Sky TV satellite service safe to 2031 but Freeview deal not yet done

Friday, 3 July 2020

Sky TV says it has finalised a new satellite deal it trumpeted in 2018 and shaved off some cost.

The future of Sky Television’s satellite television service appears assured up to 2031 after it finalised a previously conditional agreement to buy capacity on a new satellite, at a cheaper rate.

However, a question mark still appears to linger over Freeview’s satellite service, with no agreement that would allow it to continue broadcasts beyond 2022 currently confirmed.

Sky announced it had finalised a conditional agreement it reached in 2018 to lease capacity on a new satellite that will be launched in 2023 by Singapore-owned telecommunications company Optus.

Prior to 2018, that hadn’t appeared a certain outcome, due to declining satellite subscriber numbers and the rapid uptake of alternative, streaming television services.

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Sky originally put the cost of the conditional contract at “in excess of $200 million” in 2018, indicating it provided a drop on its current costs.

But spokeswoman Sue Hamilton said Sky’s final deal gave it “overall lower costs on top of what we revealed [then]”.

The Optus 11 satellite will be more configurable that the D1 satellite (pictured above) that it is replacing, which could make it easier for Sky to either add or cut back on channels and upgrade some to 4K after its launch.

”It is even more advantageous,” she said.

The new Optus 11 satellite will be remotely configurable in space.

That means Sky should be able to upgrade at least some of its channels to higher-definition 4K or even 8K formats at any point over the life of its new contract with Optus, if it can justify the expense of the extra satellite capacity and of upgrading its set-top boxes.

Sky and Freeview’s satellite services are currently beamed to New Zealand from Optus’ D1 satellite, which was launched in 2006 and is now nearing the end of its forecast 15-year service life.

D1 has a back-up satellite, D3, which is expected to move out of stable orbit some time from 2025, meaning that from that date Sky and Freeview could be solely reliant on Optus 11, with no back-up if that failed.

Scott Bartlett, chief executive of state-owned transmission company Kordia, which leases satellite capacity for free-to-air broadcasters such as TVNZ and MediaWorks, had expected it would advance an agreement last year that would ensure the continuation of Freeview’s satellite service beyond 2022.

'We have flagged to all of our customers that this is the year when we want to get into a really solid dialogue about the future of satellite,” he said in February 2019.

“I think if we left it to 2020 it might be getting a bit too far out.'

But Kordia said in a statement on Friday that it was still working through an agreement with Optus and it didn’t have any developments to share at the moment.

It was not clear whether sub-leasing capacity from Sky might be an option.

“Kordia currently uses one of the transponders on D1, and our commitment to a new satellite means they will have comfort that this delivery mechanism remains available to them,” Sky spokeswoman Chris Major said.

“The revised deal provides us with sub-licence opportunities and we will consider options in due course,” she said.

Freeview chief executive Jason Foden said confirmation Sky would become the anchor tenant on Optus 11 was a positive development.

Even though Freeview was available in HD to about 86 per cent of households via radio towers and UHF aerials, the viewer split between its satellite and terrestrial transmissions was roughly equal, he said.

Foden did not believe a lack of back-up for Optus 11 should be of great concern, in the context of the broader shift to streaming television.

“I don’t think you need ‘belts and braces’ on satellite risk, as people move off it,” he said.