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CanWest MediaWorks is considering leasing out two of its new channels on the Freeview digital platform as it figures how to cover costs moving into the digital TV era.
Under the Freeview deal with other broadcasters, CanWest has been allocated space on Freeview that would allow about six new channels broadcasting from satellite and from existing sites.
CanWest MediaWorks chief executive Brent Impey said that the use of Freeview to broadcast in the HDTV format would use two or three of the channels. Impey said yesterday that CanWest had several options for content on two new channels but it was too early to discuss them.
CanWest has indicated it will have one channel up and running by the end of 2008 and another by the end of 2009. Impey said one option was leasing the channels out for others to use.
The Government is allocating $79 million to TVNZ over six years for content on a 24 hour news channel and a general interest channel called TVNZ Home, which Impey said was bailing out TVNZ and its "failing commercial operation" and called for a return to a "level playing field" after funding increases to TVNZ.
Longer term, analysts have raised concerns about CanWest's options during the transitional period between analogue and digital television.
Rob Mercer of sharebrokers Forsyth Barr said that CanWest could be in a difficult position financing new content for digital channels when for the first few years at least Freeview channels would be unviable.
"Under the Sky model they make money out of subscriptions, and TVNZ is picking up extra Government money for its channels that will not have advertising," he said.
The Government approach to digital so far was for extra funding for TVNZ and to maintain its 50 per cent audience share.
"I would question whether that is sustainable," Mercer said.
Goldman Sachs JBWere media analyst Rodney Deacon said the $79 million for two TVNZ Freeview channels "send a warning shot across the bow" of MediaWorks.
The additional funding over six years indicated the Government could be placing TVNZ's own interests above the rest of the industry and disadvantaging MediaWorks.
"We believe it blurs the line between the Government's role as a regulator, shareholder and a guardian of New Zealand's biggest broadcaster," Deacon said.
CanWest Mediaworks shares closed down 1c yesterday to $1.98.
Boxing clever
Digital TV: A digital signal that offers clearer pictures and allows more channels.
Freeview: A consortium of broadcasters including TVNZ and CanWest who will use the Freeview digital platform for free-to-air television. People will have to buy a set-top box to access the signal.
HDTV: A type of super digital TV technology for people with the right sets whose picture quality is even better than standard digital TV.
