The launch of Sky Network Television
by Adrian Blackburn
This article was first published in the NZ Listener (16 April 1990).
“We’re going a hundred miles an hour already,” breezes Richard Anderson of Sky Network, speaking just over a fortnight after arriving in New Zealand to become chief executive of the network. It’s his job to introduce pay television to New Zealand, overseeing the final stages of three years’ planning and the investment by Sky Network’s promoters of more than $50 million.
May 18 is the target date, the date when transmissions, initially to the Auckland area, begin, the date when Sky’s three new channels will, at a stroke, double the TV enthusiast’s choice.
Looking around the vast, open and meagrely populated spaces at Sky’s 7000 sq m headquarters at Mt Wellington, it seems that Anderson may need to speed up to a thousand miles an hour, rather than a hundred, if he’s to meet the initial deadline.
New Zealand’s painful crawl from a two- to a three-channel television system suggest that adding a further three channels might take rather longer than a bare three months from the Government’s approval of successful bids for ultra-high frequency (UHF) frequencies. And that sort of deadline seems particularly unlikely when the aim is to transmit not only 12 hours each of sports and movies daily but also 24 hours of television news.
Just two months later transmissions to the Hamilton and Tauranga regions are to begin, followed before year’s end by the rest of the North Island, with service to the South Island planned for 1991. That would bring Sky transmissions within reach of roughly 80 percent of the population about the number reached now by TV3.
The big difference – this is pay TV, remember – is that only those viewers who have bought or rented decoders to unscramble Sky’s encrypted UHF signals, who have paid Sky in advance for its service, will get to see its offerings.
The tight deadline does not seen to worry Anderson. At 40, the slight Californian is a veteran of 15 years in the cable television business. For 11 years he has worked on cable TV for the powerful Times Mirror company, parent of the Los Angeles Times , and has himself started and run cable companies in several US centres.
“It’s a very similar business to this. The technology of broadcasting is much easier than cable, though the channel capacity is less. We were running 45- to 55-channel capacity in the US against the three to four we’ll have here.”
In mid-February, when Commerce Minister David Butcher announced successful bidder for UHF frequencies, Sky was the big winner, taking four of the seven national networks awarded, at a cost rumoured to be around $400,000 each.
So confident of success were Sky’s promoters they had Richard Anderson signed to a three-year contract and in New Zealand in time for Butcher’s announcement.
Behind Sky are Auckland businessmen Craig Heatley, Terry Jarvis, Trevor Farmer and Allan Gibbs. Although TVNZ has a 35 percent shareholding, the controlling interest lies with Heatley (ex-Rainbow Corporation) and Jarvis, who are Sky’s managing partners. (Although Sky shares its name with Rupert Murdoch’s immensely costly television venture in Britain, the Australian media mogul has nothing to do with the local business.)
Meanwhile Anderson is also keen to quash any idea that Sky is simply some sort of puppet for TVNZ. “We’re run totally separately,” he says. TVNZ is not programming Sky, both are in the marketplace separately buying programmes and although TVNZ has aided Sky with its technical expertise, “everything else is really just a financial investment.”
The technical side remains quite straightforward. A big satellite dish sits out the back of the buildings which, purpose-built for Wilson and Horton’s costly but doomed attempt to head off other third channel contenders at the pass, are proving well-suited to Sky’s needs.
From the satellites Sky takes the US-based Cable News Network (CNN) international news feed and the Entertainment Sports Programming Network (ESPN) international sports feed, as well as other regular programming and individual events.
Programmes will be scrambled by a special computer programme before being transmitted on UHF. Would-be viewers will need a decoder (the same German-designed, Singapore-built equipment as used for the British Sky channel), which will be available for $499 from Sky Network or for a similar amount through retailers.
The 80 percent or more who have not got a fairly new TV with multiple channels capable of being tuned to the UHF band, will need to use their VCR to tune in the different channels. The antenna and cable – yes, most people, depending on their area, will need a UHF aerial costing perhaps $30 to $50 plus fitting – will go directly into the decoder, with the decoder’s output going into the VCR, which is linked to the TV set.
That’s not quite all. Securing your Sky signals will also cost $10 a week plus GST, payable monthly in advance. And the sophisticated IBM 400 computer which is the heart of Sky’s systems knows how to cut you off if you stop paying.
Sky began test pattern transmissions in the Auckland area in February, continued them in March and from April 6 to April 8 offered viewers a chance to taste its wares for free, transmitting unscrambled pictures of Winfield Cup rugby league from Australia.
These transmissions also gave potential pay viewers a chance to check on tuning into UHF and on whether they need a UHF aerial. Those without enough cash to buy a decoder, or who are not prepared to gamble on what Sky is offering, will have the option of renting decoders from TV service companies.
At this stage the question as to how many New Zealand TV compulsives will be ready to dig deep for Sky remains unanswered. But the company’s market research suggests at least a profitable proportion.
Sky is not revealing its break-even, but it clearly lies somewhere between the eight and 10 percent of viewers who feel impelled to buy anything new that comes along in the TV/video field, and the 15 to 20 percent of the TV audience with which Sky would be “very happy”.
“Ultimately we expect as high as 30 percent penetration,” says Anderson.
The big drawcards, as he sees it, are price, after the initial outlay, and programmes. Sky’s sights are set firmly on the disposable income represented by the estimated $140 million a year rental videos market.
“No, the video shops probably won’t love us, though in the States there hasn’t been a great impact except to dramatically lower the price of videos, typically $US1 to $2.
“With many new movies on view just a short time after video release, plus all the sports and the news for the price of renting around two videos a week, we really think Sky will be a bargain.
“And we’re going to programme these channels with such a great product it will be very hard for the consumer who enjoys TV at all to say no to Sky.”
Anderson says New Zealanders’ readiness to embrace new technologies is reassuring. “We find 75 to 85 percent of homes have VCRs and that has to be very close to No 1 in the world. Video is obviously very important in the dollars that a New Zealander will spend for entertainment.”
The research shows pay TV users will be no exclusive group. “Very much across the board,” says Anderson, “both male and female and across all income levels.”
But when it comes to the point, why should people make a relatively large outlay simply to get more TV, a medium in which greater quantity is notoriously no guarantee of better quality?
Sky maintains that its programming mix, and the hours of transmission, offer viewers choices that go a long way towards meeting needs not now met by the three broadcast channels. And because Sky will draw only about five percent of its revenue from advertising, it guarantees minimal interference from ads.
The cocktail, as outlined by Sky programming director Harold Anderson, who was until recently TVNZ’s programming chief, does sound attractive. He sees the sports channel as being possibly the biggest draw. “The success of televised sport depends on how quickly you can deliver it. The whole thrust of the channel is going to be live, or as near live as possible. Because we have 12 hours we can do that. We’re not restricted by the risk of offending part of the audience that doesn’t like sports.”
Harold Anderson says great care has been taken to create a balance of sports programmes to suit New Zealand tastes. And although the channel will operate basically from noon to midnight, those hours will be extended for special events.
Sky will show Winfield Cup league live from Australia every Friday, Saturday and Sunday, will carry local national league basketball live at 8.00pm on Saturday and, through its relationship with TVNZ, will carry full coverage (though not live) of the major local rugby matches.
A contract with the BBC will provide over 250 hours of British sport a year. There will be full coverage of the major match of the day in English league soccer, over four hours a day of Wimbledon tennis, as well as British rugby league. Other features include full coverage of Grand Prix motor races, other major tennis tournaments and PGA golf from the US.
Flexibility in timing means Sky can promise not to cut the end from a world championship boxing match to meet other programming requirements.
“If there is an extreme over-run on a major event we will just stay with it because it’s the sports fan who is sitting there, not someone waiting for the network news to come on.
“On both the movies and sports channels we are aiming for commercials-free programming. We will achieve it with sport in most cases by editing the commercial breaks out as the feed comes in on the satellite.
“The only time we will get caught is when we are taking something live from America and we will need to cover their commercial breaks with our own material, possibly local analysis of what is on.”
The news channel, depending basically on CNN and its 26 international news bureaux, will have to cover locally CNN’s commercial breaks of up to 12 minutes an hour. “We will cover these with graphically presented local news, similar to Teletext, with a rolling update every hour of local news.”
Hiring of local journalists and presenters to provide fuller local coverage is a few months away, though local presenters will quickly be involved in the sports channel.
Sky will run in full a couple of British news bulletins each day as well as repeating TVNZ’s 6.00pm bulletin in mid-evening.
Harold Anderson expects the movies and light entertainment channel, which will also run from noon to midnight, to be close in popularity to the sports channel.
Films will be run ad-free and normally in the same form as for cinema showing, not as cut for broadcast TV. They will usually be shown within nine to 12 months of local cinema release, with seldom more than 60 to 90 seconds of advertising between them.
Sky already has more than 300 movies available, as well as mini-series, which will also be shown before they are available to the normal TV broadcasters.
In its first weeks of transmission Sky will be showing more than 20 new movies a week. This will settle to six films premiered a week, each repeated in different time slots over the next few weeks to give all viewers a chance to see them.
All films will be rated for age suitability. Viewers wanting to stop children viewing unsuitable material can cut off Sky simply by removing a card similar to a credit card from the decoder. A more sophisticated card will be available later this year enabling only films rated, for instance, up to 13-year-old viewing, to be received.
Richard Anderson does not believe pay TV will result in New Zealanders becoming even more firmly planted couch potatoes. “Time is very important to people and I really think people simply want more choice on what they watch at the times they are available to watch. Part of extending that choice could be longer hours in future for Sky’s sports and movie channels.
What about cable TV, with its potential for many channels? Richard Anderson believes at the moment that the lack of sufficient programmes available by satellite, combined with the cost of cabling – in the US between $US45,000 and $55,000 a mile – would make it uneconomic. That could change within three to five years, and if so Sky would expect to be involved.
What will Sky do with the fourth national channel it won in February? The company is saying nothing, except that it too will be launched before year’s end.