bids in order to meet that condition.

However, it is commonly known that the economics of big sports events are different for free-to-air than they are for pay TV.

The broadcasting world has changed dramatically in the 10 years since Sky took over Prime. Today, TVNZ, MediaWorks and Prime are all surviving in a crowded market and haemorrhaging ad revenue to digital.

In my opinion - given the challenges facing linear TV - there are questions whether New Zealand can sustain five commercial TV channels.

Griffin staying on

Few will be surprised that the Government has extended the term of Radio New Zealand chairman Richard Griffin.

Griffin ends his second three-year term in April and has agreed to stay on until April 2017.

It is understood the extension is due to the substantial changes at RNZ initiated during Griffin's terms. Those changes are still settling in this year.

They include the new Checkpoint with John Campbell, and earlier changes to the Afternoons show and Morning Report.

Changes are due to the more proactive stance taken by chief executive Paul Thompson, who replaced Peter Cavanagh in 2013.

Even before Cavanagh left, Griffin had taken an assertive stance over what he perceived as a resistance to change among management.

In my view, there is some truth in the claim that RNZ had become atrophied and unengaged over the years. The counter argument is that the National Government starved the state broadcaster of resources out of pique.

Griffin promoted RNZ's new "Radio With Pictures" concept against staunch opposition from Cavanagh, sources say. It has now been introduced, with some early success by Campbell on Checkpoint.

Griffin is a former RNZ political editor, Prime Ministerial press secretary and player in politics, who has links with National individuals while maintaining cross-party relationships.

One source said his biggest achievement - and a key part of his role - has been to heal the rift that grew between National and RNZ.

His biggest failure, however, is in not convincing the Government to end a funding freeze that is now in its eighth year. The rift has always existed, with senior Cabinet Ministers alleging bias and branding RNZ "Radio Labour" - usually unfairly, I believe.

An RNZ source said Griffin had been appointed by National to mend that rift and the "antagonistic" attitude between the Government and RNZ.

Suspicion between the Government and RNZ had reached the point where National politicians only infrequently accepted invitations to appear on air.

Now, Cabinet Ministers are featuring more often on RNZ.

Radio NZ has also eased its isolation by allowing staff to interact more with other media.

Griffin is used to playing an intermediary role between politicians and media.

He played that role at TVNZ, during the troubled Ian Fraser period when there were tense relations with the Labour Government.

And during the Brent Impey period at MediaWorks, he also played a key role in relations with the Government.

Griffin will be joined on the board by two new board members. Gary Monk and Josh Easby have stepped down to be replaced by Akaroa financial executive Rodger Finlay and media executive Bill Francis.

Francis has stepped down as chief executive of the commercial radio body, The Radio Broadcasters Association. Previously, he was head of talk radio at Newstalk ZB.