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Spark cries foul: Sky-Vodafone merger officially opposed

16 Aug 2016

Spark has formally announced that it is opposing the Sky TV/Vodafone merger, after previously saying that the company would welcome competition. The u-turn comes after the company's submission to the Commerce Commission outlines how Sky's monopoly on the wholesale premium sports content market will not be in the best interests for consumers.

“We’ve already gone on the record that we’re ready to compete with a merged Sky / Vodafone. We’re generally supportive of market consolidation where it leads to better outcomes for consumers, however we’ve told the Commerce Commission that based on Sky’s current wholesale market arrangements for premium sports content, we don’t believe the proposed merger is in the best interests of New Zealand consumers and so should not go ahead in its current form” says Spark New Zealand’s GM regulation, John Wesley-Smith.

Wesley-Smith believes that because Kiwis love 'national sports', a monopoly on content provides 'very few' options for content access as there is no wholesale market in what are considered 'must-have' rights for media content providers. He believes that Sky's limiting wholesale options are Spark's main concern.

“Sky's business model seems increasingly focused around sports, which underlines how effective their monopoly is in this space. The proposed merger with Vodafone is likely to entrench that monopoly, and that's something all New Zealanders should be concerned about," Wesley-Smith explains.

He goes on to detail how Sky's wholesale operations involve reselling Sky boxes, commenting that "We’re not interested in being tied to this outdated distribution model as it doesn’t work for our customers who want better choices that let them watch their sports whenever and wherever they want to.”

Wesley-Smith reveals how Spark was offered a reseller deal with Sky in 2013, but walked away from the deal because it wasn't commercially viable then, and it still isn't viable now.

“We believe if the Commerce Commission blocked the proposed merger, Sky would be forced by commercial realities to make all of its sports content available online and on-demand – and via wholesale arrangements with lots of parties that help distribute this content to New Zealand consumers," he explains.

Wesley-Smith believes that premium sports content should be made available through a 'viable' and 'credible' wholesale market, which would benefit consumers and allow Sky to sell content rights to more providers - which is something that cannot happen if the merger goes ahead as-is.

“A merged Sky/Vodafone will be able to leverage its monopoly power in the sports market, to the detriment of consumers. That's why we’re asking the Commerce Commission to reject the proposed merger in its current form,” Wesley-Smith concludes.

Vodafone responded to Techday's enquiries by releasing a statement this morning, saying that Sky and Vodafone will respond to submissions and the Commerce Commission 'in due course'.

"The Commerce Commission has this morning published public submissions on the Statement of Preliminary Issues in regard to the clearance applications from Vodafone Europe B.V. and Sky Network Television Limited in respect of the proposed merger of Vodafone and Sky in New Zealand. Vodafone and Sky will review all the submissions and respond to the Commerce Commission in due course," says Andrea Brady, head of external communications at Vodafone New Zealand.

Read Spark's submission to the Commerce Commission here. 

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