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One of the greatest enigmas surrounding Freeview is that it misses one of New Zealand’s key free-to-air channels – Prime.
Sadly, without government regulation, this situation is unlikely to change.
Sky bought Prime in 2006 for $30.26 million, squeaking the sale past the Commerce Commission.
To many analysts, commentators and even TV stations themselves, Prime has long been considered Sky’s Trojan horse. The purchase was positioned as little more than window dressing used to skirt around the edge of regulatory issues, and also to assist in the bidding process for lucrative events like the Olympics and world cups. These events are increasingly inserting “common good” clauses demanding free to air coverage of major events.
Sky chief executive officer John Fellet told NBR Prime would join Freeview when it “makes business sense.” Although this is open to interpretation, it assumes Sky is referring to a decent return on its investment.
Currently, the completely ad revenue-driven Prime has done little more than break even – any attempt to expand its market share and thus revenues should be welcomed.
Freeview would appear to be a logical expansion.
Mr Fellet placed Prime’s transition costs if it moved onto the Freeview platform at approximately $3.3 million. This includes $200,000 annual service fee, $1.62 million on HD transmission and linking costs through Kordia, and another $1.5 million on upgrading infrastructure.
But Prime doesn’t have to go to HD to get on Freeview; it’s already transmitted as a digital signal. The annual service fee of $200,000 dollars, plus Kordia's linking and other distribution costs, would hardly trouble Sky’s books.
"If we got government assisted funding to set it up, like TV Works and TVNZ did, then we'd be on there now," Tony O'Brien of Sky TV said.
Mr Fellet also claimed that there were licensing issues; that because the satellite signal can be picked up by anyone this will affect contract negotiations in buying content. The example he used was a delayed broadcast of the Warriors playing on Prime being available to boffins around the Pacific/Australia – if they had 6m satellite dishes in their back yard.
“A delayed sportscast is worth next to nothing to the rights holders, I’m sure if the issue came up they would be happy for you to say ‘we’re getting this out to 120,000 extra viewers through the free service’ – can we renegotiate please?” Freeview’s Steve Browning said.
Somewhat ironically, if Prime was transmitted in HD, as Mr Fellet mentioned earlier, it would only be available terrestrially through Freeview’s UHF HD service.
Prime is currently broadcasted free-to-air through UHF (with limited reception) and encrypted through Sky’s satellite service. In other words, it’s out there in the ether but blocked from Freeview boxes.
TVNZ 6 and 7 are the same – they are being transmitted unencrypted and Sky has been forced by regulation to block the channels.
Neither party wants to give up its property to the competition, and fair enough. Unfortunately, Sky claims Freeview isn’t competition when referring to their annual report’s churn figures.
“It doesn’t even feature on our top reasons for customers leaving Sky,” Mr Fellet said.
It is all too easy to ascribe underdog status to Freeview, but it is important to remember it is there to make money too, and have performance targets to reach – namely a user base. Prime, and its added sports coverage, would boost numbers, and ruin the Prime to Sky upgrade path it’s building ahead of Sky’s UHF switchoff.
When TVNZ 6 and 7 were announced, Sky no doubt expected that they would be freely available. Opponents determined that the taxpayer-funded channels were effectively giving free content to Sky.
Many pundits have screamed, “I paid my taxes, I should get TVNZ6 and 7 however I like!”
And so you should. The issue could easily be resolved by following the UK model. Effectively, pay TV broadcasters were ordered to make free to air content available over their decoders. This simply meant that anyone could buy a decoder and get all the free channels they wanted, then BSkyB simply sold a card that decrypted their private pay channels.
If customers pull out their Sky cards at home now, they get nothing but dead air.
Freeview is hardly a saint and has a similar problem. Zinwell (the main decoder brand sold here) doesn’t have a card slot – even if Sky’s encryption data was made available through regulation.