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UPDATED: TVNZ and Sky shack up in digital pay TV 'co-opetition'

Sky and TVNZ have, at last, confirmed they are indeed launching a joint pay TV service – as predicted weeks ago over at our sister site StopPress.

Sky and TVNZ have, at last, confirmed they are indeed launching a joint pay TV service – as predicted weeks ago over at our sister site StopPress.

TVNZ will be taking 49 percent of a new pay TV platform called Igloo – with Sky holding the majority 51 percent.

The cahoots between the two dominant players in the free-to-air and pay television market effectively shuts out competition and will be seen as a blow to TV3 owner MediaWorks and to Freeview. This unholy alliance allows TVNZ to get into pay TV without going head to head with Sky. TVNZ has been quoted as saying the relationship with Sky TV is one of “co-opetition” where it continues to compete for ad revenue.

SPADA, the organisation representing New Zealand production companies and producers, isn't impressed.

Chief executive Penelope Borland said in the absence of any regulation,  TVNZ and SKY could force commercial deals at the expense of local producers and NZ On Air.

“It’s pretty clear that there is no negotiation in a scenario where New Zealand’s biggest free-to- air, government-owned television broadcaster in partnership with our only pay TV provider takes rights to pay TV for no compensation.” 

These arrangements would not be tolerated in countries with regulatory regimes like Australia, Canada, and the UK, she said.

The New Zealand government has so far refused to consider regulating Sky.

TVNZ’s head of digital media and channels Eric Kearly said on Radio New Zealand’s Nine to Noon programme this morning the main barrier to the new model was the negotiation of rights to content.

Sky chief executive John Fellet said the new service would start in mid 2012 – in time for the start of the switch-off for analogue signals.  It is thought to cost about $25 a month, although this is yet to be confirmed, and with uptake slowing for the full Sky package, the cheaper offer will likely help Sky to revive growth.

Departing TVNZ chief executive Rick Ellis, who’s off to head the new Telstra division Telstra Digital Media in Australia soon, said TVNZ wanted to secure a strong foothold for all channels to protect the network in the future.

“We want all our channels to be available on as many platforms as possible,” said Ellis.

"The introduction of regional breakouts for TV ONE will provide new opportunities for some advertisers, and incremental revenues for TVNZ,” he said.

Fellet said he was pleased to have reached the new agreement with TVNZ, which will deliver more viewing options to over two million New Zealand viewers.

“The new agreement increases the number of channels available through Sky, the addition of HD versions of TV ONE and TV2, and supports our strategy of providing subscribers with everything from one box,” said Fellet.