Taking a gamble - the digital future

As a former head of Ansett New Zealand and a senior executive for Ansett Australia, Rick Ellis knows what it is like to work for Rupert Murdoch.

It is interesting, then, that he is so passionate about ensuring that pay-TV operator Sky TV - also part of Mr Murdoch's global media empire - should not be left to call the shots when it comes to New Zealand television's digital future.

For the past year, TVNZ has been working on a plan that would see it put its own set-top boxes into viewers' homes once its transmission network is converted to digital. The plan would see it not only offer free-to-air channels, but niche channels, as well as additional services such as home banking, video-on-demand and Internet access.

According to Mr Ellis, the extra revenue from these services will be needed to offset a gradual decline in advertising dollars on free-to-air channels - "It only takes a 16 per cent drop in our revenues on our current programme costs before we're losing money."

"That's crap," counters John Barnett of South Pacific Pictures. "If the day of the free-to-air broadcaster was numbered, then why did Viacom just buy CBS and why did Disney buy ABC? The only reason TVNZ wants to take on Sky is because of ego. If you want to make that as a commercial decision, that's fine, but this is public money."

So far, the Government has refused to approve the plan, saying it is simply too risky. But Mr Ellis remains unrepentant.

"Even in a market this size, the whole digital revolution is such a fundamental shift in the way economies work that I don't believe that New Zealand should be stuck with just one player," he argues. "Unless [TVNZ] brings competition in, who the hell else is?"