Sky, TVNZ in pay TV partnership

Sky TV and TVNZ have confirmed their long rumoured partnership to offer a low-cost digital TV service.

Sky TV will have a 51% holding in the new venture; TVNZ 49%. It will launch at an unspecified time in the first half of next year.

NBR understands a subscription to the new service - which has the working name "Igloo" -  will start at $25 per month. Content will be the existing Freeview channels, plus up to 12 more.

I've just had a quick chat with Sky TV chief executive John Fellet (Freeview general manager Sam Irvine having restricted his comment to, "I only know as much as you but I'm sure more detail will be forthcoming over the next few days.")

John was playing his cards close to his chest ahead of the official launch on December 7 (a post-election launch that was been spoiled in part by pre-election leaks).

Asked if the new service could run via a MySky decoder, Fellet said his understanding was that the service would be encrypted; today's Freeview boxes were not capable of receiving the encrypted signal, necessitating a whole new set-top box - which will be terrestrial (Sky's set-top boxes take a satellite feed, as you're probably aware from the dish on your roof; Freeview HD is terrestrial).

The release below makes oblique reference to the government's $1.35 billion Ultrafast Broadband (UFB) Crown fibre roll-out.

The Sky TV boss said you'd have to be crazy to release a set-top box today that did not have support for content delivery over cable at some point in the future.

Another snippet: the new service will take a Freeview feed, then add an unspecified number of premium channels (Fellet wouldn't say if those would be drawn from Sky TV's existing line-up).

Mr Fellet said the new service would offer up to 12 SD (standard definition digital) channels on top of the existing Freeview lineup. Asked if a smaller amount of HD (high definition digital) channels was possible, Mr Fellet declined comment at this point.

It shows a major change of direction for TVNZ our supposed state broadcaster which should be delivering quality content to New Zealanders free of charge.

Asked whether the TVNZ-Sky TV alliance would put more heat on Sky TV (I hesitate to use the term "political heat" since there isn't any) given it would now have its fingers in even more pies, Fellet said he anticipated less given there would now be a low-cost option.

Labour broadcasting spokeswoman Clare Curran railed against the announcement. Obviously Clare is coming at things from a left perspective, but any TV viewer who'd like to see a little choice, and competition, in the pay television market should probably be starting to stir about now.

"TVNZ's argument that this is a win for consumers is disingenuous given it will provide only to those who pay," Ms Curran told NBR this afternoon.

"It shows there is a strategy to ensure that TVNZ and Sky lock up ultrafast broadband content, which will prevent real competition at the retail level.

"If ever there was a need for regulation across the telco and broadcasting sectors with regards to content distribution, this is it."

Ms Curran predicted the current government "will ignore this partnership." While she stopped short of specifics, she offered that "A labour government would have a close look at it and ensure there is real competition in what should be a growth industry" and look to safegard access to free-to-air broadcasting.

"Under this alliance, free to air could be doomed, and at best marginalised."

TVNZ has written off in excess of $17 million on its investment in Australasian TiVo licensee TiVo, but has committed to supporting the service for at least two more years. The Crown has pumped around $60 million into subsidising the creation of Freeview to help move along the digital TV switchover, which should ultimately yield around $200 million to the state as freed-up spectrum is auctioned to phones companies, ISPs and others.

The announcement was made after the market closed. Sky TV shares [NZX:SKT] closed today down 0.55% to $5.42.
 

RAW DATA: Sky TV/TVNZ media release:

SKY AND TVNZ PARTNER TO LAUNCH A NEW DIGITAL

PAY TELEVISION SERVICE

SKY Television and Television New Zealand (TVNZ) today announced that they have formed a partnership to launch a new digital pay television service, delivering pay channels over SKY’s digital terrestrial spectrum. SKY has a 51% shareholding and TVNZ a 49% shareholding in the joint venture.

The new service will provide paid-for and free content, including free-to-air channels, to a digital decoder, which is also readied to utilise Ultra-Fast-Broadband (UFB) in the future.

The launch will be in the first half of 2012, timed to take advantage of the digital switchover (DSO), when a large number of New Zealand homes will need to transition to a digital television service.

SKY’s Chief Executive Officer, John Fellet, said;

“It’s exciting to be working together with TVNZ to provide Kiwis with more television viewing options. We’ll be working hard to develop a brand new television service we believe will appeal to a large number of households.”

TVNZ’s Chief Executive Officer, Rick Ellis added;

“TVNZ and SKY have enjoyed a growing relationship in recent years and our strategy is to reach more New Zealanders in more ways. This investment helps us to achieve this. “

TVNZ’s Head of Digital Media and Channels, Eric Kearley, who will also serve on the Board of the venture, added;

“This is a win for consumers who will enjoy more choice in terms of how they access free and paid-for content and future proofs access to further options once UFB comes on stream.”

The joint venture will announce further details, including content and pricing, in the near future.