Webs in signal spat

Prime, Sky say government mislead them

AUCKLAND — While the U.S. and Europe agonize over the switch from analog TV signals to digital, New Zealand shows no sign of making the change.

Infact, Kerry Packer-backed commercial terrestrial channel Prime New Zealand and Rupert Murdoch-controlled Sky Network Television are fighting to keep their analog UHF frequencies.

The government wants to auction UHF rights in 2005, five years before they expire in 2010, giving enough time for a smooth handover if they change hands.

Prime and Sky execs claim the government had lead them to believe they had an option to keep the UHF rights for a further 20 years at a relatively low price.

But now they could lose a bidding war and be forced off air.

Some two-thirds of Prime viewers watch on UHF, with one-third picking it up on the Sky digital satellite platform.

Sky is less vulnerable because its four-channel UHF pay operation is winding down and it could coax viewers over to digital.

But both TV outfits were taken by surprise when the government scrapped plans to grandfather their rights.

Prime CEO Chris Taylor said that just 12 months ago the government had acknowledged that TV businesses needed secure tenure on their frequencies.

But the Ministry of Economic Development has defended the government’s move. A ministry discussion paper says there is no way to determine the price of UHF frequencies other than to auction them.

It was claimed during the first frequency auction in 1990 that frequencies had been given away at bargain basement rates because the government did not want to be seen to be gouging profits.

Twenty-year rights to UHF networks used by Sky and Prime that allowed the channels to reach 80% of New Zealand households sold in 1999 for $100,000 to $401,000.

A UHF network with seven years of the 20-year lease expired is understood to have been sold for $4.1 million in 1997.

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