TVNZ's digital TV venture with Telstra Saturn has some things in common with the deal scotched by the government this year, except the huge financial risk.
In announcing the venture, TVNZ CEO Rick Ellis said the entry cost for the state broadcaster would be between $3 million and $10 million, including the lease of a satellite transponder – compared with the investment of $200 million proposed under the original venture with the UK-based cable company NTL.
Ellis and Telstra Saturn CEO Jack Matthews yesterday signed a memorandum of understanding on the venture. Matthews said he was confident that final contracts would be signed by Christmas for TVNZ's existing channels, with other programming probably going free to air in April or May.
The companies are to form a joint venture company to provide acquisition and commissioning of content – including "enhanced interactive content" and managing the digital head end. The joint venture will also contract to TVNZ for the sale of television programming and related ads and sponsorship.
Telstra Saturn will continue to sell a subscription service and provide set-top boxes for the public to buy and own, with basic digital decoders costing around $200.
"We'll try have a range of options in terms of the technology that goes into people's homes, starting with a very basic digital box and moving up to a set-top box that allows internet access or IP telephony or any number of things – the nirvana of all boxes," said Matthews.
"Digital TV is not just about better sound and pictures. It's also about convergence - the integration of voice, video and data services … a fundamental reconfiguration of what the television is all about."
While the new deal spares TVNZ from building its own digital broadcast network, the broadcaster has brought a transponder to the party. Its space on the Optus satellite will give Telstra Saturn breathing space by allowing the delivery of the same services via direct satellite broadcast.
The company risked losing the race for Auckland but has been in Wellington for years and expects to have cable running past most homes in Christchurch by early next yea.
Ellis said the new deal would see TVNZ "acting in a manner consistent with our obligations as a public broadcaster" while protecting value in the SOE. The partners have discussed carrying the channels of other broadcasters and the proposed new Maori channel has been offered capacity.
Government agencies will also have access to the set-top boxes, bolstering the government's drive for electronic service delivery.
While the existing channels will continue to be available free to air, Ellis is not ruling out new products designed for the subscriber market.
"The company at this stage has no plans to enter the pay television market. Having said that, we see ourselves as a content provider and we're interested in compiling and producing the One News 24-hour news channel. If there are opportunities for us to exploit our content in the creation of pay channels then that's something we would contemplate. "