Yesterday, Sky TV reported two actions impacting on them by the Commerce Commission. One, happily, involved the Commerce Commission clearing a deal between Sky TV and TVNZ over their Igloo Pay TV venture, which sees the major commercial TV company in New Zealand do a deal with the state owned TV network.
The other, sadly, involved more unexpected action by the Commerce Commission, with the effect of destroying wealth belonging to NZ KiwiSavers, people with money in funds, and direct investors.
This was in regards to Sky TV entering into deals with Telstra, Vodafone and Telecom over whether this might impact on competition on pay TV. (this after they cleared Sky TV going into partnership with one of its competitors on the grounds it wasn’t a big deal).
SkyTV are partnering with the companies that give it more options with the distribution of its content in anticipation of the big fibre rollout. Unsurprisingly, SkyTV want to ensure they get exclusive rights with the broadband retailers they partner with. This has caused the Commerce Commission to wade in and sniff around.
It’s a nonsense concern, because thanks to the Government rolling out fibre (in concert with Chorus) it will be cheaper than ever before for a new entrant to come to NZ, and offer set top boxes that plug into fibre connections for entertainment. Who needs expensive broadcast equipment anymore? It would be cheap for a new entrant to offer a broadband/fibre based TV package to consumers. (Just don’t mention how the Commerce Commission is going to disincentivise broadband users by artificially forcing down old copper prices!)
Sky TV’s shares were down by over 7% yesterday, or around $150 million in shareholder value lost.
Add to that the $180m of value lost in Chorus after the Commerce Commission unexpectedly proposed dropping copper wire broadband pricing by a large amount (and also involving the subsidising of rural users by town users), and you now have over $330m that got wiped away in the last two weeks – all thanks to the unexpected actions by a Government organisation.
If the National Party professes to respect property rights, then it’s now high time for the government to step in and re-write the Commerce Commission’s frameworks and guidelines, so as Bryan Gaynor so rightly put in the other day, the interests of shareholders and investors in NZ companies are considered in the mix as well.