New Zealand taxpayers are giving a substantial subsidy to media baron Rupert Murdoch's Sky TV to deliver a service which only 15% of taxpayers will be able to see, National MP Murray McCully said today.

Mr McCully said TV3 had been on the brink of signing a contract to provide footage of Parliamentary question time for broadcast by Sky TV.

"With considerable set-up costs, extra resources, and all of the expensive requirements which are associated with television broadcasting the service would have involved a significant payment to TV3," Mr McCully said.

"However, at the last minute TVNZ chair Dr Ross Armstrong offered to provide the service to Sky, and TVNZ management negotiated a package which delivered it for free.

"The only people who will be able to receive the service are those in the 177,000 households which have paid a $500 joining fee and a minimum $35 a month subscription to receive Sky.

"So New Zealand taxpayers as owners of TVNZ are subsidising Rupert Murdoch's Sky TV to provide a commercial service which they can only receive on a subscription basis. Many taxpayers will want to know why Dr Armstrong directed TVNZ to enter into a deal like that.

"The answer is to be found in the secret negotiations which Dr Armstrong has been spearheading with Sky TV. As was revealed last week, those negotiations have been heading towards TVNZ abandoning digital plans of it's own and transmitting TV1 and TV2 via the Sky digital platform. The problem is that this strategy would see Sky become what this weeks Listener aptly describes as 'gatekeepers to the digital domain in this country". But, more on that later.

"I understand that Broadcasting Minister Marian Hobbs was kept informed of these developments. Did she approve of this substantial subsidy to Sky? Did she ask whether the board of TVNZ had explicitly agreed to carry the cost of giving this service to Sky for them to sell to their subscribers? Or did she just have no idea what she was being told?

"Personally, I think option three is quite credible."

"I believe Minister Hobbs and Chairman Armstrong have some explaining to do," Murray McCully said.

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