Sky Television has confirmed an interest in Prime New Zealand amid resurgent speculation that the free-to-air station could be sold.

But Sky chief executive John Fellet played down the possibility of any imminent deal, dismissing talk of a Prime NZ sale before an option to buy 50 per cent of the New Zealand network held by Australia's Nine Network is resolved.

"We have had discussions with Prime since 2000 - Prime Australia that owns the network here - on just exactly what their long-term plans are. But any discussions at this stage would be premature," said Fellet.

Prime New Zealand is owned by listed Australian broadcaster Prime Australia. But under the terms of a 2001 content provision deal with Nine Network - owned by Kerry Packer's Publishing & Broadcasting - Nine has an option to buy 50 per cent of the New Zealand business until March 2007.

Fellet said he would be interested in Prime NZ - or any free-to-air network in New Zealand that came up for sale - at the right price. "But before Sky could get interested, the Nine option would have to be removed."

CanWest MediaWorks, also mentioned as a potential suitor, would not comment on the speculation.

Talk of a potential Prime NZ sale follows a difficult period for the network in New Zealand. Earlier this year, it enticed broadcasting personality Paul Holmes from TVNZ to spearhead its push for local identity - only to cancel his weeknight current affairs show within months due to poor ratings.

A revival of Nine Network's rival Seven Network this year may also be contributing to speculation - although analysts think it unlikely Nine would give up its option before it expires even if the Australian network does not want to take on Prime NZ while battling on the home front.

"What have they got to risk with a zero-cost option?" asked one analyst. "It doesn't seem right, but that's not to suggest it can't happen the other way around - in terms of one of those parties approaching Nine."

Prime New Zealand chief executive Chris Taylor said the rumours had been going on for a while. "I don't comment on matters of ownership," he said.

But he said it was flattering to be viewed as an acquisition and it made "absolute sense" that Prime NZ would be of interest to Sky and MediaWorks. "Prime, in its own right, is a successful business and has a bright future."

Analysts said Sky would like Prime NZ as a platform to package its rugby in a free-to-air environment, while MediaWorks could potentially move its youth-oriented music station C4 on to the Prime frequency and put Prime on the C4 frequency to take aim at TVNZ's One.

Sky has previously said it could look at a free-to-air network of its own to stop the erosion of the value of rights to replay rugby - and analysts said it might also want its own news bureau, a common activity for pay TV networks globally.

Choice asset

* Prime New Zealand debuted in 1998.

* Its flagship shows include Who Wants to be a Millionaire and Getaway, and local shows have included Holmes and The Tem Show, starring Temuera Morrison.

* Prime grew revenue by more than 50 per cent in the year to June 2005.

* Its operating losses reduced by 37.5 per cent in the June year.

* Prime Australia has said the New Zealand business is on track to generate profits in the near term.