Tuesday, May 20, 2008

The ex.monopoly moaning about the competition

Imagine if you had a statutory monopoly on your business since your sector came into existence, in other words for a total of 29 years. Imagine if your first competitor was required to tell you, four years in advance, all of its products and the timing of their release, so you'd know when it started exactly what to do to ruin its chances. Imagine then that when the market was opened up, you bought extra capacity to compete with your new competitors and allied yourself with one of the emerging players.
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Now some 17 years after the market being fully open, it's all a bit hard and you're moaning to the government that one of the new players is so successful, it's unfair.
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Of course I forgot to say that the company in question is 100% state owned, that the government since 1999 has had no interest in privatising it and stymied a plan to directly take on its competitor shortly after it won office.
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I am talking about the arrogant self styled guardian of "kiwi kulture" TVNZ. TVNZ, of course, gets some money from the taxpayer to pay for programmes that viewers wouldn't otherwise pay for. Sky gets nothing. TVNZ inherits its rights to broadcast, Sky had to bid commercially for its UHF frequencies and now pays commercially for satellite broadcast frequencies. Sky's customers CHOOSE to pay to have its channels available, and Sky offers around 60 channels plus radio. TVNZ offers 4. Sky started from nothing in 1991, with 3 pay TV channels and lost money for around the first decade of its operations. TVNZ was government funded and enjoyed milking NZ TV advertising monopoly until 1989.
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Do I smell the whiff of loser? Now TVNZ could have performed better had it been privatised as it could have invested in pay TV, more channels, and spent money on programming people wanted rather than being the Prime Minister's plaything (it is rumoured than when TVNZ dropped BBC World from TV1 overnight because of the high price the BBC charged, the PM rang the TVNZ CEO and demanded it be reinstated - of course Sky offers BBC World 24/7).
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TVNZ wants the government to ban Sky from bidding for the broadcast rights for certain sports events, presumably so TVNZ can pay the sports event operators less so it can attract customers to watch it for nothing (even though hundreds of thousands are willing to pay). It can't seem to convince advertisers to pay enough for the programming compared to how much Sky can convince subscribers. Too bad TVNZ. It calls Sky subscriptions a "sports tax". No! It's not a tax because it is voluntary, but then the socialists at TVNZ maybe don't quite get that, having been friendly to statism for many years.
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However it goes further. No doubt buoyed by Labour's decimation of Telecom's property rights, TVNZ wants Sky forcibly split into two businesses; one to buy and manage programming, another to operate satellite transmissions and set top boxes. What?
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This is the same TVNZ that once owned BCL (now Kordia). This is the same TVNZ that holds the two highest rating commercial TV channels, and for years dominated the free to air broadcast market because it advertised its own programmes for free on its own channels. I guess the inherited monopoly benefits have been eroded by the market.
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Sky was one of three pay TV businesses that have had a reasonable presence in the market. Telstra Clear is second with its cable TV operations in Wellington and Christchurch, and Telecom was a third with the long defunct First Media cable TV operation in parts of Auckland and Wellington. Ihug also briefly ran a pay TV operation. TVNZ could have done so too, but government has prevented it from doing so.
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TVNZ wants a "level playing field". What, you mean having a 31 year head start wasn't enough? It wants "media diversity", when it spent several years in court in the 1980s fighting a third TV channel, and itself bought one of the seven nationwide UHF TV frequencies when they were first sold (and had a 25% interest in SKY which bought four others).
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You see 720,000 households subscribe to Sky - that's people choosing to pay for TV. Unlike the hated TV licence fee which people DIDN'T choose to pay, but which predominantly benefited TVNZ.
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Quite simply TVNZ are moaning losers, it has milked TV advertisers for decades, milked taxpayers and the TV licence fee paying them by force for what people wouldn't otherwise choose to buy. Sky comes along, offers programming people want to pay for, and TVNZ thinks it is unfair.
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It should be privatised, in full - it is an arrogant broadcaster that specialises in vapid oversimplification of issues, "to make them relevant for the viewer" by treating news like a sports match "good vs bad". It has overpaid so called "stars" that it creates, and almost never challenges the statist status quo, and warmly embraces those who want more government or government to fix problems.
So go on TVNZ, charge subscribers for your content, and see how well you go or maybe just ask your masters to sell you to someone prepared to invest in developing your business. Don't get upset because the relatively new boy on the block is outdoing you right left and centre.

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