The company was founded by Craig Heatley in 1987 as Sky Media Limited. It was formed to investigate beaming sports programming into nightclubs and pubs using high performance 4-metre satellite dishes by Jarvis and an engineering associate Brian Green, but was redirected into pay television following successful bidding in 1990 for four groups of UHF frequencies in the Auckland, Hamilton and Tauranga regions. Initially operating only in the Auckland region, Sky contracted Broadcast Communications to provide the broadcast service and transmission from its Panorama Road studios, formerly owned by defunct broadcaster Northern Television. The first Sky subscriber was former Speaker of the New Zealand House of Representatives Jonathan Hunt, according to Helen Clark, former Prime Minister of New Zealand.
The concept of a pay television service was new to New Zealand and Sky had early problems. These included viewer acceptance of subscriber television. It faced difficulty in educating retailers and customers on the use of the original decoders. However, this problem was eased with the introduction of easier-to-use decoders that allowed greater viewer flexibility.
Sky originally launched in early 1990 as an analogue UHF service. Subscribers required UHF set top box and UHF aerial both of which were supplied by when joining Sky. The signal was sent with the picture scrambled, the decoder was used to unscramble the picture. The Sky Movies channel was the only channel broadcast in NICAM stereo, all other channels broadcast in mono. The original decoder didn't actually support stereo sound, if a subscriber wanted to watch Sky Movies in stereo the subscriber had to feed the audio from another source such as a NICAM stereo capable VCR.
The original channel lineup consisted of just three channels, Sky Movies (later renamed to HBO before reverting to its original name), Sky Sport and Sky News. Sky rapidly won long term rights from US sports network ESPN (which became a 1% shareholder) as well as CNN and HBO providing it with a supply of sports, news and movies for the three channels.
Sky News screened a mixture of CNN International and BBC news bulletins and a replay of the TV One 6 pm One Network News bulletin. The Sky News channel was later discontinued and became branded as a CNN channel.
In 1994, Sky launched two further channels, Discovery Channel and Orange, Orange later became known as Sky 1 and then The Box. Discovery Channel broadcast on a channel already used by Trackside. The Trackside service was available free to air to anyone who could receive the UHF signal without the need for a Sky decoder, Discovery Channel screened outside of racing hours and was only available to Sky subscribers.
Orange broadcast from 4 pm onwards each day with Juice TV screening outside of Orange's broadcast hours, Juice TV was available originally free to air. Cartoon Network shared the same channel as Orange from 1997 to 2000 screening between 6 am and 4 pm with Orange screening after 4 pm. In 2000, Cartoon Network was replaced with Nickelodeon.
Later, funding allowed Sky to extend its coverage throughout most of New Zealand: In 1991, the company expanded to Rotorua, Wellington and Christchurch. Then in 1994, the company expanded to Hawkes Bay, Manawatu, Southland and Otago, followed by the Wairarapa, Taupo, and Wanganui regions in 1995. Its final UHF expansion, in 1996, was to Taranaki, Whangarei, and eastern Bay of Plenty.
Following the launch of the digital satellite service in 1998, Sky began reducing services on the UHF platform. NICAM stereo was eventually removed from Sky Movies, the CNN channel was discontinued in 2004 with the UHF frequencies issued to Māori Television.
Sky switched off its analogue UHF TV service on 11 March 2010 at midnight.
Sky used a portion of the freed up UHF and radio spectrum to launch its joint venture, Igloo, in December 2012. The remaining unused spectrum was relinquished back to the Government and will be recycled to support new broadcasting ventures.
In April 1997, Sky introduced a nationwide analogue direct broadcasting via satellite (DBS) service over the Optus B1 satellite. This allowed it to offer more channels and interactive options, as well as nationwide coverage. It upgraded it to a digital service in December 1998.
While some channels on the UHF platform were shared with other channels, Sky Digital screened the same channels 24 hours a day. Orange (later known as Sky 1 and The Box) extended to screening 24 hours a day on Sky Digital but was only available to Sky UHF subscribers between 4 pm and midnight. Discovery Channel was available to Sky Digital subscribers 24 hours a day but UHF subscribers could only receive the channel outside of Trackside's broadcast hours.
Digital versions of free to air channels have always been available on Sky Digital meaning that some subscribers did not need to purchase any equipment to receive digital TV when New Zealand switched off its analogue service. While most free to air channels have been available on Sky Digital, TVNZ channels TVNZ 1 and TVNZ 2 did not become available until the end of 2001.
A SkyMail email service was featured for a time, but was later pulled due to lack of interest (including the wireless keyboards they had produced for it).
The unreliability of the aging Optus B1 satellite was highlighted when the DBS service went offline just before 7 p.m. NZST (8 a.m. London, 3 a.m. New York) on 30 March 2006. The interruption affected service to over 550,000 customers and caused many decoders to advise customers of "rain fade." Due to excessive volume of calls to the Sky toll-free help-desk, Sky posted update messages on their website advising customers that they were working with Optus to restore service by midnight. Sky credited customers with one day's subscription fees as compensation for the downtime at a cost to the company of NZ$1.5 million. Sky switched its DBS service to the Optus D1 satellite on 15 November 2006. It later expanded its transponder capacity on this satellite to allow for extra channels and HD broadcasts.
My Sky service
In December 2005, Sky released its own digital video recorder (DVR), which essentially was an upgraded set top box similar to Foxtel IQ in Australia or TiVo in the US. Called My Sky, it offered viewers the ability to pause live television, rewind television, record up to two channels at once straight to the set top box and watch the start of a recorded programme while still recording the end. It also gave viewers access to a revamped Guide and the new Planner, used to plan and access recordings at the touch of a button.
There was software in My Sky that after an hour of no signal from Sky then the decoder locks playback of pre-recorded programmes. This was discovered on 30 March 2006, after the ageing Optus B1 satellite was out of alignment for a 13-hour period and therefore unable to broadcast Sky to over 600,000 subscribers.
This generation of box was replaced by My Sky HDi when it launched on 1 July 2008. The boxes allow connection of to up to four satellites which can work with its four TV tuner cards in any combination. The device has a 320GB HDD. The quality of My Sky HDi is 576i via component and 720/1080i via HDMI.
A new feature was released exclusive to My Sky HDi on 6 July 2010 called Record Me. This feature allows subscribers to press the green button on programme advertisements to record that advertised programme.
In May 2009, Sky introduced copy protection on My Sky and My Sky HDi decoders limiting the ability to copy material from My Sky/My Sky HDi to DVD/HDD recorders and to PCs. Sky Box Office channels, including adult channels are copy protected so DVD/HDD recorders and PCs will not record from these channels. Other channels are not copy protected. Copy protection technology is not built into other decoders.
On 1 July 2011, a version of the same decoder with a 1TB hard drive was launched as My Sky+
Purchase of Prime Television
In November 2005, Sky announced it had purchased the free-to-air channel Prime TV for NZ$30 million. Sky uses Prime TV to promote its pay content and to show delayed sports coverage. New Zealand's Commerce Commission issued clearance for the purchase on 8 February 2006.
Purchase of Onsite Broadcasting
Sky purchased Onsite Broadcasting, now Outside Broadcasting (OSB), from Australia's Prime Media Group in July 2010. The sale price was $35 million but once liabilities were taken into account the net amount was $13.5 million. Since 1999, OSB has provided outside broadcast facilities for Sky Television's sporting coverage and continues to be the leading outside broadcast supplier in New Zealand as it is also contracted out by Sky to other broadcasters like TVNZ, TV3, Warner Brothers, Fox Sports, Channel 9, Ten Network, Channel 7 and BBC just to name a few.
OSB owns the following vehicles, based in Auckland, Wellington and Christchurch;
- HD1 and HD3: 14.3m semi-trailer production unit with expanding side, capable of holding 20+ cameras. They are supporter by tender vehicles.
- HD2: 14.3m semi-trailer production unit with the capability of holding up to 16+ cameras. It is supported by a tender vehicle with extra production facilities.
- HD4: 15m semi-trailer production unit with the capability of using 16+ cameras. It too is supported by a tender vehicle with additional production space.
- HD5: 12.5m rigid truck and can input 8+ cameras supported by a similar sized tender vehicle with additional production room.
- HD6: Small van which is capable of 6+ cameras. It is supported by a similar sized van for storage and linking
- OSB1 and OSB2: Original 13.5m semi-trailer production unit capable of 14+ cameras. They are supported by tender vehicles. One will be transformed into a support trailer for larger broadcasts.
- HD/SD Fly Away kits: Suitable for broadcasts overseas.
News Corp sale
In February 2013, News Corp announced it would be selling the 44 percent stake in Sky TV that it acquired via a merger with Independent Newspapers Ltd in 2005.
Replacement of legacy hardware
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From November 2015, Sky has started replacing the legacy standard digital decoders and 2005 My Sky decoders with a new decoder. The My Sky HDi and My Sky + box software will be upgraded to the same system software of these new boxes. The new Sky software has features such as internet capability, search functionality, favourite channels, and a series stack function. The new Sky box has built-in Wi-Fi, but a Sky Link device can be ordered for free by customers, in order to use a Wi-Fi connection on the older My Sky boxes. The new box has an ability to turn recording features and storage capacity on if the subscriber is a My Sky subscriber, so no additional box is required. This will allow Sky to cease broadcasting scrambled channels using the current H.262 video compression in favor of H.264, which means Sky will have roughly double the capacity on satellite for additional channels and Ultra H.265 HD broadcasts in the future. Free-to-air channels such as Prime, Edge TV and Bravo Plus 1 will have to remain in H.262 to be accessible to non-Sky subscribers such as Freeview viewers.
The software upgrade to MySky HDi contained many bugs such as lost recordings and features such as series link. This had led to many complaints from Sky customers (ref Sky NZ Facebook page). Sky have acknowledged issues with the screen fonts which will be changed in future upgrades, however have not commented on the wider issues with the software.
Proposed merger with Vodafone New Zealand
In June 2016, Sky TV and Vodafone New Zealand agreed to merge, with Sky TV purchasing 100% of Vodafone NZ operations for a cash payment of $1.25 billion NZD and issuing new shares to the Vodafone Group. Vodafone UK will get 51% stake of the company. However, the proposed merger was rejected by the Commerce Commission which saw a plunge in Sky TV's shares.
In late February 2018, Sky TV announced that it would be splitting its existing Sky Basic service into two new packages called Sky Starter and Sky Entertainment, giving new and existing customers the option of building bundles. The Sky Starter package would cost $24.91 monthly, replacing the earlier Sky Basic service which cost $49.91 monthly with extra charges for sports, movie, and other premier channels. The price reduction came in response to fierce competition from streaming services such as Netflix, Lightbox, and Amazon Prime Video, which had caused the loss of 38,000 satellite subscribers the previous year. Unlike its competitors, Sky TV was dependent on a linear broadcasting model and its exclusive rights to rugby union, rugby league, netball, and cricket content. While Sky had TV hoped that this change would attract new customers, the company's stock market shares dropped by 10% in response to investor concerns about future revenue, knocking NZ$100 million off its market value.
In early March 2018, it was reported that Sky TV CEO John Fellet was pursuing talks with Netflix and Amazon Prime to share content and services. Fellet hoped to mimic the UK-based television company Sky plc's success in negotiating a bundling package with Netflix.
On 26 March 2018 John Fellet announced his intention to step down from his position, after being CEO for 17 years. Fellet has been with the company since 1991, first as chief operating officer before taking on the chief executive role in January 2001.