TV3

"As the impressive and expensive package of rights came together, the crucial missing element was rugby union. At the time Sky was being established, rugby was still an amateur sport, though players were increasingly dissatisfied with their conditions and arrangements. But although the agitation for reform was real, it was not yet coordinated or well directed. Heatley was aware that when the time came, Sky would have to beat TVNZ or TV3 to rugby rights. More than that, it might be that Sky itself needed to be the catalyst to start a professional competition to which it alone would have the rights. But for now, Heatley and Jarvis had a lot more to juggle, decide, sort and, worryingly, pay for."

"Sky also needed a home base and studios to transmit from and here, finally, it had some good fortune. When the government had tendered the licence for a third free-to-air TV channel, Wilson & Horton had bid for it. The Auckland-based media company had already been dabbling in television and, apparently anticipating winning the licence, had constructed purpose-built TV studios on a 2.6 hectare site in Mt Wellington. The studios were not perfect for Sky—for a start Wilson & Horton had anticipated just one channel, not the three that Sky proposed, so the equipment needed replicating twice over and technology was changing so quickly that it already needed updating. But it was a proper set of functioning, soundproof studios, technical facilities and offices so Sky did not have to start from scratch. Wilson & Horton had rented some morning airtime from TVNZ and had broadcast a few programmes from the studios, but was left with a white elephant when TV3, not Wilson & Horton, won the licence for the third channel. Importantly for Sky, the acquisition enabled it to hang its shingle on a building that genuinely was a television studio. It was important physical evidence that Sky was real, and was coming."

"Sky tried to keep costs down but even without big-name TV stars, which Sky did not need, it was hard. ESPN would send hours of sports programming daily, which Sky had to filter, view, select, edit, package and broadcast to New Zealand viewers, and as soon as it was done they needed to start on the next day. It was labour-intensive work. Sky had only 200 staff to TV3’s 300, and more savings were hard to find. Hardware like antennae and decoders had to be paid for. The advertising budget was high because, without commercials, subscribers were the only source of revenue, so trying to sign them up through advertising campaigns seemed vital. But without change, Sky was unsustainable."

"It was a fair point. If TVNZ had bid US$350,000—and Sky knew that figure—and TV3 did not bid at all, then Sky was the only potential bidder left so had not needed to pay so much. However, doing so signalled that the market had changed and that Sky was prepared to pay a significant premium for exclusive rights. It wanted to dominate live sports coverage on New Zealand television. TVNZ was furious. ‘If the time for co-operation is at an end and Sky is to “go it alone” then, clearly, we must be formally instructed so that we can end the feather-bedding arrangements put in place to assist Sky,’ remonstrated Harman.[3](private://read/01jectdbce729daxqkxt7cbe8r/#mn26) It was not up to Sky’s executive to terminate agreements laid down in the original and subsequent shareholders’ agreements, he wrote. The board and shareholders needed to do that and Harman was requesting an urgent board meeting to be preceded by a shareholding meeting."

"Chisholm’s role in the negotiations was to maximise the return for News Corp. Heatley’s was to maximise the exclusivity for Sky, while minimising—as far as reasonable—the financial outlay. Both men knew the picture. TVNZ also wanted the rights, but its board was likely wrestling with the constraints faced by the boards of all government-owned companies: trying to weigh the public tolerance for spending against people’s expectations of service and trying to second-guess what their minister-shareholders would want them to do. TV3 would also want the rights but was likely to be priced out of contention, especially since it had just beaten Sky to the Super League rights so, Heatley thought, had probably spent its budget. But he could take nothing for granted."