Sky merger rejected

Sky Television plunged in value by hundreds of millions of dollars after its proposed merger with Vodafone NZ was rejected by the country’s competition watchdog.

Sky shares opened down 75 cents on the NZX on Thursday, instantly wiping $300 million off the value of the pay-TV firm.

The country’s competition watchdog declined to grant clearance for its merger with Vodafone NZ, which was first publicly proposed in June.

‘‘We are disappointed the Commerce Commission was unable to see the numerous benefits this merger brings to New Zealanders,’’ Vodafone NZ’s chief executive Russell Stanners said on Thursday morning. Had the merger been allowed, Britain’s Vodafone would have taken a 51 per cent share of the merged firm and banked $1.25b in cash.

But the rejection means Sky TV will remain a standalone business for now, and may have to pursue other avenues to fend off competition from internet television providers such as Netflix.

Vodafone may also need to look for other means to differentiate and grow its New Zealand business in the increasingly competitive and low-margin telecommunications market.

Commerce Commission chairman Mark Berry indicated that was the problem. ‘‘Had the merger not included Vodafone acquiring all of the premium sports content we would have likely approved this merger. Sky Sport has been central to our decision.’’