KEY POINTS:
Depending on your viewing angle, traditional free-to-air television either sits on the edge of a digital precipice, awaiting oblivion, or is doggedly tearing at the heels of that evil Cyclops, Sky TV.
Conventional wisdom has it that free-to-air giants TVNZ and TV3 are destined to live in the shade as digital television and internet TV bring an explosion in new channels, fragmenting audiences and draining advertising revenues.
Sky, with its subscriber base and the purchasing clout of Rupert Murdoch's Newscorp behind it, stands poised to soar higher and higher, unveiling a galaxy of new channels.
This picture has gone fuzzy with the Government's review of broadcasting regulations, designed to sort out the environment needed for the digital era being phased in, as analogue is phased out, to free up broadcasting spectrum space.
The review, while opening the can of worms which is our light-handed broadcasting regulatory regime, has shed light on the skulduggery and competitive strategies behind the cheerful face of television. It's a regime left largely untouched since 1980s deregulation and which has allowed Sky TV to flourish to a point where, TVNZ and TV3 claim, they are severely disadvantaged. Freeview, the long-delayed attempt at a free-to-air satellite alternative to Sky, claims to be in the same boat - unable to break Sky's "monopoly" in premium sport content.
On one level, the free-to-air campaign is a blatant me-too: give struggling Freeview access to live sport - either by "unbundling" or anti-siphoning rules requiring sports events important to the national psyche to be shown free-to-air - and Freeview would take off.
But the bigger picture is more complicated - what rules should be in place for digital television. What happens with sports rights could point the way.
The gloves came off last week when the review submissions were posted on the internet and debate quickly spilled on to ever-expanding media "platforms" - from newsprint to TVNZ's Media 7 programme on Freeview.
According to TVNZ, viewers are not being well-served by Sky's "near monopoly" on live sport. It accuses Sky of using its deep pockets to "hoard" programmes and deny free-to-air viewers the opportunity to watch most sport. Using its free-to-air channel Prime, Sky can snap up both the pay TV and free-to-air rights to sporting events - but it shows them on Prime only on a 'limited, selective and delayed basis," says TVNZ.
It accuses Sky of cross-subsidising Prime, whose advertising revenues are insufficient to buy high-rating programmes. It says Sky has locked-up seven of the eight transponders for the Optus D1 satellite, creating no easy path for the growth of free-to-air satellite transmission.
Many New Zealanders are effectively paying a sports tax, says the state-owned broadcaster, with sports lovers forced to shell out 1.5 per cent of household income to get their fix. Its submission compares the $14.77 weekly cost of Sky Sport with "average household spending of less than $13 per week on education, around $22 per week on health and almost $33 per week on clothing and footwear."
On Media 7, TVNZ head of corporate affairs Peter Parussini plucked more emotive heart-strings: "There's a generation of New Zealand kids who have never seen a [rugby] test match live on television."
Free-to-air rival TV3 dropped bombs of its own with its submission. According to TV3 owner Mediaworks, Sky's cross-ownership (through Prime) of pay TV and free to air is "possibly the biggest medium-term threat to the future of free to air television" and could "cause the ultimate demise of competitive free to air television in this country."
TV3 wants legislation to force Sky to divest itself of Prime. Like TVNZ it wants key events such as the Olympics, Commonwealth Games, All Blacks tests and one-day cricket subjected to anti-siphoning legislation, so they are offered first to free-to-air TV.
It says sports should be forced to "unbundle" their various products and share competitions around, as happens with football in Europe, and rejects as "scare tactics" the claim that sports will lose revenue if they do.
The free-to-air rivals even suggest that sports are placing themselves at risk by entering exclusive coverage arrangements.
But the mud-pie throwing is not confined to sports rights. Mediaworks decries TVNZ's use of charter funding and NZ on Air funding for commercially-successful programmes such as Dancing with the Stars and Sunday.
It also condemns Sky's charging $600 to install MySky; forcing subscribers to take a basic minimum service including many channels they may not want; and its alleged use of Prime to either outbid rivals or force up the price of series in free-to-air bidding.
Sky gave as good as it got, claiming Prime's hands are tied in bidding for premium programmes such as Lost, Bones or House because TVNZ and Mediaworks have tied up exclusive studio deals with major players Warners, Disney and Granada (TVNZ) and Fox, NBC and CBS Paramount (TV3).
It also rounded on TVNZ's access to Government funds and ability to cross-subsidise with little scrutiny.
The sports rights arm-wrestle sets the scene for a bigger power struggle, with TVNZ and Mediaworks wanting Freeview better-positioned to compete in the digital era. The current broadcasting regime is portrayed as one of the least-regulated in the world; in which Sky has thrived and where PayTV viewers wanting to see Freeview have to buy a second decoder.
Philip Smith of Great Southern Television took the widescreen view on Media 7: "It's like there's been an America's Cup race with only one boat in it. Now the other two have arrived. Freeview is here to stay and Sky has realised they are now in a fight."
Yet, despite the free-to-air players' complaints about the lawless jungle, none wants a strong regulatory watchdog - they only want Sky's "monopolistic" position dismantled.
Wayne Hope, associate professor of communication studies at AUT, says digital television will become the gateway to the internet, and an eventual explosion in the number of television channels. The review submissions represent the start of "a huge battle between Sky's business model and Freeview as to which is going to be the primary platform for receiving that."
"The big issue here is whether we have a converged regulator which overlooks the whole landscape [including digital and internet TV] or a fragmented regulatory regime. I think we need a converged regulator."
What viewers make of all this depends on how we view television programmes themselves - once paid for by advertising revenue and available free to anyone who paid a television licence. Now it's ingrained in viewers' psyches that if you want live sport you pay for it - it's not something we're freely entitled to. And few sports fans are complaining - with up to six channels, fans of the major codes see hundreds more hours than they ever could and a wide range of minor sports are gaining exposure for sponsors and fans. Largely on the back of its sports coverage, Sky now beams into more than 650,000 homes, reaching 47 per cent of the viewing audience.
For Peter Thompson, a senior lecturer at Unitec's School of Communications Studies, the crux of the sports rights debate is whether we see access to live sport as a public good.
"Signal encryption and conditional access systems, such as Sky's set top box decoder, create artificial scarcity and transform what might otherwise be a public good into a private good," says Thompson. "There is certainly a public value argument that public access to events [important to] the national psyche should not be restricted."
Overseas, countries have introduced various measures to ensure free access to "iconic" events, including anti-siphoning rules in Australia - basically, a list of events which must be shown free to air - and unbundling rules for football in Europe, which prevent a single operator gaining exclusive rights to all competitions.
Here, unbundling could apply to rugby and cricket while an anti-siphoning list might cover major rugby, cricket and netball tests and provincial competition finals, world cups in sports like rowing, the Olympic and Commonwealth Games and the Football World Cup.
Thompson says it would be far cheaper for the Government to compensate sports for any loss of broadcasting revenue for particular events than forcing viewers to subscribe to Sky TV to watch these events.
Others, including Freeview's Steve Browning, say experience with European football shows revenue need not be lost. "A bit of clever packaging would ensure that the sports body continues to receive the revenue that helps sustain their sports, while meaning that all Kiwis can see the sporting heroes our children aspire to emulate," Browning wrote in the Herald this week.
But, says Thompson, such moves are a huge threat to Sky's business model - it relies on control of key events to keep core subscribers.
And the NZ Rugby Union says our market is too small to make comparison with European football.
Hope says the debate over sports rights may be a litmus test. "If anti-siphoning legislation comes in, and it's agreed that a regulatory authority can run it, that's a significant shift in the light-handed regulatory regime we've had so far. If it doesn't happen it will just be business as normal - it's a really important test of where the regime is going to go."
Broadcasting Minister Trevor Mallard indicated he's in a mood to meddle this week by stripping TVNZ of its power to decide how it spends more than $15 million in charter funding.
Thompson agrees the approaching digital era raises bigger issues than sport - such as continued diversity and public service content.
"If a range of actors all want the same programmes, prices go through the roof, they pay big money for core packages and go cheap on everything else.
Public broadcasting becomes more important not less important in the multi-media environment."
SPORTS TV IN AUSTRALIA
Free-to-air broadcasters have priority to acquire the rights to sporting events of "national importance and cultural significance. These include:
* Rugby league tests, NRL matches and State of Origin'
* Aussie rules premiership and finals
* Melbourne Cup
* Cricket, rugby union and netball tests
* One Day Cricket World Cup
* Football World Cup
* English FA Cup final
* Most tennis and golf majors
* Formula One motor racing
* Olympic Games
* Commonwealth Games.
