Speaker 1: Kyoda.
Speaker 2: I'm Chelsea Daniels and this is the Front Page, a
Speaker 2: daily podcast presented by the New Zealand Herald. Another one
Speaker 2: dollar deal and another big shakeup for the New Zealand
Speaker 2: media industry. SkyTV has snapped up broadcast Network three and
Speaker 2: its associated platforms and we'll have control of them by August. First.
Speaker 2: It sees the exit of another international player in the
Speaker 2: local media landscape, with Warner Brothers Discovery retreating a year
Speaker 2: after it closed down three's news outfit news Hub. So
Speaker 2: what does this new media merger mean for the industry
Speaker 2: and could this change how you watch the All Blacks Today?
Speaker 2: On the Front Page, host of the Fold podcast asked
Speaker 2: for the spin off, Duncan Grieve is with us to
Speaker 2: discuss how this shakes things up. Duncan, how shocked were
Speaker 2: you about this news?
Speaker 1: I don't think shocked is the right word, because there'd
Speaker 1: been a sort of a slow drifting together and rising
Speaker 1: the the idea for a while, but a lot of
Speaker 1: things get floated around and a rumored that never actually
Speaker 1: come to anything. So not shocked, but suddenly surprised and
Speaker 1: just excited because I think this industry needs some dynamism
Speaker 1: and needs a level of competition, and three in Sky
Speaker 1: just makes sense together. Sometimes you see things come together
Speaker 1: and you're like, I don't know about that, but this
Speaker 1: you're like, okay, this makes sense and and so what
Speaker 1: it does for the the sort of energy, the dynamism,
Speaker 1: the level of competition within the industry that was that
Speaker 1: was the kind of the big thing that kind of
Speaker 1: just jumped out to everyone as soon as it happened.
Speaker 2: So when you say, come on competition in the industry,
Speaker 2: you meaning TV and Z.
Speaker 1: I think, well, look, I haven't spending twenty on TV
Speaker 1: and Z yet, and I'm sure, well, I'm sure if
Speaker 1: I did, they would say that, no, this is great.
Speaker 1: We welcome competition. I know the line. That's kind of
Speaker 1: why sometimes I don't even want to ask, but I
Speaker 1: think fundamentally, TV and Z has always been number one.
Speaker 1: It's always had a huge share of audience. But more
Speaker 1: than that, it's even had a bigger share of the
Speaker 1: advertising market. It makes roughly three hundred million dollars in
Speaker 1: advertising revenue versus around one hundred for three. But Sky
Speaker 1: is sort of rapidly gaining there. It's put a lot
Speaker 1: of emphasis on there. And if you just dropped one
Speaker 1: hundred million dollars in ad revenue. Not to make it
Speaker 1: all about the commercial or about the ads, but it
Speaker 1: just puts them on a much more even footing. And fundamentally,
Speaker 1: I do think that I don't think this is any
Speaker 1: kind of existing challenge for TV ins there. But what
Speaker 1: we do have here is too much more balanced than
Speaker 1: well matched opponents in the local TV market. Then we've
Speaker 1: probably hadn't quite some time.
Speaker 2: Right, So a one dollar deal or is it really
Speaker 2: I mean, they're not actually buying like people will see
Speaker 2: that and then it's I'm got a couple of bunks.
Speaker 2: I could have brought that up to five on trade me,
Speaker 2: what does it actually mean when a company buys another
Speaker 2: company for a dollar?
Speaker 1: Say, as far as I know, there is an actual
Speaker 1: transaction you do walk into and it's a bit of
Speaker 1: a photo op you hand over the dollar coin kind
Speaker 1: of thing. But obviously that is a symbolic gesture. It
Speaker 1: says we will take on the company as a going concern,
Speaker 1: including and it was the major thing all of the
Speaker 1: ongoing contracts. You know that three has been a loss
Speaker 1: making enterprise viewed in isolation for quite some time. That said,
Speaker 1: people have always thought it could be more than it
Speaker 1: currently is. It's why it's for what I understand to
Speaker 1: be US twenty million less than five years ago. But
Speaker 1: it's kind of been a bit of an orphane like
Speaker 1: it had been with a radio company. It's never quite
Speaker 1: had the scale to properly compete with a tvN's head.
Speaker 1: And now that it's next to this subscription beast with
Speaker 1: a million customers, that is Sky a real powerhouse and sports.
Speaker 1: Sky already spends more money on content than anyone else.
Speaker 1: It's now just got another place to look at to
Speaker 1: put it and a place that people are used to
Speaker 1: spending a lot of time with them that they really love.
Speaker 1: So it's a whole new canvas for Sky to put
Speaker 1: its content on and to kind of, you know, sort
Speaker 1: of see what free to wear at real scale looks
Speaker 1: like for that company.
Speaker 2: So if we wanted to get into it, why does
Speaker 2: Sky want three? We know that three or why three
Speaker 2: would want Sky? But why the other way around?
Speaker 1: Tie by on your earlier question, Like they could have
Speaker 1: got more money for it than a dollar, but they
Speaker 1: wanted it to go to a good home that can
Speaker 1: be like a corporate reputation thing. Sometimes it's actually they
Speaker 1: just really do care about the people, and they still
Speaker 1: you know, WBD still operate in this market. They've still
Speaker 1: got a production house here, they've still got the HBO
Speaker 1: Max brand, which is currently also sort of effectively leased
Speaker 1: to Sky. So they want to be part of the
Speaker 1: industry here. So just selling it to whoever is the
Speaker 1: highest bo that are irrespective with their responsible owner's that's
Speaker 1: a different thing. So I don't think that they'd want
Speaker 1: to be in that business. In terms of why Sky
Speaker 1: would want it, Sky for the longest time was a
Speaker 1: sort of castle on the hill. It was wasn't really
Speaker 1: part of the New Zealand media industry. It had a
Speaker 1: totally different business model, which was, you know, subscriptions and advertising.
Speaker 1: It just wasn't a big part of what it did.
Speaker 1: It almost didn't need to be. It was so profitable
Speaker 1: without it that it and part of what you were
Speaker 1: paying for was a different kind of TV, you know,
Speaker 1: that TV which had much less ads on it than
Speaker 1: the terrestrial free to air TV that you were used to.
Speaker 1: Now the game has changed. Everyone from Netflix on down
Speaker 1: is doing not just subscriptions but ads as well, and
Speaker 1: so for Sky, which has already got a great subscription business,
Speaker 1: it's already trying really harder in ads and has been
Speaker 1: making progress there when a lot of people are flat
Speaker 1: to declining. This just opens up a whole lot more
Speaker 1: audience and one hundred million dollars worth of advertising revenue
Speaker 1: that it can plug into its subscription and content portfolio.
Speaker 1: So it's kind of a no brainer for them.
Speaker 2: So they come on board, Sky does, and they will
Speaker 2: presumably do a whole bunch of cost cutting as they
Speaker 2: normally do. You know, there'll be some back office functions
Speaker 2: at free that Sky's already doing.
Speaker 3: All that sort of stuff will happen.
Speaker 4: You'd imagine that kind of thing. I mean, we're driving
Speaker 4: in there. But they're saying that this would result in
Speaker 4: a sustainable ebit uplift of at least ten million dollars
Speaker 4: from financial year twenty twenty eight, So they are looking
Speaker 4: quite some years out before they're really really seeing the
Speaker 4: games of this. But I guess if you're thinking in
Speaker 4: a bigger sense that sports rights play a big part
Speaker 4: in how people make money out of broadcasting, and if
Speaker 4: you've got a free to wear option that you can
Speaker 4: offer cut TV ins out, that's the one for you. Later, Yeah, interesting, is.
Speaker 2: It all about rugby? When it comes to Sky. I
Speaker 2: mean I've had to chat with some people around the office.
Speaker 2: They say, why do you still subscribe to Sky back home?
Speaker 2: We call something similar like foxtail. Why would you still
Speaker 2: have a subscription to foxtail when you've got all of
Speaker 2: these other options And one of the main things is
Speaker 2: sport Rugby International rights for Football or AFL pops up
Speaker 2: on the screen sometimes does Sky Sport nine or something?
Speaker 3: What happens to.
Speaker 2: All of those like is that going to be a
Speaker 2: real game changer for them?
Speaker 1: Live sport is the last great driver of TV audiences.
Speaker 1: You know, you can get hits here and there, and
Speaker 1: there are lots of there are lots of properties which
Speaker 1: still work. But you know, in the US, for example,
Speaker 1: something like ninety of the one hundred biggest TV audiences
Speaker 1: of the year are NFL games live NFL games, and
Speaker 1: so absolutely for Sky. Well it's not the only thing.
Speaker 1: Rugby cricket, you know, these kind of properties are a
Speaker 1: huge part of what makes Sky a very sticky product
Speaker 1: for the person paying the bill. There's no other way
Speaker 1: to see it, and certainly not not a good way
Speaker 1: to see it live. And that's where I think from
Speaker 1: a looking at the competitive dynamic with TV and Z
Speaker 1: where it gets really interesting because TV and z's got
Speaker 1: a big newsroom, you know, three famously shut its down
Speaker 1: its newsroom down last year. It's got a really good
Speaker 1: library of New Zealand content and ongoing shows and personalities
Speaker 1: that people are really familiar with. But what it doesn't
Speaker 1: have as much of as sport. And in fact that
Speaker 1: what sport it has. For example, the New Zealand cricket
Speaker 1: contract is actually going from TV and Z to Sky,
Speaker 1: so you're going to see a really big change in
Speaker 1: what is available. Two three, it's got all the Sky
Speaker 1: Sports contracts. I want to want to give too much
Speaker 1: away for free because then people wouldn't subscribed to Sky.
Speaker 1: But certainly it can put live sport there or even
Speaker 1: delayed sport, and that's a real differentiator from TV and Z.
Speaker 1: But it also has, like the HBO Max contract, it
Speaker 1: has a whole bunch of really premium TV. Again, probably
Speaker 1: won't be a first run there, but it can play
Speaker 1: it out, you know, weeks or months later, and what
Speaker 1: the channel is to consumers has the potential to change
Speaker 1: in quite a positive way. That will give TV and Z.
Speaker 1: It's a real well resourced and differentiated competitor in a
Speaker 1: way that probably has never dealt with before.
Speaker 2: What's the point of media companies merging now? I can't
Speaker 2: think of any really good examples off the top of
Speaker 2: my head, but I'm thinking, like Disney owns I don't
Speaker 2: know everything now, like Fox and stuff? Right, and or
Speaker 2: is that the other one? I mean, this is asking you, ESBN,
Speaker 2: I mean, and then you've got the Fox side of things.
Speaker 1: They own They own Fox now, they own Fox, not
Speaker 1: Fox News, but Fox the twentieth century, fix century TV
Speaker 1: and movie studio business.
Speaker 2: Yeah. Yah, So it's kind of like a media company.
Speaker 2: I kind of think of it visually rolling along and
Speaker 2: just collecting up all of these smaller companies to a
Speaker 2: point where it's just this huge blob of content and
Speaker 2: news and money. An is there any point being one
Speaker 2: of those smaller blobs on the side anymore?
Speaker 1: I think if you're a small blob, I love this.
Speaker 1: While you're describing this. The hard thing is that there
Speaker 1: are a lot of giant blobs around, and as big
Speaker 1: as we think of some company like Disney, you know
Speaker 1: there are They're right next to Netflix, which is now
Speaker 1: a significantly bigger blob at least from a market capitalization standpoint.
Speaker 1: But even Netflix, which is like a five hundred billion
Speaker 1: US company, it's looking up at Google, which is you know,
Speaker 1: YouTube is bigger again in terms of audiences, and then
Speaker 1: it has all its other businesses. Meta has a huge
Speaker 1: share of the sort of social video market. So the
Speaker 1: market for people's tension is dominated by a few enormous
Speaker 1: players and they have huge structural advantages. The likes of
Speaker 1: YouTube and Metha. They don't buy content advance, that don't
Speaker 1: commission it. It just sort of comes to them, and
Speaker 1: that's a huge structural advantage for their YouTube actually shares
Speaker 1: a lot with its creators, which Meta doesn't do. But
Speaker 1: there is just a scale and a business model thing
Speaker 1: there that is really hard to beat. So if you're
Speaker 1: a small player bundling a lot of different types of
Speaker 1: business together because some of the back office, whether it's finance,
Speaker 1: hr technology, that kind of stuff, the more channels and
Speaker 1: audiences that you can spread that across your head sales,
Speaker 1: the more you can spread those things across, the better
Speaker 1: your little blob has a chance of surviving against the
Speaker 1: really big blobs that are headquartered in the Silicon Valley
Speaker 1: have their non and all finance has run out of
Speaker 1: Dublin and pay text precisely nowhere for the most part.
Speaker 2: In terms of media companies like this merging, what does
Speaker 2: it mean for creatives? I did see that Sky TV
Speaker 2: CEO say that they are interested in more local content,
Speaker 2: and that's obviously something that they've heard from all the
Speaker 2: comments and stuff regarding Netflix taking our dime and like
Speaker 2: you know, the people have been saying Netflix should say,
Speaker 2: pay a tax so we can create more New Zealand content,
Speaker 2: And that really stuck out to me from listening to
Speaker 2: her about that.
Speaker 3: Do you believe that it will lead to that?
Speaker 1: Well, I think if you think about content in a
Speaker 1: very broad sense, Sky probably makes more local content than
Speaker 1: anyone else because of the amount of sport that producers,
Speaker 1: and then there's all the wrap around sports shows. We
Speaker 1: don't tend to think about that, and the production sector,
Speaker 1: which is where a lot of that sort of the
Speaker 1: drums beating around Netflix's commissioning locally comes from. They don't
Speaker 1: typically think about sports, but Sky screens and producers and
Speaker 1: has hard working people go all over the country to
Speaker 1: bring you NPC and and all kinds of different sports properties.
Speaker 1: They also, you know, through New Zealand on air and
Speaker 1: you know, through some commercial partners at ships make some
Speaker 1: local content as well, but not nearly so much as
Speaker 1: you know, the likes of TVNZ for example, Three has
Speaker 1: massively pulled back from that itself. You know, it used
Speaker 1: to have multiple news bulletins. Now it just has the one.
Speaker 1: It doesn't make it itself. Stuff manufactures that for them,
Speaker 1: So they have basically trenched to the point where they
Speaker 1: said the only local content will make will either be
Speaker 1: funded by new zeand on air or be commercially funded.
Speaker 1: Whether that remains the case for the combined Sky three business,
Speaker 1: I do think that's an open question. If you look
Speaker 1: at you know, the battle of the big blobs again,
Speaker 1: what's a differentiator for our local blobs? It is where
Speaker 1: they are, it's and they can't go anywhere else. You know,
Speaker 1: the likes of Sky and TV and Z are in
Speaker 1: and of this country. And how do you signal that,
Speaker 1: and how do you do you differentiate yourself and the
Speaker 1: likes of you know, Disney Plus, Amazon, Prime Netflix. It
Speaker 1: is actually with your local content. So that's the sort
Speaker 1: of the upside too, and the argument for them them
Speaker 1: commissioning more local shows in future.
Speaker 3: I guess.
Speaker 2: The three brand has always been seen as a bit
Speaker 2: of a renegade. Hey, up against the corporate and very
Speaker 2: serious TV Z. That's where you get serious things. And
Speaker 2: when TV three, especially i'm thinking three News, came into
Speaker 2: the play, it was much more fun. It was a bit,
Speaker 2: you know, a bit out there. My producer actually told
Speaker 2: me about this iconic footage of Blenda Todd taking the
Speaker 2: Grim Reaper through the office when the network was in
Speaker 2: its infancy.
Speaker 3: It's the same reception that's been here since the beginning.
Speaker 1: You've come about the jobs.
Speaker 3: The same reception that hosted host Belinda Todd along with
Speaker 3: the Grim Reaper when TV three went into receivership.
Speaker 1: I'm too groad, Angy Morgan.
Speaker 2: You can have me for one thousand dollars a week,
Speaker 2: plus all the land that was taken from my tribe.
Speaker 3: The receiver th on was just a month after Nightline launched.
Speaker 2: We're just running with scissors with a hair on fire,
Speaker 2: and no one expected anything of it, so.
Speaker 3: We did what we liked.
Speaker 2: And there have been so many owners over the years,
Speaker 2: so much change at three. Do you think this deal
Speaker 2: is going to bring some long term stability, not only
Speaker 2: two three, but perhaps the wide media landscape.
Speaker 1: Yeah, I mean, I think that that renegade spirit of
Speaker 1: three was very deliberately cultivated. It was a classic challenger
Speaker 1: brand and and it hired personalities who had a particular
Speaker 1: sense of fun and playfulness, and it was just so
Speaker 1: well executed against that over its sort of first twenty
Speaker 1: years or so, to the point where if you look
Speaker 1: at some of the biggest names on TV and Z,
Speaker 1: you know, the likes of Hillary Barry and John Campbell,
Speaker 1: they were three lifers before they eventually made their way
Speaker 1: across there. Not that they wanted to be a development
Speaker 1: house for talent, but that's just sort of it shows
Speaker 1: just how admired they were at that capacity. In terms
Speaker 1: of how three has lived its whole life. It has
Speaker 1: had huge amounts of debt, it's had reluctant owners, it's
Speaker 1: had bankruptcies, and it's just kept on trucking. You know,
Speaker 1: that's their understanding of the world is that way up there,
Speaker 1: something weird's always happening, and you just got to do
Speaker 1: your job, and so, you know, there was My understanding
Speaker 1: is that TVNZ went and camped outside Flower Street, which
Speaker 1: is only going to be their home for a matter
Speaker 1: of a few days I think for three to sort
Speaker 1: of get their reaction to this, and I'm like, you
Speaker 1: should know that this is the most normal thing that's
Speaker 1: happened to three from an ownership perspective, in probably its
Speaker 1: entire existence, and so it will have I would have thought,
Speaker 1: no impact on them, kind of emotionally, but equally if
Speaker 1: you sort of step back a bit, it's obviously a
Speaker 1: great day for them. You know, I think when you're
Speaker 1: owned by a giant multinational, and especially when you're off
Speaker 1: to the side of what their core business is, you know,
Speaker 1: you should never really count your chickens. But when you're
Speaker 1: owned by a publicly listed New Zealand media company, you're
Speaker 1: part of the furniture that you're a really important asset
Speaker 1: to them. And I think that for three Star, you know,
Speaker 1: those who are left, you know, a lot of them
Speaker 1: have gone by the wayside in recent years, but those
Speaker 1: who are still there, who especially those have got a
Speaker 1: kind of connection back to previous eras this this should
Speaker 1: be an amazing moment for them because they're finally at
Speaker 1: a place where they're sort of seen and valued and
Speaker 1: have reason to believe that they can grow and prosper
Speaker 1: and evolve. In a way that has been really hard
Speaker 1: to imagine. For a lot of the last sort of
Speaker 1: probably ten to fifteen years.
Speaker 2: In the past, TV and Z has poached some of
Speaker 2: three's biggest hits. I've been told Home and Away is
Speaker 2: probably the biggest, that was the lead in show for
Speaker 2: the six PM news for a long time there. And
Speaker 2: you've also seen they announce the other week that Graham
Speaker 2: Norton is moving over to TV and Z. They even
Speaker 2: took Broken Wood Mysteries from Sky did TV and zed.
Speaker 2: So is this stronger media company perhaps going to put
Speaker 2: up a lo a bit more of a fight.
Speaker 1: Yeah, it's interesting some of those shows that you listed
Speaker 1: weren't necessarily poached from three so much as Three either
Speaker 1: deliberately or unintentionally botched the negotiation on them, and they
Speaker 1: were real losses. You know, some of those, particularly Home
Speaker 1: and Away were real tent poles of how they set
Speaker 1: up their evening. And you know, also give TVNZ credit,
Speaker 1: they knew how to behave in a competitive environment like
Speaker 1: a really strong competitor. They still will be in this situation.
Speaker 1: I think it's less about Three defending what it has
Speaker 1: and it still has a lot, you know, David Lomas
Speaker 1: is still a very beloved property for them. Meretithist Side
Speaker 1: Australia regularly tops the ratings. Basically, comedy and reality TV
Speaker 1: as locally made genres were largely driven stratgically buy three,
Speaker 1: and while particularly the comedy side and some of the
Speaker 1: reality side TVNS has picked up on it, they were
Speaker 1: definitely fast followers rather than originators of that. And so yeah,
Speaker 1: this absolutely a more robust company to sort of defend
Speaker 1: what three has. But I think what's more instructive and
Speaker 1: interesting about the dealer is if you just look at
Speaker 1: the vast library that Sky has, truly it's one of
Speaker 1: the best in the world. It might be the best
Speaker 1: in the world just because we're a sort of small
Speaker 1: market with less BATV operators across sports, across entertainment. What
Speaker 1: it can do in terms of putting some of that,
Speaker 1: a sampling of that on three and then using that
Speaker 1: as the top of the funnel to say, if you
Speaker 1: like that, there's a whole lot more where that came
Speaker 1: from across s guy's properties, and then advertising that there
Speaker 1: Once that it's all properly put together, strategically understood and executed,
Speaker 1: that should be a pretty formidable machine for them sitting
Speaker 1: aside the whole advertising piece of it, which is the
Speaker 1: obvious stated justification too.
Speaker 2: Thanks for joining us, Duncan.
Speaker 1: Thank you so much for having me. I could talk
Speaker 1: about this all day.
Speaker 2: That's it for this episode of the Front Page. You
Speaker 2: can read more about today's stories and extensive news coverage
Speaker 2: at enziherld dot co dot mz. The Front Page is
Speaker 2: produced by Ethan Sills and Richard Martin, who is also
Speaker 2: our editor. I'm Chelsea Daniels. Subscribe to the Front Page
Speaker 2: on iHeartRadio or wherever you get your podcasts, and tune
Speaker 2: in tomorrow for another look behind the headlines.