Sky TV bats away analyst's monopoly position concerns

Sky TV says there is more sport on free-to-air TV now than before its network existed. Photo / Dean Purcell

Sky TV has played down an analyst's concerns about it facing future regulation over its monopolisation of sports events and says there is more sport on free-to-air TV than before.

Morningstar analyst Nachi Moghe released a report on the listed pay TV operator this week describing the company as being in an "unassailable position" in New Zealand as a pay-TV provider with a subscription base of 856,000 or around 50 per cent of New Zealand households. "We believe the company's dominance is unlikely to end any time soon, allowing it to earn healthy returns on capital."

But Moghe also warned that the biggest near term credible threat to the pay-TV operator was regulation.

"Unlike most pay-TV companies around the world, Sky TV is not regulated. The implication of this is that the company monopolises rights to important sporting events, a key driver of subscriptions, then charges subscribers to view that content.

"Given its financial clout, Sky TV is able to outbid its free-to-air counterparts. New Zealand's Commerce Commission might construe this as being unfriendly to consumers and could impose restrictions on Sky TV in relation to programming rights."

A Sky TV spokeswoman said it faced similar regulators to other pay-TV operators around the world.

"There is more sport on free-to-air TV now than before Sky was around. There is a whole free-to-air sports channel."

The spokeswoman said Sky had been concerned about regulation for more than 10 years. But it felt less concern at the moment given the Commerce Commission had recently completed a very intensive investigation into Sky.

Moghe also warned Sky was open to competition with the internet becoming a viable option for distributing content to subscribers. The company had reached a point where subscriber growth may be lower.

Moghe upgraded his value on the stock from $6 to $6.50 and has a hold recommendation on it. Sky shares closed up 11c yesterday at $6.10.