State broadcaster wants regulator to block Sky TV's bid for Prime

Television New Zealand has asked the Commerce Commission to stop Sky TV's bid to buy free-to-air network Prime, saying the purchase would lessen competition.

"TVNZ believes that, because the acquisition will deliver a change in market structure and behaviours by Sky that are likely to result in significant economic harm and a lessening of competition, the commission should decline Sky's application for clearance," the network said in its submission.

In November, Sky applied for clearance from the commission to buy Prime New Zealand from its Australian parent for $30.3 million.

The move would be the pay-TV provider's first move into the free-to-air market.

TVNZ and Canada's CanWest MediaWorks are the two main free-to-air players, with a combined market share of 73 per cent, according to the network's filing. The combined market share of Sky TV and Prime would be 26 per cent.

TVNZ is concerned that if the acquisition goes through, Sky "will have no incentive" to continue licen-sing free-to-air rights of programmes such as sports to any network other than Prime.

Last year, Prime said it had won free-to-air rugby rights for 2006.

TVNZ said Sky TV "may attempt to create the appearance of competition by opening up bidding for the free-to-air rights to all free-to-air broadcasters", but in most cases Prime would probably be the winning bidder.

TVNZ's objection was not seen as having much weight, given the network's market dominance.

"There's little ground for that," said Forsyth Barr analyst Rob Mercer. The Sky TV purchase of Prime was in the public interest.

"Sky TV is increasing competition in the market. If Sky doesn't buy Prime, then Prime probably isn't going to be in the market."

TVNZ said it was also concerned about a lessening of competition in the market for digital broadcasting services, which will become more important as free-to-air networks move into digital broadcasting.

The state broadcaster asked the commission to hold a conference to hear arguments on the proposed acquisition.