Pacific Media Watch

21 February 2017

NZ: Spark launches legal fight against proposed Sky/Vodafone merger

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AUCKLAND (New Zealand Herald/Pacific Media Watch): Spark New Zealand is seeking a court order for a short-term pause if the proposed Sky TV/Vodafone NZ merger gets the green light from the Commerce Commission.

In a statement to the NZX today, Spark said it was seeking a court ruling for a stay in the event the Commerce Commission cleared the merger this week.

The move comes after Sky TV last week said it would not delay a planned merger with Vodafone New Zealand for a few days to allow for appeals if the deal got regulatory approval next week.

The Commerce Commission is scheduled to make a decision on the deal on February 23, with the companies set to create the country's largest telecommunications and media group, with Sky TV buying Vodafone NZ for $3.44 billion, funded by a payment of $1.25b in cash and the issue of new Sky TV shares at a price of $5.40 per share.

Vodafone becomes a 51 percent majority shareholder in Sky TV, in what amounts to a reverse takeover. The pay-TV operator will borrow $1.8b from Vodafone to fund the purchase, repay existing debt and use for working capital.

Spark's general manager of regulatory affairs John Wesley-Smith said a short pause would provide "breathing space" to assess legal options and background on the decision.

"This is a question of natural justice: to allow Sky and Vodafone to push ahead with the merger without this breathing space would likely mean the merger would already have been effected, and be difficult to unwind, before opposing parties have had a chance to view the detailed reasoning underlying the commission's decision," he said.

Requests rejected
Wesley-Smith said Spark was among other parties who wrote to Sky and Vodafone last week asking for a voluntary agree to a pause in the event the merger gets clearance.

"Sky and Vodafone rejected our requests, so we feel we are left with no choice but to seek a High Court ruling on the matter," he said.

Simon Moutter, chief executive, said Spark objects to the merger on the grounds that it would restrict access to popular sports coverage, and that an effective wholesale regime is necessary to prevent the monopoly position shifting into another market, he said.

"With the merger approved, we think New Zealanders will have fewer choices on how to consume the sport they want available from one company," Moutter said.

"If the merger's not approved, then Sky will be highly incentivised to work with all broadband companies to produce a range of sporting products and bundles that can be delivered in a new way across everyone's services and New Zealanders will be far better off and so will Sky in our view," Moutter said.

A meeting is scheduled at the High Court in Auckland on Wednesday.

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