Oh dear. There has just been another cock up at TVNZ that will probably cost the broadcaster dearly.

TVNZ announced today it had “offloaded” its Commonwealth Games coverage rights to Sky/Prime TV.

The only problem is – it hasn’t. Yet.

Sky are only “doing due diligence” on the proposal according to its PR maestro Tony O’Brien.

Sky has only, he says, “received a proposal from TVNZ to purchase the rights”.

Note the key words “proposal” and “due diligence”.

This means Sky regards it not as a done deal but the beginning of a negotiation process.

The first rule of business in conducting negotiations is not to give away your bargaining position right from the start, do not put yourself in the position of appearing to have a fire sale, do not use the desperate phrase “offload”, and do not inform the public until the deal is done or your competitor will have you over a barrel when it comes to price.

TVNZ has managed to do all of the above. Doh!

Sky CEO John “Tight Pockets” Fellet is not the kind of guy who automatically agrees to anyone’s terms and he has a well deserved reputation as a hard man around the bargaining table.

Whatever TVNZ were hoping to sell the rights for, I think you can now assume they will have to discount heavily because Sky/Prime is the only alternative broadcaster. Cash strapped TV3 couldn’t do it.

So, why would TVNZ want to get rid of the rights to next year’s Commonwealth Games in Delhi in the first place?

TVNZ’s Megan Richards cites the recession, claiming TVNZ was headed for a $5 million loss on the Games.

Surely the broadcaster would have done the sums prior to purchasing the rights and even the advertising downturn wouldn’t account for a $5 million shortfall?

Maybe someone at TVNZ forgot New Delhi is 7 hours behind New Zealand, meaning the main events would be off peak, late night and early morning New Zealand time.

That’s not a widely attractive option for sponsors and advertisers. Doh again!

My best guess is that TVNZ was relying on government Charter Funding to offset the loss.

But now that Charter funding is not available because its become commercially contestable.

TVNZ used more than $2 million of Charter Funding to cover the last Beijing Olympics, so this makes sense.

The second absurdity in this affair comes from Progressives Leader Jim Anderton who tries to use the situation to justify anti-siphoning legislation that would mean iconic sporting events could only be run on free-to-air TV.

The problem for Anderton is that, if Sky buy the rights, the games will be shown on free-to-air TV. Prime TV.

Prime is showing 12 hours of the Winter Olympics, with 4 other Sky pay channels screening more.

With the London Summer Olympics Prime will screen 22 hours a day of those games with at least 6 Sky pay channels also running more.

So its reasonable to assume that Prime will run many hours a day of the Delhi Games and that’s not including what the Sky Sports channels will run.

By the way, a major games puts out more hours of sport than one channel could ever run in a day so the main free-to-air channel that screens a games will cherry-pick the best events but fans of minority interest sports miss out.

A Sky/Prime deal (or a TVNZ/Freeview deal) allows the subsidiary channels to run a much broader coverage.

One last thing. Most free-to-air channels around the world treat things like the Commonwealth Games as a loss leader.

You may lose money on them but you get a huge surge in audience, your promos reach more people than usual, and you usually have a boost in ratings for several weeks after the event.

I guess that logic doesn’t apply with TVNZ but does with Sky/Prime. Go figure.

This entry was posted on Wednesday, September 23rd, 2009 at 2:08 pm and is filed under Corporate. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.