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Sky TV's Fellet say submissions against merger 'misleading'

Thursday 20 October 2016 04:32 PM

Sky TV's Fellet tells shareholders submissions against merger 'misleading and inaccurate'

By Fiona Rotherham

Oct. 20 (BusinessDesk) - Sky Network Television chief executive John Fellet has hit out at submissions opposing the pay-television broadcaster’s planned $3.44 billion merger with Vodafone, describing them as “unified by their predictability and misleading and inaccurate statements which we’re dealing with point by point."

Speaking at the company’s annual meeting in Auckland today, Fellet said the merger was on track, with the Commerce Commission not yet changing its November 11 target date for a decision.

Vodafone chief executive Russell Stanners, who will become head of the combined company while Fellet will be chief executive of media and content, was also present at today’s annual meeting.

Fellet said he hadn’t yet seen anything from the regulator that indicates there will be pushback on the proposal.

“At the same time they have the NZME and Fairfax merger right on the heels of this one so it’s not in their interests to delay,” he said. “The faster we can get it going, the quicker we can start looking at the innovative steps we want to do – sending more content to mobile phones.”

Spark New Zealand and 2degrees both formally opposed the proposed merger, saying in their submissions to the commission that the deal would adversely impact consumers as a result of creating a company willing and able to use premium live sports content to stifle competition.

Fellet said he doesn’t know how it will have that effect and both companies have opted not to buy sports content that's been offered over the past decade.

“Even after the merger I’ll be happy to sell to anyone that’s interested so I find that hard to believe that somehow competition is limited.”

The Telecommunication Users Association said while the merger would not necessarily lead to reduced competition, it placed significant premium content into the hands of one of the market’s two largest broadband providers and that posed a risk to competition in the telco market.

But Fellet said the merged company had no intention of limiting its content to Vodafone which had around 30 percent of the broadband market while Sky TV reached 47 percent of households nationally.

“To go down to 30 percent and say you have to be a Vodafone subscriber would be destroying this end of the business so we’ll continue to market and work with anyone willing to do a deal with us,” he said.

Fan Pass, Sky’s live sports streaming service, and Neon, its subscription video on demand service, were the company’s two best-performing products, Fellet told shareholders.

Neon, which competes against Netflix and Spark’s Lightbox, is likely to only ever be third in the market, primarily due to the fact the services are complementary to Sky, he said. Netflix content was not complementary and Spark was giving away Lightbox to mobile and broadband subscribers, he said.

In the annual report Fellet said the biggest concern any traditional pay television company had in launching Over the Top services was ensuring they expand the subscriber base rather than cannabilise it. As at June 30, it had slightly increased subscribers to 852,679 subscribers. Just under 3 percent of those signing up for the new internet services were traditional Sky subscribers in the previous three months.

Fellet said the next decoder Sky is planning to launch in six months has room for apps. Neon will be added to it and he’d like to see Lightbox and Netflix also go on.

“We want it be the ‘go-to’ platform where they can not only get all of Sky but can get everything of everyone else.”

In several countries Netflix had gone on boxes and has said it’s open to the idea here, he said.

Earlier today, Sky TV said it had increased its annual forecast for depreciation, amortisation, and impairment charges, to $109.1 million for the year ending June 30 2017, owing to an error in the start date of depreciation for some assets transferred to fixed. The figure would also be revised further if the merger is given the go-ahead because it would have to reassess the value of its assets and liabilities, it said.

Sky TV shares are trading up today to $4.80.


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