Sky gets okay for sale of its outside broadcast unit

After several months’ delay, the Commerce Commission has cleared Sky TV to sell its outside broadcast unit to the multinational NEP. The Overseas Investment Office had already okayed the deal.

Earlier, Sky said if the deal was approved, almost 40 staff would shift across to NEP’s local operation, which will produce games and other events for the pay-TV broadcaster on undisclosed terms.

Sky has never revealed a sale price, but in a market filing it said the deal would save it some $50 million in operational expenditure over the next five years.

As part of their application, Sky and NEP promised cameras used to shoot major games would be upgraded to 4K ultra highdefinition — or four times the video quality of today’s broadcasts.

The transaction involves the sale of six high-definition outside broadcast (OB) trucks and equipment and transfer of two OB warehouse facilities.

Opponents of the deal said it would give NEP a monopoly.

Sky and NEP pointed to new competition, including Spark Sport bringing UK outfit Whisper to New Zealand with a major sixyear deal to shoot domestic cricket.

In their original clearance application, Sky and NEP said the existing OB gear was creaky. They said NEP had the wherewithal to upgrade it.

Clients will want events shot in 4K — already common for sports overseas — within two years, Sky and NEP said.

“In the early to mid-2000s standard definition technology was the norm,” the pair write in their submission.

“Things shifted to HD technology in the mid-to-late

2000s and now the market expects 4K [4X HD] quality broadcasts shot from spidercams, ultra slow-mo and other high tech cameras. Next, the market will seek 8K quality filmed from the latest iteration of innovative cameras, and so on.”

Sky can’t deliver 4K but NEP can, the application said. “[Sky’s] cameras are all lastgeneration HD, whereas many of NEP’s Australian-based units are equipped with the latest 4K cameras. NEP will bring that level of technology to New Zealand posttransaction.”

Sky’s current decoders only support HD, not 4K, but the broadcaster plans an upgraded box this year that will support 4K. Producing games in 4K would also make the better quality video an option for its streaming service Sky Sport Now.

The deal should help bolster Sky’s credentials with NZ Rugby as the union weighs a deal with technology investment powerhouse Silver Lake — which is likely to want more and better content for global streaming.

Two anonymous submissions to the Commerce Commission during October carried the same allegation: that the deal would reestablish a monopoly in outside broadcasting services.

They say that while the commission has identified seven players in the market, the other contenders are minnows, or yet to even open an office in this country.

Sky became the dominant player in outside broadcast services after it bought Onsite Broadcasting (later renamed Outside Broadcasting or OSB) for $35m in 2010.

Sky shares closed yesterday up 0.3c at

18.3c. The stock is up 12 per cent for the week following an upgraded earnings forecast but still down 47 per cent for the past 12 months.

Now the market expects 4K quality broadcasts shot from spidercams, ultra slow-mo and other high tech cameras. Sky/NEP submission