Sky and Voda: NO. Spark and Netflix: YES!

The Commerce Commission said ‘no’ to Vodafone and Sky TV last week.  It is fair to say that both Sky TV and Vodafone didn’t see that coming and it has left them reeling.  At the time, wondered “Why the need for one balance sheet?  Why not just partner up?”.

Feb. 27 (BusinessDesk) – Spark New Zealand has announced what it says is an exclusive deal with Netflix to offer bundled packages, just days after the Commerce Commission rejected Sky Network Television’s proposed merger with Vodafone New Zealand on the basis it would stifle competition, especially in access to premium sports content.

Under the Spark-Netflix tie-up, Spark broadband customers will get a one-year subscription to Netflix’s standard plan when they signed up to a 24-month ‘Unlimited Data Spark’ broadband plan, the telecommunications company said in a statement. The Netflix deal would “sit alongside Spark’s current Lightbox offer”, it said.

Chief executive Simon Moutter said the deal was “consistent with our shift towards becoming a digital services provider, rather than just a traditional telco.

Spark has an institutional understanding of making strategic partnerships.  Apart from the Xtra/Yahoo! one, which Telecom/Spark was seriously let down on, they generally add value to both partners without the need for complicated merger or takeover processes.

Spark Lightbox was stillborn with just too little interesting and current content.  In the content business, you have to be a creator.  If all you do is bring it to market, the options for the consumer are too varied and they will not be paying for it if they can avoid it.

In the end, Spark gave Lightbox away, reflecting it had no real value to consumers which left it exposed so it talked to the current King of Content, Netflix.

No need for the Commerce Commission to approve or block anything.  Netflix, Spark and the consumer all get what they want.

In the meantime, Sky and Vodafone are dead in the water.  Sky’s Sport is the part that has value as it creates original content.  But the Commerce Commission didn’t like the look of just one transport provider having access to it.  Oops.

I don’t know what sort of money Spark has sloshing around, but if I were them I’d go out hard to try and get the rights to key sports competitions such as the Olympics, Super Rugby, League, All Blacks, Six Nations, Blackcap domestic, IPL, Tennis and Formula 1.  Pay through the nose for a few seasons to lock Sky and Vodafone out of the deal.

Sky wouldn’t survive it, and it would set Vodafone back sufficiently to make it struggle in the market for relevance beyond core services.

 

Scoop

 


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