Commonwealth Games rights worth taking over, says Sky

Sky Television has reassured investors it makes good sense to buy Commonwealth Games television rights dropped by Television New Zealand.

TVNZ said yesterday that if it had not passed on the free-to-air, pay TV and new-media rights to the Games, the state broadcaster would be $5 million out of pocket.

It is understood Sky is paying less for the Games rights package than TVNZ did two years ago.

TVNZ is saving money because it no longer has to send a commentary team.

Sky Television chief executive John Fellet said the Commonwealth Games made more sense for Sky and its free-to-air channel Prime than it did for TVNZ.

Many events at the New Delhi Games would fall in prime time - between 6pm and 10.30pm.

So TVNZ would have lost revenue from popular shows, and that would have been part of the $5 million estimate.

Prime could accommodate Games coverage into prime time without losing advertising revenue, Fellet said.

"As with the 2010 and 2012 Olympic Games, New Zealand viewers will be guaranteed comprehensive free-to-air coverage," a Sky spokesman said.

Sky has limited online media and Fellet confirmed that he would consider selling new-media rights to other websites.

He said that two years ago Sky had not bid for the Games rights and TVNZ had not sought to sell pay TV rights.

TVNZ spokeswoman Megan Richards said that provided the Sky deal was approved by the Commonwealth Games Federation, TVNZ would break even on costs already incurred from buying the rights before passing them on to Sky. She declined to comment on a suggestion that break-even was possible because TVNZ would not have to send a commentary team to India.

"In wealthier times we have had sufficient financial buffer to be able to absorb the losses. We don't any longer," she said.

TVNZ's deal with Sky, which is still under negotiation, makes commercial sense. But it is an embarrassing climbdown for the state broadcaster at a time it is battling Sky.

Faced with Government demands for a 9 per cent return on assets in a bleak advertising market, TVNZ has extracted itself from an expensive public service commitment.

But the withdrawal from the Games raises further questions about the role of the state broadcaster, which is ruled largely by a commercial remit.

Last year TVNZ was attacking the growing dominance of Sky. This year it is handing over rights to a public sports event that has always played on TVNZ.

Sky Television - with Prime - last year obtained rights to the 2010 Winter Olympics in Vancouver and 2012 Games in London.