KEY POINTS:
MediaWorks' TV3 bosses in Hollywood are attempting to fend off an aggressive TVNZ push for television rights that are vital to the survival of its business plan.
At print time it was understood Television New Zealand had lodged the highest bid for free-to-air rights for Fox Television programming, and TV3 was preparing to match it.
The rights deal includes access to top shows and revenue earners such as Boston Legal, The Simpsons, Prison Break, House and Bones, among others.
TV3 holds other programming deals with other producers, with shows such as CSI. But rights to the Fox programming is a cornerstone to securing audience share and advertising revenue, so TV3 will likely pay whatever it takes.
MediaWorks chief executive Brent Impey returned from Los Angeles this week and declined to comment.
But a source said the Fox deal runs out at the end of 2008.
As the incumbent, TV3 will be able to keep its "output deal" so long as it can match a higher bid from TVNZ.
The negotiations are key to the survival of MediaWorks, which was bought last year by private equity firm Ironbridge Capital.
Pushing up the Fox price might be part of a TVNZ strategy to empty MediaWorks' coffers.
TVNZ is flush with TV rights for Warner Bros and Disney offerings. It has blamed bids by Sky TV and Prime for rights to Disney for pushing up the price and forcing it to make cutbacks on news and local programming.
In earlier talks with Fox, Sky secured the pay-television rights to screen Fox programmes.
Sky chief executive John Fellet said that Sky had withdrawn from the bidding for free-to-air rights for Prime Television.
He said bidding between MediaWorks and TVNZ was "too rich" for Sky - a view that is treated with scepticism in the television world.
Meanwhile, TVNZ is demanding controls on Sky's dominance of the TV business, including a radical split in company structure akin to Telecom's.
MediaWorks and TVNZ formed a united front this week, calling for regulations to stem the growing power of Sky and its free-to-air channel, Prime, warning Sky's huge pay-TV revenue could subsidise bids for free programming deals and shut them out.
The Fox talks have occurred at a pivotal time, as a platform war grows between Sky and free-to-air digital platform Freeview. TVNZ has insisted its new Freeview digital channels cannot appear on Sky, but TV3 has been in talks to show its new TV3 high-definition channel on Sky.
TVNZ sources say that Sky's withdrawal from bidding for free-to-air rights to Fox was part of a closer relationship between MediaWorks and Sky - in particular, with negotiations for TV3 to allow its new high-definition channel on Freeview to be screened on Sky as well, with other new digital TV3 channels to follow.
Fellet strongly denied this.
It is understood that broadcasters have spoken to Broadcasting Minister Trevor Mallard about an emerging crisis in the television sector - but that he he has dismissed the prospect of any immediate intervention.
The hands-off policy goes back to the days of National's Maurice Williamson and has been maintained by Labour's Marian Hobbs, Steve Maharey and now Trevor Mallard.
