TVNZ 'committed' to Freeview as it signs up to rival box

TVNZ will team up with Sky Television to offer a new pay service. File photo / NZ Herald

Television New Zealand, the state-owned broadcaster, says it won't turn its back on Freeview after signing a deal with the nation's dominant pay-TV company Sky Network Television to set up a rival set-top box.

TVNZ and Sky offered scant details of their partnership to develop a set-top box to offer user-pays and free-to-air content over Sky's DTT spectrum and may be open to using ultra-fast broadband in the future. That relationship won't impact on TVNZ's participation in Freeview, which was set up by the nation's broadcasters to cater for the digital switch over.

"This does not affect our relationship with Freeview" and won't reduce access to free-to-air programming, Megan Richards, a spokesperson for TVNZ, told BusinessDesk.

Sky TV and TVNZ have been developing closer relations over recent years after a decade of hostility after the state-owned broadcaster sold its stake in the pay-TV operator. Last year, TVNZ sold the pay-TV rights for local shows from the national archive to be aired on Sky's Heartland channel.

This deal comes after TVNZ's failed bid to bring TiVo into New Zealand and after it took a $17.7 million charge on its Hybrid Television Services joint venture because the TiVo box didn't gain traction among Australians or New Zealanders.

TVNZ will be the junior partner in the deal with Sky, holding a 49 percent stake, and the new box is expected to be launched in the first half of next year. That will come just before the digital-TV switchover begins in September 2012. Radio spectrum for analogue TV will be turned off by the end of 2013.

Last week, the New Zealand Herald reported the TV production industry was concerned about TVNZ's dealings with Sky after rumors of the venture emerged.

Today's announcement comes a week after TVNZ chief executive Rick Ellis said he's resigning to take up a job with Australian phone company Telstra, beginning in January.

Ellis will head up Telstra's new digital media division, potentially pitting him against the broadcasters in the battle to attract eyeballs.

Shares in Sky TV fell 0.6 percent to $5.42 in trading today, and have gained 4.8 percent this year.