Mediaworks gets a $34 million government bail-out. TVNZ blows $79 million on two non-commercial digital channels. And successive governments drop the ball on free-to-air public service television. There has to be a better way of broadcasting

Review all the horse trading between the successive governments and the television networks over the last eight years, and you have to conclude that free-to-air, advertiser driven television networks cannot deliver on the taxpayers’ investment to see more New Zealand content on TV.

The cracks started showing in 2003 when Labour broadcasting minister Steve Maharey announced that TVNZ would be given a public service charter and $12 million dollars a year to fund local productions that would meet the diverse needs of all New Zealanders – not just the impulse-buying consumers that advertisers want to reach.

The money made little or no visible difference to the diversity, quality, or quantity of programme content on TVNZ’s networks – but it certainly diminished the influence of NZ On Air, the government agency that promotes public service television on the basis of a contest for local content funding among all the free-to-air TV network operators. Labour’s charter funding was simply cash in the till for TVNZ, an opportunity lost to its foreign-owned rivals operating TV3 and Prime, and a black-eye for NZ On Air.

Subscriber-funded SKY was never in the contest for NZ On Air funding because viewers have to pay a fee to see its programmes. NZ On Air reasoned that free-to-air networks are accessible to a wider audience – so that is where the public funding for New Zealand TV programme content goes.

SKY had a sharper vision of its future. It neutralized any advantage the free-to-air networks might have derived from their exclusive ability to tap taxpayers for about $84 million a year to support their local content production by carrying their channels at no cost on its system. It climbed into satellite and digital television broadcasting faster than its free-to-air rivals, and shrewdly concentrated on building its subscriber base by offering everything the free-to-air networks transmitted, plus a combination of popular movies and sports content that New Zealanders were prepared to pay to view. Its dominance in subscriber-funded television broadcasting and its hold on live major sports coverage is now virtually unassailable, short of a regulatory change.

SKY’s next step was to pounce on the ailing free-to-air Prime network in 2005. The purchase offered two benefits. Prime could be used as a safety valve to manage public pressure for free-to-air access to major national and international sports coverage – and SKY could start tapping NZ On Air to provide taxpayers’ funds for local content that could be simulcast on its own free-to-air network and its subscription service. The other free-to-air broadcasters challenged SKY’s move into their domain at the Commerce Commission – and the Commission kicked their case out of court.

Two years later, the Labour government backed the development of the digital Freeview satellite and terrestrial transmission system for free-to-air broadcasters. It committed $79 million over six years to help TVNZ provide two non-commercial digital channel in an attempt stimulate a switch by free-to-air viewers to the new digital platform, and reclaim sections of the spectrum used for analogue TV for sale to other telecomms users.

Within days of the Freeview announcement, the Australian equity fund managers Ironbridge launched a successful bid to acquire the Canadian [Canwest] stake in Mediaworks and offered a premium price to other Mediaworks investors for their shares in the business. It was a heavily leveraged buy that would soon need recapitalization.

The 2008 election ushered in a change of government and a change of direction in broadcasting policy. National had been promising to put an end to the TVNZ charter. From here on, the story starts taking some bizarre twists and turns.

First, TVNZ and SKY cut a deal that saw its two taxpayer-funded non-commercial channels on Freeview simulcast on the SKY platforms, eliminating any competitive advantage that free-to-air broadcasters' digital system might have derived from exclusive provision of TVNZ6 and TVNZ7.

Just over a week later, new broadcasting minister Johnathan Coleman and communications minister Steven Joyce delivered another gift to SKY. They wrapped up a broadcasting regulatory review – part of an investigation of potential competition issues in the television broadcasting sector initiated by Labour. Another potential threat to SKY’s growing digital TV dominance was vaporized instantly.

Later the same month, Coleman announced the addition of $15 million to NZ On Air’s contestable pool of funds for the production of premium New Zealand content on the nation’s free-to-air TV networks. His new Platinum Fund was simply a quid-pro-quo for the removal of charter funding from TVNZ. Two years later, it is still an open question if the Platinum Fund has made any more impact on the quality, quantity or diversity of programme content than the charter funding it replaced.

While this was going on, SKY was quietly screwing a discount price for Prime’s distribution on the Freeview satellite and terrestrial transmission system, and Mediaworks was facing the grim reality of finding $43 million by October 2010 to renew its radio networks’ spectrum licences for the next 20 years.

Mediaworks revved up the commercial radio industry to lobby communications minister Joyce to give them a break in hard times. In October 2009, Joyce gave the industry the relief that Ironbridge- Mediaworks wanted: an interest-bearing five year time payment plan for spectrum licences instead of the original up-front, lump sum payment previously agreed.

Within two months of the announcement, Ironbridge was able to restructure its balance sheet, reduce its senior bank debt to a mere $387 million and trim its annual interest bill by $19 million. The myth that the switch to time payment was a radio industry lifesaver has been exploded by documentation obtained under the Official Information Act. TVNZ reported that of the $43.6 million worth of spectrum licence fees switched to time payment, $43.3 million went on providing relief for Mediaworks’ radio stations. That makes Mediaworks the lame duck that picked up the golden egg from the government goose.

Meantime, TVNZ and SKY were expanding their partnership and the menu for SKY subscribers. In March last year, TVNZ provided SKY with an exclusive Heartland channel – featuring repeat screenings from its archive of taxpayer-supported local dramas, comedies, and reality shows.

Then TVNZ convinced Dr Coleman that it should convert non-commercial TVNZ6 into the recently-launched, commercial , youth focused U channel – a move to capture an audience that Mediaworks had abandoned by dropping its youth-focused C4 music-based format and replacing it with FOUR, a more direct, mainstream competitor for TVNZ 2.

The final nail in the coffin of non-commercial public service television broadcasting at TVNZ was its decision to drop TVNZ7 as soon as the Government funding commitment runs out next year. That sound you hear is $79 million of your money flushing down the drain in another unfortunate taxpayer-funded broadcasting experiment.

So, with the millions of dollars of your money making little visible difference to the diet offered by the advertiser-dependent free-to-air television networks, you have to ask: is there a better way?

The answer is yes – and the model is the Maori Television Service. MTS is largely taxpayer-funded [about 90% of its income]. It delivers two networks on an operating budget of $36.5 million a year – less than half the current NZ On Air spends on funding public service television content across the major free-to-air networks.

More than 50 percent of MTS prime time content is in Maori – that’s a much higher ratio of local content than we see in prime time on the major networks. It grew its audience by nine percent last year, and it led the charge to provide free-to-air coverage of the Rugby World Cup.

Now we know where to go if we want to find Maori content on television. It would be great to know where to go if we want to find more general New Zealand content on television. The solution is staring us in the face – and it would actually cost less than propping up the current major players.

Declaration of interest: David Beatson is a former chair of NZ On Air and hosts a weekly current affairs programme on Stratos / Triangle television channels.

Comments (23)

by Hesiod on April 20, 2011
Hesiod

this article starts with the mediaworks bailout but forgets to mention the constant shrill politicing that went on for months before the last election. they went on and on slagging the government and Helen Clark and there was no alternative voice.

TVNZ was the same. Dallow and co shilled for the tories flat out and where was the alternative?

nowhere. this government is not going to do anythig while it has all these hair and teeth jobs and the screamers on zb skwawkbak in their corner screaming like fairground barkers 24/7. New Zealand is already infantilised and this gang of idiotes supposedly leading the debate are just another gang of manques looking for the glad hand.

so David Beatson get it right.

can the beltway crap and get down to tin tacks for crying out loud.

by David Beatson on April 20, 2011
David Beatson

Great rave. But what do you want to happen? I'm clear. The old way of getting a substantial and diverse range of New Zealand content broadcast on television isn't working. Both Labour and National have made mistakes. Come up with your solutions.

by Draco T Bastard on April 20, 2011
Draco T Bastard

Well, we did have a greater and more diverse range of NZ content on TV - back before we dergulated it and made it all work for profit.

by David Beatson on April 20, 2011
David Beatson

So, should we re-regulate and try and jam the genie back in the bottle? Or focus the tax-payer funded effort and stop fragmented it all over the fragmenting electronic media landscape?

 

by David Beatson on April 20, 2011
David Beatson

I hope you know what I'm trying to say ... that is "stop fragmenting it all over the expanding electronic landscape..." 

 

by Draco T Bastard on April 20, 2011
Draco T Bastard

All three

Reregulate so that the airwaves can't become dominated by a single company and encourage more NZ TV

Refocus government funding towards making NZ TV

Fully government funded channels that are there solely as a public service with good quality news, documentaries and political analysis so that we can have a more informed citizenry.

by Matthew Percival on April 20, 2011
Matthew Percival

Fully government funded channels that are there solely as a public service with good quality news, documentaries and political analysis so that we can have a more informed citizenry

Not much point if nobody is watching and that's the problem. These channels aren't viable because people aren't watching. So having fully funded govt channels is pointless because people aren't watching. They aren't going to be any more informed than they are now.

All you're doing is flushing $$$ down the dunny.

by Ethan Tucker on April 20, 2011
Ethan Tucker

Not much point if nobody is watching and that's the problem. These channels aren't viable because people aren't watching.

Is 'nobody is watching' a synonym for 'I'm not watching'?  Or shorthand for 'no-one is watching, apart from the ones who are'?  Because TVNZ7 and the former TVNZ6 have a loyal following.  It's hardly valid to talk of viability by comparing publicly-funded channels with commercial entities whose only role is to generate advertising revenue.  It's not the purpose of a publicly-funded broadcaster to compete with commercial broadcasters; rather, it is to fill the large cultural gaps left by the commercial broadcasters.  If you think New Zealand culture is worth putting on screen, then a dedicated public service broadcast channel - at a comparatively low price, which is what the digital channels offer - is the only way to go.

 

by on April 20, 2011
Anonymous

"They aren't going to be any more informed than they are now."

They certainly wont if they are never given the opportunity.

Having the option to be well informed is not a 'nice to have' for a democracy, it is a must.

I'd rather see our society spend money and hope rather than save money and succumb to your cynicism.

by Deborah Coddington on April 20, 2011
Deborah Coddington

NZ On Air is the child of the Broadcasting Licence. The Broadcasting Licence is, in a way, an offshoot of the days when the news had to go through the Prime Minister's office. So answer me this: We don't angst over state ownership or control of newspapers or current affairs magazines such as The Listener (which once was the only magazine permitted by state regulation to publish broadcasting programmes), and neither should we. So why do we angst over state ownership and control of television?

Prior to the first screening of television in NZ we never "saw ourselves on television" and the sky didn't fall. And before you all jump on me, I'm not offering an opinion one way or another here, on what should happen to TVNZ, TV7, or Maori Television, but just trying to peel back some layers.

Some say regulate to the "good old days"? Close to Home? Relda Familton and Town and Around? Goodnight Kiwi? NZ TV doesn't automatically equate with television which  people want to watch, but then again, the programmers at TVNZ have a reputation for putting good programmes on at the dead of night, or 9am on Sunday (eg Q & A) when no one rational watches TV. So they don't rate.

My view is the problem with TVNZ is the managers, not the people at the coalface. It's run by people who don't care about investigative journalism. It's run by "never-mind-the-quality-just-feel-the-width" mentality. They put quacking airheads out to do stories, and they pay US$1 million a year to USA gurus for advice on how to do inane live crosses (I know, because I spent 12 months fighting TVNZ using the OIA with the help of the Chief Ombudsman to get the information on Frank Magid Associates for the contracts).

What would I do? Sell TVNZ. It's stuffed. Roll TV7 and Maori TV, and Radio New Zealand into one, and make that public broadcasting. The biggest risk though, is that when bloody politicians get their hands on public broadcasting they stuff it up. Maori TV is doing a fine job now because it's left alone. The minute it becomes the focus of a minister who sees it as his or her toy, he or she will play with it until it's broken.

by stuart munro on April 21, 2011
stuart munro

Maybe the format for public education should shift off TV, and go online. It would be a great deal cheaper, and, run properly, more accessible because you wouldn't be stuck with fixed viewing slots like Deborah's 9am on Sunday.

Mind, the advertising pariahs would seek to invade and wreck the new format too. Public education and investigative reporting are contrary to the perceived interests of NZ inc., they'd work hard to make it fail.

by Mr Magoo on April 21, 2011
Mr Magoo

What would I do? Sell TVNZ. It's stuffed. Roll TV7 and Maori TV, and Radio New Zealand into one, and make that public broadcasting. The biggest risk though, is that when bloody politicians get their hands on public broadcasting they stuff it up. Maori TV is doing a fine job now because it's left alone. The minute it becomes the focus of a minister who sees it as his or her toy, he or she will play with it until it's broken.

Holy crap I actually agree with something Deborah said?? I think I need to lie down for a bit because I must be ill....

by David Beatson on April 21, 2011
David Beatson

Please, no ... Not back to the future. Not another NZBC. It would ruin Maori TV and Radio NZ. It needs to be a very lean, totally-focused TV operation - capable of broadcasting via satellite and terrestrial transmission systems and narrowcasting on the internet. It also needs to capture all the advantages that more flexible, lower-cost technology has to offer, and spend on programmes and production not buildings and bureaucracy.

by Deborah Coddington on April 21, 2011
Deborah Coddington

Mr Magoo, you must stop playing the man (or in this case, woman) and start playing the ball. It's really quite an enjoyable game when you get the hang of it.

by on April 21, 2011
Anonymous

"It needs to be a very lean, totally-focused TV operation - capable of broadcasting via satellite and terrestrial transmission systems and narrowcasting on the internet. It also needs to capture all the advantages that more flexible, lower-cost technology has to offer, and spend on programmes and production not buildings and bureaucracy."

Something like Stratos TV then.

by DeepRed on April 21, 2011
DeepRed

Matt Percival: So that means News of the World is the model to follow, then?

by Draco T Bastard on April 21, 2011
Draco T Bastard

<blockquote>Not much point if nobody is watching and that's the problem.</blockquote>

Fully government funded means that they're there to supply a service which is the distribution of needed information that is not promulgated through commercial TV. People can watch or not - as they choose. They can't choose to watch it though if it's not there.

Then there's the simple fact that a lot of people may not be watching the digital channels yet because they haven't bought a decoder yet. You know, actually doing rational economics and not spending beyond their means.

 

<blockquote>Maybe the format for public education should shift off TV, and go online. It would be a great deal cheaper,</blockquote>

Actually, it wouldn't be. A TV broadcast uses a lot less bandwidth than a video streaming out to multiple PCs.

 

<blockquote>It needs to be a very lean, totally-focused TV operation - capable of broadcasting via satellite and terrestrial transmission systems and narrowcasting on the internet. It also needs to capture all the advantages that more flexible, lower-cost technology has to offer, and spend on programmes and production not buildings and bureaucracy.</blockquote>

That could be done with the proper regulation and independence while still maintaining a public service broadcast rather than the failed commercial system we have now.

by Brendon Mills on April 22, 2011
Brendon Mills

TVNZ6 and TVNZ7 I felt was a decent compromise between those who wanted good public service TV (ie no weightloss or cheffing reality shows), and those who thought we couldnt afford it. They were able to more or less deliver quality public service TV while calling on the resources of a commercial TVNZ. This model could have worked if it was given decent funding, the best option would have seen TVNZ have an arrangement to keep its dividend as long as it put that money towards TVNZ6 and 7.

Maori TV has been a huge success story. I remember the uproar from everyone when it was first announced. But it has proved itself and has a great future ahead of itself. It has some really great stuff. "Homai Te Pakipaki" is a personal favourite of mine - it just allows people to get up there and have a go without having some Simon Cowell-type rip them to bits. In saying that, its primary purpose is and should be to promote Maori culture and the language. It cannot be forced to take on other public service obligations.

I despair at the content on TV in this country now. It all seems to reality TV all the way, the latest fad seems to be obese people. Kind of like a 21st century Barnham's circus.

 

by Brendon Mills on April 22, 2011
Brendon Mills

I am actually finding myself in agreement with Ms Coddington as well, if we absolve TVNZ of its public service obligation, then we should sell it, and use the money to start a new public service TV network from scratch. Maybe regionally based -- as I understand TV3 was going to be before the laws were changed in 1988.

by DeepRed on April 22, 2011
DeepRed

I kind of agree Brendon. It seems as far as TVNZ is concerned, once a prolefeeder, always a prolefeeder. Best to start from scratch, as with TVNZ6 & 7, than to attempt to redirect a tabloidised organisation. But I can't help thinking that 'credit ratings' aren't behind TVNZ7's demise, but rather a manifesto of anti-intellectualism masquerading as fiscal restraint - the Mediaworks wheeling & dealing and the Too Big To Fail clause being invoked how many times now. Just one part of a Tsunami of Stupid, or a Nuclear Dunce Cap.

by Tim Watkin on April 26, 2011
Tim Watkin

The problem with rolling RNZ, MTS and TVNZ7 (or two of the three) into one or selling TVNZ and starting again is how you then pay for the news.

The simple point so many forget in this debate is that news is expensive to gather, especially when you need to move cameras around and use satellites. Networks can afford it because they draw large audiences to their news and other programmes, and so can charge quite a bit for ads.

If you remove that audience and ability to gather revenue, how do you pay for the news? No, I don't know either. But solve that and you've cracked it.

Because while everyone here is praising MTS, there's one wee fly in that ointment that you're all forgetting. Bugger all people watch it. Great telly, no viewers.

Deborah mentions the licence fee... and you've got to wonder whether removing that wasn't something worth regretting. It was public funding but at arms length from MPs. Without it, it's up the market to provide. Which is what we've got now. If you think that's sufficient, fair enough. If not, as David says, what's your solution?

Oh, and for those who say the internet, there's no money in it either. Perhaps that'll change – there is TV on demand (no fixed slots, Stuart. You can watch Q+A any old time right now), plenty of clips go online, there is some TV-computer convergence happening – but no-one knows for sure.

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Anonymous

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