Mediawatch: Another $1 deal changes the media landscape

When Warner Bros Discovery (WBD) bought the TV assets of MediaWorks - including what was TV3 - back in early 2021, the deal was welcomed by many in the business.

WBD was a serious global media company with a huge library of content and channels in many genres. It could have brought exciting new programmes to free-to-air viewers and beefed up the on-demand offerings as well.

It could also - finally - give TVNZ a run for its money, they said.

It didn't work out that way.

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In a statement today Warner Bros. Discovery's Australia NZ managing director Michael Brooks said the company was "not commercially viable... despite efforts to create a sustainable business model."

Warner Bros Discovery was taking heavy losses year-on-year - including $138m on its New Zealand assets in 2023 alone.

Asia-Pacific execs flying in to announce the sudden and complete closure of Newshub in April 2024 showed they weren't prepared to wear losses like that much longer.

Sky swooping in at some point was also anticipated.

A Sky bid to buy MediaWorks in 2022 (after the TV assets sale to WBD) was knocked back by shareholders - and the Sky share price jumped when it was clear the deal was off.

But Sky now taking over Three (formerly TV3) from WBD - and its other less-watched channels including Bravo, Eden and Rush - makes much more sense.

The $1 deal - to be completed August 1- comes without debt or long-term liabilities like property leases.

It allows Sky to significantly and quickly upgrade its free-to-air TV offering, alongside the company's existing channel Sky Open.

And Sky will also have the streaming app ThreeNow, better-watched and more well-stocked with shows than Sky's own on-demand service for non-subscribers.

Sky CEO Sophie Moloney called it "an important missing component to Sky's portfolio, without incurring significant... costs and inherent revenue risks associated with building a service ourselves."

After TV3's decades in the shadow of state-owned TVNZ, Sky's expanded portfolio also sets it up as a more credible competitor.

TVNZ is also under severe financial pressure, but still dominates nightly TV ratings. It also leads the pack with the number of account-holders for TVNZ+.

TVNZ's just published Statement of Performance Expectations says it's aiming to lift digital advertising revenue from around $50m a year now to $150m in five years.

A beefed-up and locally-owned competitor on-demand and on-air will make that harder.

Sky told investors this morning the deal would lift its total combined audience reach to 2.2 million in linear TV and 1.2 million digital viewers per week.

It's aiming for a 35 percent share of total linear television ad revenue share and 24 per cent of total digital TV revenue.

Not much may change for viewers - and Sky customers - in the short run.

Viewers might eventually get more free-to-air sport live - or near-live - on Sky's doubled-up free-to-air offering. More of its premium content HBO-type shows may screen free-to-air - eventually, months after the paying subscribers of Sky's Neon have seen them when they were fresh.

Sky will also have more leverage in negotiations for sports broadcasting rights, where it's been challenged by TVNZ and others.

The state broadcaster recently revealed NZ cricket was its sixth most-streamed product of 2025, just behind the popular Australian kids show Bluey.

Sky is also seeking to bid high to again secure exclusive live rights with NZ Rugby (which has had a 5 percent stake in Sky since 2019). A bigger free-to-air footprint will help ward off any domestic competition and the cashed-up international disrupter DAZN.

But the deal strengthens Sky's hand for exclusive live sports rights, viewers will still need to pay - and probably pay more - to see elite rugby and other popular sports.

Sky already had a commercial partnership with Discovery, first formed in 2021. In October last year that was expanded to allow Sky to host Discovery's premium channel Max.

That meant shows like White Lotus and The Last of Us were behind Sky's subscriber paywall, and later screened for free on Sky Open.

But it's also possible Sky may not run both Sky Open and Three in the foreseeable future if free-to-air TV ad revenue continues to dry up.

It remains to be seen if the array of FAST (free ad-supported streaming) channels on ThreeNow will continue.

Some - such as the True Crime one - may have wider appeal with added content. Others - such is the one offering nothing but bits of the Graham Norton Show - are more marginal.

For now Stuff-produced ThreeNews looks set to continue. Currently it attracts between 100,000 and 200,000 viewers a night - well short of the TVNZ 1News average daily audience of 662,800.

But for years Sky contracted MediaWorks / Newshub to produce the First at 5.30 airing half-an-hour before 1 News and 3 News on rival channels.

"I am absolutely delighted... a great New Zealand company in Sky TV will bring TV3 back into New Zealand ownership," Stuff boss Sinead Boucher said in a statement today confirming Stuff's delivery of ThreeNews is part of the deal.

"This is a brilliant move... for the New Zealand media landscape as a whole," she said, citing "lots of new opportunities ahead.

"And who doesn't love a $1 deal!" she added, referring to her own purchase of Stuff from foreign owners in 2020.

A bargain can be a good thing if it keeps an important New Zealand media outlets alive.

But the forces that have reduced two companies once worth hundreds of millions of dollars to just $1 are powerful - and still at play.

The really critical thing now is whether a scaled-down media scene with fewer owners in the mix is stable enough for them to continue as viable digital-first businesses.