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Sky TV, Vodafone appeal blocked merger

NZ Newswire logoNZ Newswire 21/03/2017 Paul McBeth

Sky Network Television and Vodafone New Zealand will on Wednesday lodge appeals against the Commerce Commission's decision blocking their merger.

The pay-TV operator and telecommunications group are filing the papers in the High Court to fall within the statutory timeframe while they wait on the regulator's reasoning against the decision, Auckland-based Sky TV said in a statement.

Those reasons are expected to be released in the coming weeks, it said, without being specific.

The companies elected not to terminate the deal after the February 28 deadline for the merger passed, indicating they hadn't given up hope of flipping the decision.

The Commerce Commission hasn't published its detailed reasoning behind the decision, which the companies could then scour to determine whether it's worth seeking a judicial review.

The competition regulator rejected the companies' application to merge saying it risked creating a strongly vertically integrated pay-TV service and telecommunications provider, with rejection hinging on their owning all premium sports content.

Had the deal not captured popular sports it probably would have got over the line. The rejection saw shareholders dump Sky TV stock, wiping $293 million off the company's market value.

Sky TV shares increased 0.6 per cent to $3.50, having slumped 24 per cent so far this year.

US fund manager BlackRock, the world's largest asset manager, has been increasing its stake in Sky TV, on Tuesday reporting it now owns 12.3 per cent of the pay-TV firm, up from 10.3 per cent as at Jan. 31.

The companies want to create the country's largest telecommunications and media group, with Sky TV buying Vodafone NZ for $3.44 billion, funded by a payment of $1.25b in cash and the issue of new Sky TV shares at a price of $5.40 per share.

Vodafone would have become a 51 per cent majority shareholder in Sky TV, in what amounted to a reverse takeover.

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