Prime TV buy likely to enhance free-to-air competition

Sky Television's purchase of Prime New Zealand would enhance competition in the free-to-air market and give the broadcaster only a nominal increase in audience and advertising share, regulators have been told.

In its submission to the Commerce Commission, Sky said the new entity would have a slightly higher audience share than CanWest Media Works, with its TV3 and C4 channels, but only half the audience share of state-run broadcaster TVNZ, with channels TVOne and TV2.

Last month, Sky said it would buy the Prime network for $30 million. The purchase, if approved by regulators, would be its first free-to-air television channel.

Sky estimates after the Prime purchase, its 20.5 per cent audience share would jump to 26 per cent, leaving TVNZ with 52 per cent and CanWest with about 21 per cent.

Furthermore, a combined Sky and Prime would take about 11 per cent of the country's total TV advertising revenue, which was about $541 million this year. Sky has about 6.6 per cent of the advertising market now.

Overall, Sky, which is 40 per cent controlled by News Corp, said it was looking to buy the free-to-air network to increase its advertising revenue, while ensuring delayed sports rights for cricket, rugby league and others were available in prime time.

Sky chief executive John Fellet said the proposed acquisition would not restrict other broadcasters' access to Sky's sports rights. "We would still be anxious to exploit those rights and, for that matter, we're not married to having to do deals with Prime," said Fellet.

"So if TVNZ or CanWest had a better deal we'd be happy to sell the rights to them."

Fellet also said the Prime network was never a big bidder for live sporting events, so eliminating the network from the bidding process would not lessen the value that the rugby or cricket unions got for selling the first-run rights.

Sky argues that under its control Prime "would be financially stronger" and thus, better able to compete with CanWest and TVNZ for higher-rated free-to-air programmes and advertising. Prime is owned by Prime Australia.

The 40-page submission said: "Prime New Zealand continues to suffer significant losses."

Prime's accumulated loss since it launched in 1998 was about $76 million. The commission decision on the proposed deal is expected by late January.

Prime New Zealand said yesterday that chief executive Chris Taylor had resigned to take a job with Channel Nine Australia.


* Competition would be enhanced in the free-to-air broadcast market.
* Other broadcasters would not be denied access to Sky's sports rights.
* The company would have a 26 per cent stake of the country's TV audience.
* And an 11 per cent stake of the total advertising revenue.