TVNZ poised for digital deal

By VERNON SMALL deputy political editor

Television New Zealand has struck a deal with telephone and television provider Telstra Saturn to offer a digital television service by cable.

It would mean more channels and better picture quality and sound, delivered through the Telstra Saturn cable network.

TVNZ also plans to offer a satellite-based digital service as an alternative, potentially giving Telstra Saturn access to the whole country, beyond their current cable service.

Telstra Saturn chief executive Jack Matthews said yesterday that no deal had been finalised, but he confirmed that he had been in talks with TVNZ.

The deal is due to be announced before Christmas and cuts out Sky, which has also been negotiating with TVNZ.

It sets up the potential for the emergence of two big media groups to dominate the New Zealand scene.

One could be a possible grouping of newspaper group INL, which owns part of Sky, Telecom, a big INL shareholder, Sky and TV3 (whose service is carried on Sky).

The other one would be TVNZ and Telstra Saturn, with possibly another player.

TVNZ had been eager to introduce a digital service for two years, but the new Coalition Government put the brakes on, leaving it to write off almost all the $14 million it had invested in the technology.

TVNZ management yesterday told a parliamentary select committee that they were confident of signing a deal before Christmas and hoped to have it on air next year.

Chief executive Rick Ellis said that talks with Sky and other potential partners were reaching their final stages.

"All New Zealanders should have unfettered access to digital free-to-air services," he said.

The state broadcaster has invested $7 million in technology to allow news services to be used across "a number of mediums in the new digital world."

Neither Mr Ellis nor TVNZ chairman Ross Armstrong would discuss details of the deal.

But they confirmed that almost all the $14 million invested in digital before the election had been written off.

Meanwhile, TVNZ is considering a third channel to run minority programmes in prime time, as a way of meeting its obligations under its charter and maintaining the value of existing assets.

But Broadcasting Minister Marian Hobbs and a TVNZ spokesman later said it was not a live option.

TV One general manager Shaun Brown told the committee that TVNZ was considering the impact of the charter, designed to move the company towards being a public broadcaster.

It could add costs, through requiring more local and expensive programming.

It was a reasonable assumption that revenue could fall from lower audience ratings for minority programmes.

Ms Hobbs said she had made it clear to the TVNZ board and management that the charter did not mean that there should be fewer people watching.

A gradual introduction of the charter requirements would allow an easier adjustment.

TVNZ said the loss of hundreds of millions of dollars of revenue from implementing the charter, suggested by Opposition MPs, was unlikely.

Mr Armstrong said the company had options of overseas expansion, such as managing a South African TV network, to offset any loss of revenue from implementing the charter.