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Big sports monopoly downs Sky-Vodafone bid

NZN 22/02/2017 Pattrick Smellie

The Commerce Commission doesn't like the idea of the proposed Sky TV-Vodofone merger monopolising premium sports, citing it as a key reason for rejecting the deal..

"Had the merger not included all premium sports content we would likely have cleared this merger," commission chair Mark Berry told a media briefing in Wellington on Thursday morning.

The Sky Sports channel was unique in the New Zealand market because of the extent of Sky's hold on "must-have" sports followed by New Zealanders - principally rugby and netball.

Dr Berry said unresolved issues outlined to the applicants last October had remained unresolved and that its concerns particularly related to the impact of the merger on challenger competitors in the telecommunications market, TwoDegrees and Vocus.

"The commission has not been able to exclude the real chance that the merger would substantially lessen competition," Dr Berry said.

Sky may have initially been able to offer more attractive television/broadband/mobile packages.

"However, we have to take into account the impact of the merger over time, and uncertainty as to how this dynamic market will evolve is relevant to our assessment," Dr Berry said.

"These are difficult markets to assess. If we are in doubt, then we are not satisfied."

The main concern was a single telecommunications company dominating ownership of premium sports content. About half of all New Zealand households have Sky TV and a large number are Sky Sports customers, where sport is a "must have" element of the subscription, the commission noted.

Acknowledging the international trend for packaging of broadband, mobile and sports content was growing, the commission said it couldn't rule out the real chance that Vodafone-Sky would be able to leverage their sports content to attract a large number of non-Vodafone customers.

Detailed reasoning for the decision has yet to be published.

The announcement follows Wednesday's announcement by Sky that its profitability for the first half of the current financial year had fallen 32 per cent, reflecting higher programme costs and falling subscriber numbers. Sky's share price closed 2.7 per cent lower at $4.35.

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