Media: Telco aims to end Sky's charmed life

TVNZ banned website Throng from receiving its press releases after it raised questions about ratings for 'Go Girls'. Photo / Supplied

TelstraClear is gearing up to attack Sky Television's charmed position as unregulated wholesaler in the Government's framework for content under Ultra Fast Broadband (UFB).

TelstraClear was an assiduous lobbyist with the Maori Party whose concerns and voting power led to the Government abandoning its "regulatory holiday" for UFB.

Last week TelstraClear's chief executive Allan Freeth told the Herald: "We thought about pressing this issue at the same time [as lobbying against the regulatory holiday] but it was too much for our team at one time. We'll focus on content when that is over."

Freeth argues that one issue for the proposed unregulated regime for UFB is lack of transparency. With Sky's dominant position in holding rights to programming it would have a big say in the emerging wholesale market.

There would be bottleneck in content that would reduce demand for UFB and drive young customers to illegal downloads.

"The big issue is not that young people are against paying for the latest show - it is that they want it now."

TelstraClear is negotiating its content deal with Sky for its Saturn cable TV networks in Wellington and Christchurch.

But Freeth rejected a suggestion his criticism of the unregulated content market - an irritant for Sky - was leverage for its content negotiations. It was a strategic issue that went beyond Saturn, he said.

SKY EYES COMCOM

Unsurprisingly, Sky Television passionately rejects any need for regulation of content on UFB. It has prospered in an unregulated market.

In fact, Sky is even arguing that broadband television is outside the scope of a Commerce Commission study on the demand-side barriers to uptake of UFB including content. In submissions Sky indicated it was watching the study closely - and effectively questioned the independence of the competition watchdog and an upcoming conference on the matter.

"It will be important in the study that the commission conducts its processes fairly and in an unbiased manner," the commission was told. Sky is concerned about the general approach of the commission and that the study will lead to more regulation.

Sky Television chief executive John Fellet said that once up and running overseas- sourced IPTV companies like Netflix will be competing against Sky for content and UFB would lead to a divergence of its business, not a convergence.

RESPECT

"TelstraClear's Allan Freeth says "I've got a lot of respect for John Fellet and Sky for their protecting shareholder value."

Unlike other pay TV monopolies it has managed to elude regulatory oversight.

Sky has lobbied successive governments and Labour mostly treated the issue and Sky's rising dominance of New Zealand television with indifference until around 2007 when free-to-air channels took wailing about Sky to a fever pitch.

But under National, broadcasting has been inoculated from what it regards as the germs of regulation. The Nats were criticised in the 1990s for ignoring demands from consumers and competitors about regulation of Telecom. There have been no apparent signs of anti-competitive actions, but telcos have been making comparisons with National's attitude to Sky.

A policy resisting regulation of content might make good sense but National is backing one commercial sector over another. You would have thought such a key issue affecting the future of television would be built around independent advice and research. But much of the government policy for broadcasting seems to be built on Communications and IT Minister Steven Joyce's opinion and direct political lobbying.

The Herald asked Joyce what advice or research he had been given, or sought, that backed the Government's anti-regulatory stance on UFB content. He said the 2008 regulatory review findings showed there was no need for additional regulation regarding access to premium content.

"There is no evidence to suggest these conclusions are no longer valid," Joyce said.

That review - initiated by Labour and including trenchant industry criticism of Sky TV - was scrapped in its formative stages by National soon after its election. The Ministry for Culture and Heritage said it was a case for regulation, but the Government adopted the view of the Ministry of Economic Development - reporting to Joyce - which said there was no need to assess the impact for convergence of the telecoms and broadcasting markets.

I wondered what advice the Government had sought or received on the impact of that policy and the advantage it would give to individual corporate players.

Joyce said: "No specific advice on this point has been sought but ... the increasingly competitive playing field for content delivery provides assurance that the UFB will have a positive impact for all content providers.

"It is for the Commerce Commission to determine any abuses of market power under the Commerce Act. Anyone is able to make a complaint to the commission and ask them to investigate, he said.

"The minister's role is to provide a policy setting that is likely to encourage competition, for example, the open access nature of UFB."

PRINCESS AND THE PEA

TVNZ banned TV watchers' website Throng from receiving its press releases after it posted an article questioning TVNZ's motives for misleading claims about ratings for its comedy-drama, Go Girls.

This column treats ratings claims with deep caution but this bizarre outburst illustrates questions about networks' promotion of ratings statistics in press releases.

This case refers to TVNZ's cumulative ratings or "reach" that estimate how many people watch part of a programme over a certain amount of time - as opposed to the standard ratings estimating the average ratings. Cumulative figures are largely ignored by the advertising agencies but they produce bigger numbers than standard ratings so are useful for publicity and small digital channels.

But advertising consultant Martin Gillman says the tendency to quote "reach" is also part of New Zealand's unusual system for estimating TV audiences.

Standard ratings assess average audience over 15-minute blocks, but overseas it is reported "minute by minute", providing a more accurate assessment but effectively reducing ratings by 10 to 15 per cent. He said the networks' concern was academic because advertising media buyers were well aware of the variation.

TVNZ EXCLUSIVES

PR wars and network hissy fits aside, a more interesting aspect of TV advertising is use of the "exclusive deal" where a media buying company focuses a campaign on one network and excludes another.

TVNZ has been particularly successful at securing deals, with one significant media buyer with deals that shut out MediaWorks but allowed the ad agency to reach niche audiences with Sky TV. One adman suggested exclusives might explain recent estimates of media spend that show MediaWorks was not benefiting from an improvement in the ad market and there had been grumbling about the approach.

But another said TV3's slow growth was down to the cyclical shift of its line-up with some shows having been around a long time and coming off the boil in ratings.

Derek Lindsay of ad agency Draft FBC Media is the head of an industry body that represents media buyers and says there is nothing new in exclusive deals across all media sectors. He said that under such arrangements the benefit of the reduced rate always went to the advertiser - and not directly to the media buying company.

BOXING CLEVER

Television producer Claudette Hauiti has been named National Party candidate for the Mangere electorate. She says she gave up her company so she could have a shot at politics. Hauiti's Front Of the Box made the ground-breaking Eye To Eye with Willie Jackson, and a reputation for a crossover between Maori and mainstream programming.

Meanwhile, Maori TV second in charge Sonya Haggie is stepping down, raising questions about the succession plan at the public broadcaster. Haggie was general manager of marketing. She came from a background in public relations and had a reputation for sticking to her guns. It is not clear who will replace her when she leaves on July 25 to develop her own business interests.