The growing rift between New Zealand’s free-to-air television broadcasters and Sky Television is expected to become glaringly obvious this week.
The Ministry for Culture & Heritage will post more than eighty submissions on its review of broadcasting regulation on its website.
Broadcasters have been making it clear recently they believe Sky has an increasingly unfair advantage in the market and needs to be reined in.
Both TVNZ and Mediaworks (TV3 & C4) submissions are expected to be a “no holds barred” assault on Sky’s growing market dominance, demanding more rules to level the competitive broadcasting playing field.
TVNZ and TV3 have argued Sky’s business model enables it to have deeper pockets than free-to-air channels. With subscription revenues exceeding the advertising revenue of any single free-to-air broadcaster, free-to-air broadcasters are finding it increasingly difficult to compete for content.
Both TVNZ and MediaWorks (TV3 and C4) say they have to spend a greater proportion of revenue on programming than competitor Sky.
At the centre of the free-to-air argument is the lack of marketplace regulation in New Zealand which they claim has enabled Sky to lock up rights to virtually all premium sports content.
TVNZ is expected to argue that a lack of marketplace rules have enabled Sky to engage in a variety of anti-competitive behaviour, including bundling, hoarding, cross-subsidisation and gate-keeping.
TVNZ believes a lack of marketplace rules have serious implications for New Zealanders, who today have to pay if they want to watch major national sporting events live.
More than eighty submissions have been made to the Ministry’s review, which, among other things, is looking at whether the rules governing television broadcasting need to be updated.
Several submissions are expected to strongly criticise the current rules, arguing the regulatory environment has enabled the country’s only pay TV operator to increasingly control and dominate the market.
New Zealand is considered to have one of the least-regulated broadcasting markets in the western world.
TVNZ will argue that Sky’s market dominance control goes well beyond controlling major sporting events.
It accuses Sky of bundling. With many major sports events sold as a total package (instead of individual competitions within a sporting code being sold off separately as in some other countries), Sky will come under fire for using its purchasing power to secure total rights, denying access to others.
Sky can expect criticism for leveraging off its ownership of Prime, to secure both pay TV and free-to-air rights to sporting events.
Recent pay and free-to-air rights win examples include the 2010 Winter Olympics and 2012 Summer Olympics, with Sky complying with the IOC ruling that every country should show Olympics events free-to-air.
TVNZ is also be expected to accuse Sky of hoarding.
A major point on contention is Sky’s ownership of free-to-air channel Prime Television.
While it acquires both pay TV and free-to-air rights to sporting events, Sky faces acusations of limited, selective and delayed use of those rights on Prime.
There are also likely to accusations that Sky uses its pay model to cross-subsidise Prime Television.
With only a small slice of the free-to-air television audience, Prime’s advertising revenues, Sky will face face accusations of cross-subsidising Prime’s acquisition of premium content, such as free-to-air rights to Summer and Winter Olympics.
TVNZ is also likely to make public its view that Sky has been “gate-keeping” content.
With a virtual monopoly on live sports coverage, until recently channel owners in New Zealand had nowhere to go but Sky in order to get their content to a broad and digital audience base, with consumers having to pay Sky to watch free-to-air channels on Sky’s digital platform. The submissions are expected to be posted on the Ministry’s website sometime later this week.
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