What’s next for pay TV customers?

Sky Television’s planned merger with Vodafone NZ has been sunk. Vodafone argues the merger would have brought ‘‘numerous benefits’’ to Kiwis. So what can viewers expect (and not expect) now?

No need to adjust your set

Sky’s programming won’t change as a result of the ruling. The company has wrapped up the broadcasting rights for major premium sports such as rugby and cricket for the next four or five years, so it will remain a musthave for sports fans.

But isn’t Sky failing?

Not yet, or only gradually. Its net profit of $59 million on sales of $458m in the six months to December means it is still one of the country’s most profitable businesses. And while Sky is losing customers, it will remain profitable until … it isn’t. Its business model doesn’t allow it to cut its service until or unless it’s game over.

Back in the box

Sky has already been connecting its set-top boxes to the internet, so satellite customers can watch some programmes ‘‘on demand’’. But it had planned to launch a new generation of more whizzy set-top boxes that are sold in Europe by Vodafone and can receive all their programming over the ultra-fast broadband network, rather than via satellite.

Sky chief executive John Fellet says Sky still plans to offer such boxes, and could source them from Vodafone or elsewhere. The challenge is that Sky hasn’t had a good track record of smoothly pulling off such technology changes recently. It had hoped to lean on Vodafone’s expertise.

A bundle of bundles?

Sky and Vodafone offer discounts to customers who buy Vodafone broadband and Sky’s pay-TV service together. But now the merger is off the table, it is more likely broadband users will be able to get package deals from other phone companies. The risk that consumers might need to switch to Vodafone to get the best out of Sky remains for now.

Pick’n’mix chestnut remains

Want to get Sky Sports via satellite but not Sky Basic, and package that with Lightbox or Netflix? You are not alone, but don’t count your chickens. Fellet is cautious of what would happen if Sky opened up its exclusive content to partners and they did not reciprocate. ‘‘The deal has to work for both parties and not just one.’’

Downward mobility

One of the biggest opportunities for a merged Sky-Vodafone would have been in mobile video content. But if you are paying a telco for data and a TV company for programming when out and about, that can amount to a double-hit. ‘‘It is so easy, especially if you are shooting it out in HD, to blow through your data cap,’’ Fellet says.

A merged Sky and Vodafone could have stacked up an attractive mobile TV service for Vodafone customers. A partnership is still possible, but without ‘‘exclusivity’’ it may be harder to make that work.