Free speech has had a “price” put on it by directors of Sky TV as the company moves down the track in its business-boosting NZ$3.4 billion merger with Vodafone NZ. Last week’s deal documentation from Sky for its shareholders reveals that not only will the costs of the merger be around NZ$13 million, but Sky directors have agreed to effectively gag themselves during the deal’s progress towards a shareholder meeting early next month.

Sky said it had agreed to pay Vodafone NZ$21.5 million if the merger did not go ahead “in certain limited circumstances”. And those “limited circumstances” include Vodafone being paid if a Sky director withdrew their support for the merger or spoke out publicly against it before Sky shareholders meet on July 6.

Now while “an independent source” told Fairfax’s NZ media that the “penalty clause was not unusual in such transactions”, it is the first time I have heard of one being reported in 40 years of covering finance. Usually there is a so-called “break clause” in deals where one or both parties in the merger/takeover agree to payments (penalties) if the deal doesn’t go ahead for certain reasons. But there is a further delicious issue raised by this payment provision from Sky and that is the question, do Sky directors trust each other? If they do, why was the payment provision necessary, or is there one or two directors on the Sky board uncomfortable at the deal and/or its current terms?