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In June 2016 Sky Network Television Limited, New Zealand’s predominant satellite pay-TV operator, and Vodafone Europe BV applied to the New Zealand Commerce Commission 1 for clearance to enter into a $3.44 billion merger. The proposal was for Sky TV to acquire 100% of the shares in Vodafone New Zealand Limited while the latter’s European parent company would acquire a controlling 51% stake in the post-acquisition Sky Network Television Limited. The primary motive was the opportunity to develop new triple or quadruple-play bundles of landline, mobile, internet and audiovisual content in response to the emergence of new subscriber video-on-demand services. The ‘Skodafone’ application was opposed by rival commercial interests in the telecommunications and television sectors who argued that the merged entity would have the ability and incentive to develop bundles of services including Sky’s premium sports content (notably New Zealand rugby) against which rivals would be unable to compete. Sky and Vodafone argued that premium sports was not ‘must-have’ content for market entry into subscriber video-on-demand (SVOD) services, pointing to Spark’s development of Lightbox in 2014 and the launch of Netflix in 2015. After numerous cross-submissions from various stakeholders, in April 2017 the Commerce Commission’s final determination declined the application. Although Vodafone and Sky lodged a legal appeal against the ruling, they subsequently decided not to pursue the case. Arising in the same timeframe as the (also declined) NZME-Fairfax merger application, the Vodafone-Sky case is symptomatic of several intersecting structural conditions in the New Zealand media ecology: deregulation, financialisation and convergence. On one level, the drive for consolidation and vertical integration can be regarded as a direct response to these pressures. However, there are also institutional-level contingencies which shape how structural pressures are articulated into decision-making as well as contested normative and epistemic assumptions about the definition of media markets, the nature of the public interest and the implications of the merger for competition. Drawing on document analysis of the merger submissions, this article analyses the significance of the Vodafone-Sky case through a critical institutionalist perspective and examines the key factors shaping the outcome. It concludes that while the Commission’s decision was correct, it would be premature to conclude that existing competition law is sufficiently robust to prevent public interest considerations being subordinated to those of financial investors. Rather, the Commission’s decision serves to underline the extent to which the commercial imperatives of the corporate media have sought to secure the political-economic conditions for accumulation by exploiting New Zealand’s historically feeble regulatory framework.

Pie in the Sky? The Political Economy of the Failed Vodafone-Sky Merger