Sky buys Three and ThreeNow to create New Zealand's most muscular media empire
Pay TV giant Sky has agreed to buy Discovery NZ in a deal which profoundly reshapes the commercial TV and streaming landscape in New Zealand, creating easily the biggest media company in the country by revenue, and potentially by audience too. Discovery NZ houses the second-most-watched free-to-air channel, Three, along with a popular ad-supported streaming service in ThreeNow. It also has eden, Rush and HGTV, more niche channels which play on Freeview and Sky, all joining Sky's huge range of pay-TV and streaming channels.
All changing hands for less than the cost of a month's Netflix. Sky paid just $1 for the assets, which come across debt free, with Sky assuming the ongoing commercial contracts of the business. The Commerce Commission was privately advised, and saw no issue – an unimaginable situation even a few years ago.
It's the second major media company to change hands at that symbolic value in recent years, after Stuff was sold for $1 in 2020. The price indicates that Discovery NZ's parent, WBD, simply wanted to exit the free-to-air business, which had been bought by Discovery from Mediaworks in 2020 for a price described at the time as 'more than a dollar'. Sources familiar with that deal peg it at US$20m, suggesting Sky has got a comparative bargain – or that Discovery overpaid.
For Sky, it's a major move into free-to-air TV and ad-supported streaming, at a time when the company has placed far more emphasis on advertising as part of its revenue mix than ever before (it scooped the Beacon Award for 'best sales team' just last week). While it has long had free-to-air TV through Sky Open (formerly Prime), Three is a much more powerful brand, with far larger audiences, home to smash hits like Married at First Sight and David Lomas Investigates.
It brings Sky into even more direct competition with TVNZ. Historically, despite being the two biggest companies in TV, they were well differentiated. TVNZ was purely ad-supported, big on news and mass entertainment, a minor player in sports. Sky was largely a subscription business, mostly paywalled and big on sports with only a very minor presence in local news.
That changes from August 1, with TVNZ facing down the largest and most formidable direct competitor in its history. Sky has over a million paying customers across pay TV and streaming products like Sky Sport Now and Neon. It now has a major free-to-air presence to both function as a funnel into its pay products, and extend the reach of its advertising.
While Sky Open has functioned as a shop window into Sky for some time, Three and ThreeNow will be a far more powerful version of that proposition, with the ability to take a mix of Sky's sports and entertainment products and attack TVNZ on quality and content mix. That's why longtime former Sky CEO John Fellet sought to buy Three a decade ago.
Three can now put NRL, Super Rugby and cricket head-to-head with TVNZ's prime time line-up, and given that live sports is one of the last big draws for linear TV audiences, it represents a very powerful tool to grow Three's audience. For NZ on Air too, the consolidated business is a much more interesting and powerful way of reaching New Zealanders.
It's not uncomplicated for Sky. The declining sale price tells you just how difficult pureplay ad-supported media models are now. And it adds yet more brands and platforms to what is already a very complicated mix. Sky now operates two different boxes, a puck, Sky Go, Sky Sport Now, Neon and ThreeNow from a technology standpoint. Netflix just has Netflix. Rationalising that will be a priority for Sky CEO Sophie Moloney and her team.
There remain a number of other unresolved questions. Sky and NZ Rugby have still not announced a renewal of their long-term broadcast deal, though industry sources suggest it is signed, with only haggling over free-to-air screening remaining. Three and ThreeNow loom as potential solutions to some of NZ Rugby's audience accessibility issues, even if it reduces by one the plausible buyers of its rights. Similarly, Three currently contracts Stuff to produce its 6pm news bulletin. That has had challenging ratings for much of the year, but remains an important part of a well-rounded product offering and starts the channel's evening programming.
Aaron Ibbotson, a senior analyst at Forsyth Barr, is a fan of the transaction for Sky. He says 'the deal makes a lot of sense. They're not paying anything for it, and there would be natural synergies across broadcasting and content.' He contrasts it with a failed attempted acquisition of Mediaworks in 2022, saying that the Discovery NZ deal is 'closer to what Sky knows well, its core business'. Sky's shares are up 11c in early trading today.
It's the latest big change to a media ownership environment which is suddenly very fluid. Earlier this year, Jim Grenon launched a hostile board takeover attempt after buying 10% of NZME, which ultimately rolled the company's chair and reshaped its governance. Then QMS completed a takeover of outdoor and radio giant Mediaworks, Stuff sold 50% of its digital arm to auction site TradeMe, while Are Media, New Zealand's biggest magazine publisher, went up for sale.
New Zealand's commercial media has long been considered too fragmented, given the size of the market. It now has effectively two major TV operators, two radio networks and two scale digital news providers. All staff are being ported across, with Three's leader Juliet Peterson now reporting into Sky CEO Moloney, but over time there will be efficiency gains from accounting to sales to programming.
Yes, efficiency gains is code for job losses, of which the media has endured too many in recent years. But the real battle is not with cross-town rivals, it's with unregulated tech giants. The question is, will we even have local news and entertainment products at all? For an embattled local media, which endured a cataclysmic 2024, this deal creates a powerful and diversified new media giant – one which poses challenges for TVNZ, but should result in a more robust local media landscape as a result.
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SO INCREDIBLY PROUD to share 2 HUGE updates: 1) The first baby was born using @OrchidInc technology — and he's super cute 🥰 2) I tested my own embryos with Orchid — we got SO much information & l feel confident now 🚀 This is the future of how babies will be born! — Noor Siddiqui (@noor_siddiqui_) April 22, 2024 'Sex is for fun, and embryo screening is for babies,' Siddiqui said in a video she shared on X. Soon, she suggests, it will be unremarkable for hopeful couples to choose their embryos by spreadsheet, as her current clients do, weighing, say, a propensity for heart disease that is 1.7 times the risk of the general population against a 2.7 score for schizophrenia. Zilis, the mother of four of Musk's at least 14 children, has been an Orchid client, according to two people close to the company, speaking on the condition of anonymity to describe private conversations. They said at least one of Musk and Zilis' offspring is an Orchid baby. 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Photo / The Washington Post, Camille Cohen This growing movement, which is far from a monolith and has fierce debates within it, is giving a huge boost to a fertility industry already experiencing heightened demand. In February, the Trump White House issued an executive order pushing for expanded access to IVF. And while the loudest voices arguing that people should have more babies are on the right, there's broader political support for increasing access to fertility treatments: a new California law, set to go into effect next July, mandates that all large insurers cover IVF and other fertility services. In Silicon Valley, innovations that could make these services more affordable and accessible are coming, some of them backed by people concerned with population decline. Thiel has funded the egg-freezing robotics start-up TMRW, launched a US$200 million fund to bring fertility services to Asia and bankrolled a family planning app connected to a right-wing magazine. The investor, who is gay, has recently become a father to four children through IVF and surrogacy, according to people familiar with his family choices, who spoke on the condition of anonymity to describe personal relationships. Thiel declined, through a spokesperson, to comment. Siddiqui, who has already created 16 of her own embryos and plans to do more IVF rounds, says her company has an important role to play in advancing people's ability to have more children. She told the Post that being able to have a healthy child should be considered a basic human right, and she has hosted a podcast episode on Fighting the Fertility Crisis, a discussion about the causes of population decline. The extensive genetic screening Orchid provides, she said, can help more people have babies – by improving the IVF success rate and allaying parents' fears about future babies' health risks. 'I think everyone who wants to have a baby should be able to have one,' she said, adding that IVF and genetic testing should be made available and affordable for everyone. But Orchid doesn't just help people have children; it helps them shape their future children in dramatically new ways. And that has sparked controversy. Some critics see its polygenic scoring as veering towards a contemporary form of eugenics, enabling a world in which the rich leap even further ahead with super intelligence and superior health starting from birth. Orchid founder Noor Siddiqui says "everyone who wants to have a baby should be able to have one". Photo / Washington Post Musk, who has funded a population research institute at the University of Texas, wants to produce offspring with genes for superior intelligence, Zilis told one of Musk's biographers. The two people close to the company said Siddiqui has provided intelligence screenings in the past to couples on an ad hoc basis – including, one of them said, to Zilis and Musk. Orchid declined to comment on that and vociferously rejected any association with eugenics. Siddiqui said Orchid helps prospective parents who would otherwise fear having children because of potential genetic disorders. IVF was controversial when it began in the 1970s, she said; protesters showed up with 'pitchforks' at the offices of the scientists pioneering the breakthrough and tried 'to put them in jail' for playing God. If they had prevailed, she added, '12 million people wouldn't exist today'. Orchid screens for intellectual disability but does not provide intelligence predictions, Siddiqui said. A growing number of start-ups do, however. One of them is the Thiel-funded start-up Nucleus; another is Heliospect Genomics, the research arm of Herasight, an executive of which is a bioethicist who advocates 'liberal eugenics' – casting that term as applying not to governmental efforts to weed out undesirable births but instead to parents' use of emerging biological tools to enhance their children's prospects. Until last month, Orchid's website featured advice from that bioethicist, Jonathan Anomaly, on overcoming scepticism about its service. 'We intentionally alter our environments, breed crops so that they're more nutritious and easier to harvest, and we've invented lightning rods and vaccines to make us less likely to die from natural disasters,' he wrote. 'I find the playing God objection a bit tiresome.' Orchid removed the page after the Post asked about it. Anomaly said he now prefers the term 'genetic enhancement' to 'eugenics'. Delian Asparouhov, a partner at Thiel's Founders Fund who has invested in Nucleus, made a similar argument. 'When you choose your married partner, you're using a form of eugenics,' he said. 'When your kids are older, you invest in tutors and great schools. What's the harm in using a tool that allows you to amplify that type of effect?' 'Russian roulette' or a jet to the future? In the United States, there are virtually no restrictions on the types of genetic predictions companies can offer, and no external vetting of their proprietary scoring methods. Orchid and a handful of other start-ups offering polygenic risk scores are barrelling forward in this largely unregulated milieu. The first Orchid baby was born in late 2023, and Orchid is now in 100 IVF clinics in the US – more than twice as many as a year ago. (The company won't say how many babies have been born using its service.) Nucleus launched its screenings, which test embryos for more than 900 heritable traits and conditions, last month. Yet several genetic scientists told the Post they doubt Orchid's core claim: that it can accurately sequence an entire human genome from just five cells collected from an early-stage embryo, enabling it to see many more single- and multiple-gene-derived disorders than other methods have. Experts have struggled to extract accurate genetic information from small embryonic samples, said Svetlana Yatsenko, a Stanford University pathology professor who specialises in clinical and research genetics. Genetic tests that use saliva or blood samples typically collect hundreds of thousands of cells. For its vastly smaller samples, Orchid uses a process called amplification, which creates copies of the DNA retrieved from the embryo. That process, Yatsenko said, can introduce major inaccuracies. 'You're making many, many mistakes in the amplification,' she said, rendering it problematic to declare any embryo free of a particular disease, or positive for one. 'It's basically Russian roulette.' George Church, a genomic sequencing pioneer at Harvard University and an Orchid investor, harbours no such doubts. Questioning the advancement that enables Orchid to sequence the full genome from such a small sample – enabling long-term health predictions and near-term defect detections in an embryo – is 'like asking how much faster is a jet than walking,' Church said. Relying on a small number of cells is not the technology's only shortcoming, other experts said. Numerous fertility doctors and scientists also told the Post they have serious reservations about screening embryos through polygenic risk scoring, the technique that allows Orchid and other companies to predict future disease by tying clusters of hundreds or even thousands of genes to disease outcomes and in some cases to other traits, such as intelligence and height. The vast majority of diseases that afflict humans are associated with many different genes rather than a single gene. These algorithmic scoring methods are increasingly accepted by scientific and medical experts because they have shown promise in predicting the occurrence in a general population of a growing number of common ailments, including coronary artery disease, type 2 diabetes, inflammatory bowel disease and breast cancer. Researchers and clinicians hope that such complex genetic predictions will come to significantly enhance the quality of medical care. But the genetic code reflects only propensities: much is still unknown about how constellations of genes and gene variants interact with an individual's environment and with one another to contribute to the likelihood of any individual getting a disease in life. And for traits such as intelligence, polygenic scoring has almost negligible predictive capacity – just a handful of IQ points. Critics say such scoring could compel couples who have struggled with fertility issues to discard perfectly good and hard-won embryos based on inaccurate or incomplete information. A 2024 paper raised concerns that the scores could encourage couples to unnecessarily incur the cost and physical burden of additional rounds of IVF. Or parents might select against an unwanted trait, such as schizophrenia, without understanding how they may be screening out desired traits associated with the same genes, such as creativity. 'Maybe we don't want to screen those people out of our society,' said Lior Pachter, a computational biologist specialising in genomics at the California Institute of Technology. Embryos are tested for viability in IVF labs. Photo / Getty Images In response to questions from The Post, an Orchid spokeswoman, Tara Harandi-Zadeh, said the company explicitly counsels patients not to throw away embryos. Company executives also downplayed the value of Orchid's polygenic scores, which one described in an interview as merely an 'add-on' benefit of the full-genome sequencing the company provides. The primary benefit of its service, she said, is the ability to detect many more single-gene-derived diseases and non-hereditary mutations than a standard genetic test conducted in an IVF clinic. 'Hundreds of serious monogenic diseases – each with well-established genetic causes – can now be detected before implantation,' Harandi-Zadeh said in a statement. 'These aren't vague risks or statistical associations; they're clear, causal mutations that lead to profound outcomes: seizures, organ failure, inability to walk or speak, early death. These are missed without comprehensive whole genome embryo screening.' Orchid's marketing materials and Siddiqui's own descriptions have repeatedly showcased polygenic disease screening, however. 'The parents and their physician get much more information' from polygenic scoring, Siddiqui said in a 2023 video. 'They get information about neurodevelopmental disorders, birth defects, pediatric hereditary cancers, complex conditions, meaning conditions where it's not just a single gene, but dozens, hundreds, to millions of genes that contribute risk.' Three-month-old Astra Meridian plays at home with her parents, Julie Kang and Roshan George, who used Orchid for a full genome screening of 12 embryos and selected one that didn't have a hearing-loss gene they both carried. Photo / The Washington Post, Camille Cohen The American College of Medical Genetics and Genomics calls the benefits of screening embryos for polygenic risks 'unproven' and warns that such tests 'should not be offered' by clinicians. A pioneer of polygenic risk scores, Harvard epidemiology professor Peter Kraft, has criticised Orchid, saying on X that 'the science doesn't add up' and that 'waving a magic wand and changing some of these variants at birth may not do anything at all'. Still, many of those same experts say the scientific evidence supporting the validity of polygenic scoring methods is only getting better and already making its way into clinical use for adults. Consumer attitudes are liable to change, too. Asparouhov, the investor, said he was still critical of embryo selection based on polygenic scores. 'Right now it's a false choice,' he said. 'But in the future, it's the trust fund.' 'A license to do things' The availability and power of consumer genetic tests have exploded in the past six to 10 years, powered by far cheaper human genome sequencing and large public and private biobanks that store genetic data from hundreds of thousands of volunteers. Researchers have used that data to explore connections between genes and population-wide disease outcomes, in what are known as genome-wide association studies, or GWAS. An influential 2018 paper in the peer-reviewed journal Nature Genetics showed that groups of genes could be analysed to identify people at significantly increased risk for five common ailments, including coronary artery disease, type 2 diabetes and breast cancer. That paper and others opened up the possibility for clinicians to give people specific medical advice and treatments based on their genetic propensity. Siddiqui founded Orchid the following year. She had moved to Silicon Valley from Northern Virginia after winning, in 2012, a $100,000 grant from Thiel for aspiring entrepreneurs willing to ditch college to pursue a business idea. Forgoing a university education was anathema to her Pakistani immigrant parents, she has said, so she applied in secret as a high school senior. Siddiqui's parents eventually came around, and she credits her mother with being the impetus for Orchid. When Siddiqui was a child, her mother developed retinitis pigmentosa, an eye disease caused by a rare genetic mutation. Siddiqui became acutely aware that some people were 'genetically privileged' – while others were not, like her mum, who was functionally blind. 'For people who haven't had that type of tragedy hit them or their family, it's really hard for them to relate,' she said. In a later stint at Stanford, where she completed degrees in computer science, Siddiqui became fascinated by the way data science was transforming biology, creating new potential applications for reproduction. She also became steeped in a close-knit milieu of self-described builders who looked up to Thiel. Her husband is a cybersecurity entrepreneur she met while a Thiel fellow; a friend, Laura Deming, who was in Siddiqui's Thiel Fellowship class, has been working on age-reversing technologies since she was a teenager. One of Siddiqui's early investors, billionaire Brian Armstrong, the right-leaning CEO of the cryptocurrency exchange Coinbase, said he invested after seeing a tweet about a class she was teaching at Stanford, called 'Frontiers of Reproductive Technology'. He has tweeted that preimplantation genetic testing is part of a 'Gattaca stack' – a reference to a 1997 dystopian science fiction film – of emerging innovations that will 'accelerate civilisational progress'. Had she not come to Silicon Valley at an early age, Siddiqui said, she would never have had the confidence to start a company. 'Everyone here took me incredibly seriously as a 17-, 18-year-old, working on medical start-ups,' she said in an interview next to San Francisco's Ferry Building. 'It's just a place where everyone has a licence to do things.' Noor Siddiqui at 18 in her home in Clifton, Virginia, in 2012, after she won a Thiel Fellowship enabling her to pursue a project of her own design before going to college. Photo / The Washington Post, Ricky Carioti Securing early funding from Armstrong, ethereum founder Vitalik Buterin, bitcoin and genetics entrepreneur Balaji Srinivasan, 23&me founder Anne Wojcicki, and others, Siddiqui got to work combing through scientific literature to build the company's proprietary polygenic scoring methods. In 2022, Orchid had what it describes as its big breakthrough: an innovation that enabled it to sequence all 3 billion base pairs of the human genome from as few as five embryonic cells. But the paper laying out that breakthrough, published last year in the peer-reviewed journal F&S Reports, is fundamentally flawed, according to Stanford's Yatsenko and Aleks Rajkovic, chief genomics officer at the University of California at San Francisco Health Center for Clinical Genetics and Genomics. It excluded results that didn't fit its thesis, Yatsenko said, and both scientists said that by using Orchid's own lab to check those results, its authors didn't adhere to ideal scientific practice. Orchid said that the paper's findings had been verified by independent labs and that there were 'zero discrepancies' in the results. Todd Lencz, the leader of a federally funded research project examining polygenic embryo screening, said the science isn't clear enough for use in a clinic. Subtle differences among different companies' algorithms 'can produce strikingly different results in clinical contexts,' said Lencz, a professor at Hofstra University's Zucker School of Medicine. 'There's no gold-standard consensus about which method is best.' Orchid countered that slight differences in algorithms' results are no argument for preventing people from benefiting from the best scientific knowledge available. Another big issue facing Orchid and other start-ups is that polygenic scores can be up to half as accurate, according to some researchers, for some people with non-European ancestry. The primary pools of genetic data available to researchers come from European and American sources, especially the UK Biobank, a large database in the United Kingdom that includes the genetic data of a half-million people. Siddiqui told The Post that Orchid is well aware of the potential for bias, noting that she is South Asian and her husband has Middle Eastern ancestry. She said the company uses standard statistical methods to correct for limitations in the scores. In some circumstances, she said, Orchid does not offer any score. The data used to create risk scores draws on the genetics of people who are now adults and often elderly, and it's unclear how much the risks faced by people now in their 70s apply to babies being born today, said Patrick Turley, a statistical-genetics researcher at the University of Southern California. Environmental factors that affect the genes of present-day embryos in-vitro, such as microplastics and endocrine-disrupting chemicals, are different from environmental factors many years ago, he added. And lifestyle and behaviour, which also impact genes and life outcomes, are different today than for generations past. 'It's hard to make projections about how well [polygenic scores] are going to predict in the future when the world's a different place,' Turley said, while emphasising that genetic embryo selection could benefit certain couples, such as those who are carriers of rare diseases. Orchid said research has shown that genetic predispositions are 'remarkably stable' across decades. 'Genetic signal doesn't vanish just because the world changes,' spokeswoman Harandi-Zadeh said. Pachter, the Caltech computational biologist, has called Orchid's offerings 'amoral nonsense' and said conveying genetic information in numerical scores gives a certain 'class of people' the illusion of more control than they really have, and validates the feeling that 'one's own genome must be special'. Orchid rejected Pachter's criticism, too. 'It's easy to moralise from an ivory tower when your child isn't the one who might be born with a fatal disease,' Harandi-Zadeh said. 'This isn't about 'some illusion of control.' It's about giving families the ability to prevent real suffering based on the most accurate information modern science can provide.' Seeking 'peace of mind' Roshan George, a start-up executive in San Francisco, said that when he and his wife, Julie Kang, used Orchid last year, the company's genetic counsellors gave detailed explanations about the probabilities of different predictions, emphasising that 'nothing is 100 percent certain'. The couple sought out Orchid after learning, during a standard parental genetic screening process at their IVF clinic, that both were carriers of a rare genetic mutation that causes irreversible hearing loss soon after the child is born. Julie Kang and Roshan George with their 3-month-old baby, Astra Meridian, in their home in San Francisco in late May. Photo / The Washington Post, Camille Cohen The couple's main concern was whether they were passing the hearing loss variant on to their embryo. Though they probably could have found out by screening the embryos at an IVF clinic through standard processes, which amplify a snippet of the genome, George sought out full genome screening for 'a more complete picture' and 'peace of mind,' he said. George and Kang produced 12 embryos and used Orchid to screen all of them – a cost of $30,000 on top of IVF. Six were viable. Two had the hearing loss gene variant. Another two were carriers, which meant they could pass the gene on to their children but wouldn't be affected themselves. And two, called embryos JK3 and 6-JK in Orchid's report, were unaffected. The couple pored over their spreadsheets, debating which of the two to select. One embryo had a 1.5% lifetime risk of bipolar disorder, about half that of the general population. But its type 2 diabetes risk – 29% – was slightly above average, about 1.2 times that of a typical person. Another had a slightly higher risk of obesity. Given his and Kang's ethnicities – South and East Asian, respectively – George took the predictions with 'a grain of salt'. After weighing all the other factors, the polygenic scoring became 'the tiebreaker,' George said. Kang gave birth in March; so far, their daughter, Astra Meridian, has perfect hearing. Julie Kang and Roshan George play with their baby in their home in San Francisco. Photo / The Washington Post, Camille Cohen The family's experience is likely to be a window into the future, scientists said, in which an abundance of data offers families improved odds for healthy children and fraught reproductive choices. If families seek that information, the medical industry shouldn't be 'paternalistic' and deny them, UCSF's Rajkovic said, but companies have to be careful not to promise more certainty than science can deliver. Orchid's offerings are 'not ready for prime time,' according to Rajkovic. But the premise the company is pursuing – better odds for healthy babies – is 'commendable in terms of pushing the barriers,' he said. 'Because genetic disease can be devastating.' Nitasha Tiku contributed to this report.
