TVNZ terminating satellite venture

By SIMON HENDERY

TVNZ is bailing out of its previously lucrative satellite transmission business.

Yesterday's announcement that the state broadcaster was closing Satellite Services, which has a staff of 28, comes just months after TVNZ signed the subsidiary up to an international alliance.

The deal with Intelsat Global Sales and Marketing was hailed last September as a potentially multimillion-dollar revenue earner.

But yesterday TVNZ said Satellite Services was the victim of a worldwide recession in the satellite carriage business, which had caused "enormous price pressure and major change" in the industry.

"Despite vigorous effort, recovery to the profitable position of previous years has not been possible," the company said.

Although exact figures have never been separated out in TVNZ's books, Satellite Services generated millions of dollars of revenue during the 1990s organising "occasional use" and one-off international satellite links for other broadcasters involved with major sporting and other international events.

The subsidiary's efforts won it a Trade New Zealand export award in 2002.

Last year's Intelsat deal was aimed at giving broadcasting customers access to a global network of satellite and terrestrial infrastructure complemented by a portfolio of television broadcast services.

The alliance was touted at the time as having the potential to quadruple Satellite Service's revenue.

A TVNZ spokeswoman said yesterday that Intelsat was working with the company to end the alliance amicably and economically.

TVNZ will work at redeploying Satellite Services staff to other parts of the TVNZ business, she said.

Satellite Services would remain in business until the end of the year to meet existing contractual obligations, including a major commitment related to the Athens Olympic Games.

In a memo to staff yesterday announcing Satellite Services' closure, TVNZ chief executive Ian Fraser said over the past 10 years the subsidiary had made a very significant contribution to TVNZ.

"As a result its activities have added real value to the TVNZ brand both in New Zealand and overseas and its successes are a shining example of kiwi ingenuity and tenacity."