Vodafone TV - will Sky benefit from the deal?

Vodafone TV is a game-changer for Vodafone, says a top media commentator.

Vodafone and Sky yesterday announced an internet TV deal which will enable consumers to access a catalogue of channels and apps on multiple devices through a central box hub, similar to Apple TV.

Vodafone TV, which will be for those on Fibre and FibreX broadband plans, will be available before Christmas but it is not known when or how much it will cost.

Media commentator Janet Wilson said the announcement between the two companies was a very smart move.

"I think what Sky and Vodafone are doing is extremely smart - they're merging without the merger," she said. "They're getting their way."

Earlier this year Sky and Vodafone dropped its appeal of the Commerce Commission's decision to decline the two companies' merger plan, citing costs likely to outweigh the benefits.

The planned $3.44 billion media merger was declined by the Commerce Commission, mainly due to Sky's monopoly on premium sport content.

FNZC research analyst Arie Dekker said the deal between Vodafone and Sky was expected.

"The market has been expecting the launch of Vodafone TV for some time, with Vodafone and Sky signalling the intent to launch an IPTV platform with the same broad features, back in June 2016 when they announced they would merge," Dekker said.

"While the merger was not approved by the Commerce Commission, the commercial relationship between Sky and Vodafone remains strong and they have moved ahead with the product."

Dekker said he expects Sky will launch a product with similar features in the future.

While it seems that Vodafone is the clear winner in the deal, Wilson said Sky TV chief executive John Fellet would have striked a beneficial deal.

"Sky is still operating under an increasingly old business model. A business model that is dependent on contracts and licensing for rights, and numbers. Their direct competition is video streaming services now so I think the deal for Sky is less clear," Wilson said.

"For Vodafone it's a fantastic deal - they get another arm to their business, and they get to enter into the entertainment business. This is a whole new ball-game for Vodafone."

Fellet yesterday said the deal was the biggest project the two companies had worked on together, and that there were others in the pipeline.

Wilson said the partnership may set a precedent worldwide.

"It will be interesting to see if this is copied and emulated worldwide for the company."

Sky would likely have striked a content licence deal with Vodafone, Wilson said.

"What they would be going for is increased views, people buying into the sport channels - that's where the money is for them now," she said.

"[John] Fellet is a follower of the Warren Buffett philosophy when it comes to business and unless the deal is there I don't think he would have done it."

It is unclear how Sky will benefit from Vodafone TV.

"The way Vodafone is framed so far is, of course: 'We're taking Sky'."