New Zealand is heading for a digital divide that will see a substantial portion of the population disadvantaged by the change. The rot starts with our free-to-air television broadcasting system and expands with the introduction of the ultrafast broadband internet.

Last week, I was one of the usual suspects rounded up for a talk-fest on the Future of Public Television in New Zealand at Victoria University. Working up my own presentation on “Sustaining Local Content”, I became more and more depressed. I might as well share my misery.

We have one of the most de-regulated television media markets in the world. If you have all the technical bells and whistles on your home receiver and purchase the top-line SKY payview package you can have access to around 158 television channels. When you sign on to purchase your monthly access to the ultra-fast broadband internet system, you will have a whole world of options at your fingertips. You just need the ability to pay for it.

The unfortunate truth is that, on current Government policy settings, you are going to see less and less New Zealand content in your media diet.

Up till now, the driver of New Zealand television and film production has been the New Zealand-based free-to-air television networks - and the main Government intervention to secure a diverse range of New Zealand content on our home screens has been NZ On Air. Unfortunately, both the growth engines are sputtering under the strain.

Last year, our six major free-to-air networks delivered first-run local content for just 21% of hours they broadcast between 6:00am and midnight - about the lowest level of TV local content for any nation in the developed world.

NZ On Air funding – public funding – supports just 28% of that local content. The rest is funded by the broadcasters from their advertising revenue. Over the last two years, the total amount of first-run local content on our networks has declined by 8% to just 8,223 of the 39,420 hours of programming they transmitted in 2010.

It isn’t just the economic recession that is depressing the local content output.This is the beginning of a trend that will continue, unless policy settings change. The free-to-air TV networks’ share of the advertising spend has been planking over the last decade. A growing proportion of the spend is being diverted to lower cost, more targeted and inter-active advertising opportunities on the internet. Internet advertising revenue has grown steadily through the recession. So have subscriptions to the SKY pay-to-view service.

No wonder our TV networks are scrambling onto both digital platforms to “monetize” more of their programme content. You can charge viewers to see your product on SKY. You can’t on its free-to-air rival Freeview. SKY provides to 110 channel options. Freeview offers 18. Sky reaches 48 percent of TV viewers compared to just 31 percent tuned to Freeview.

SKY now offers all the local content that’s screened by the free-to-air networks on Freeview, and much more besides, including two channels created exclusively for SKY by TVNZ. SKY is poised to become the most powerful player in the New Zealand television market.

New Zealand also has a frail set of 15 free-to-air regional television channels, scattered from one end of the country to the other. More than half of the population does not even know they exist, according to a survey conducted for the Ministry of Culture and Heritage. With just 2% of the television funding distributed by NZ On Air, they will generate more than 1,000 hours of local content this year. They also relay a diverse range of international content that does not see daylight on our advertising-driven networks or the SKY payview platform , but is highly valued by many of the ethnic minorities who now form a growing proportion of our population.

The regional channels need to use the Freeview-Kordia digital terrestrial transmission system to survive beyond the digital switch-on that starts next year. Satellite transmission is beyond their financial reach and their regional needs. A significant number of them will not make it through the change. The terrestrial transmission system will only cover 86% of the population. Some regional channels and their audiences live outside its coverage area. Others will simply not be able to afford the increase in their on-going transmission costs. Ultra-fast broadband does not offer them a distribution option: its coverage will only reach 75% of the population by 2019. On top of that, the internet does not offer free-to-air viewing that can be provided by broadcast transmission.

These issues have largely been ignored in Government decision-making from the time planning started for the digital switch-on. The current focus is on finding ways to save New Zealand’s first nationwide, advertising-free public service channel ,TVNZ 7, when its current public funding runs out at the end of June next year.

A recently released Cabinet paper on options for sustaining a public service channel saw only three solutions – continuing dependence on the contestable funding intervention through NZ On Air, continuing direct funding to TVNZ to sustain TVNZ 7, or seeking tenders for a funded public service channel from interested providers.

Two of them are obvious non-starters. NZ On Air is struggling to maintain adequate local content generation and distribution via the advertising-focused free-to-air networks. TVNZ has already failed to produce a plan that would sustain an advertising-free public service channel without additional funding, despite its substantial recycling of programme material already screened on its networks and the leveraging of the extensive production resources at its disposal to produce TVNZ 7.

The third option – contestable open tendering for the opportunity to operate the public service channel - is a perfect opportunity for another step towards market dominance by SKY, and its free-to-air broadcast subsidiary Prime, currently the smallest generators of local content in our television market. With its monopoly hold on live coverage of the international sports of most interest to New Zealanders, superior bidding power, and a vast inventory of programmes to call on, SKY has all the leveraging power in the world.

So, SKY rules – OK? Well, there has to be a better way to grow the local content in our free-to-air broadcast television diet, where it’s universally accessible. And there is, but that will have to be the subject of another column.

Declaration of interest: David Beatson hosts The Beatson Interview on Triangle & Stratos television and is a former chair of NZ On Air.

Comments (15)

by tussock on June 25, 2011

Surely it's 48% sky and 79% freeview, with the former including the latter?

But if you want to stop the skytv juggernaught, you need some sort of law that prevents them capturing all the high value programming. Like if the final of the world cup was live on 17 different channels, from various world feeds (because there was no legal means of preventing that), less people might bother with sky in the first place.

They'd still have a market for the programs that commercial stations can't or won't pay for, but they couldn't make the wealthy half of us pay to prevent the poor half seeing popular and interesting things at home.

by David Beatson on June 25, 2011
David Beatson

Freeview provided a presentation at the seminar stating that 30% of New Zealand homes have installed Freeview reception equipment. In terms of regulating SKY - one of the problems is that the horse has bolted in the de-regulated environment that had been created before its entry, and retrospective regulation will clearly diminish the value of its business... Grounds for a prolonged and expensive legal wrangle, I would think.


by Brendon Mills on June 25, 2011
Brendon Mills

We probably should have seen this coming back in 96 when Sky snaffled the rugby rights. Getting the exclusive rights to cover All Black test matches live (and 3 years later, international cricket) was the key from transforming Sky TV from being a small niche pay TV provider, which it was doing very well,  to being what it is today.

Mind you, there is evidence that Sky is starting to abuse its monopoly. Endless repeats, the growing amount of advertising, the changing of the rules regarding its sports package, to name a few.

And David, you seem to be implying that that there will be a sizable part of this country that would be left without a TV service come the digital switch over?

by Brendon Mills on June 25, 2011
Brendon Mills

And by the way, I despair at the quality of TV these days.

Masterchef, strict parents, desperate housewives and fashion shows are all that there is.

by David Beatson on June 26, 2011
David Beatson

Brendon –After the digital switch-on, the SKY and Freeview satellite services will provide 100% coverage of the country - but people will have to pay monthly subscriptions to receive up to 110 channels on SKY, or purchase a Freeview box to receive 18 channels to use their set after DSO. Either way, consumers pay more for access to TV because of DSO. Next, broadcasters’ transmission costs are escalating significantly in the transition to DSO and this, plus the increased competition for advertising dollars that flows from the constant expansion of digital media, reduces funds available to support both the amount and the diversity of New Zealand-produced content on the screen. Second-hand foreign imports are cheaper to screen than local product – and shows like MasterChef move a lot of kitchenware and appliances.

by Wiseacre on June 26, 2011

Sky TV recorded a profit of $60.4 million for the half year to December 31, 2010.

Why not impose a levy on annual broadcaster profits over $20 million that could then be directed towards a true public service channel? The smaller, less profitable, broadcasters would be excluded. This would, in effect, make Sky TV pay for the bulk of public service broadcasting.

by on June 27, 2011

The regional channels need to use the Freeview-Kordia digital terrestrial transmission system to survive beyond the digital switch-on that starts next year. Satellite transmission is beyond their financial reach and their regional needs. A significant number of them will not make it through the change.

The problem with this is that most people who have a satellite dish (whether Freeview or Sky - which combined must be at least 60% of the population) will watch all their television via satellite and will not use the terrestrial option. Why would you? The DVB-T option (marketed as "Freeview HD") is limited in its channel offering, is not usually compatible with a satellite PVR (e.g. MySky) and requires maintaining an antenna.

So that means that 60% of the population are not going to ever view any regional channels. Satellite transmission is essential if viewers are going to treat local channels as being of any importance.

What prevents this?

- Cost. Each regional channel would require a satellite uplink.
- Transponder capacity. Sky deliberately bought up nearly all the capacity on the Optus D1 satellite to stop any other DTH service of any significance starting up. Freeview has only limited capacity of around 20 channels.

The answer? Regulation. Regulation could have forced Sky and Freeview to pay for the carriage of local channels. Even a composite channel relaying local news bulletins from all the regional channels could have been better than nothing. And while the government was at it, some decent support for the local channels' production adn programming wouldn't have gone amiss.

Unfortunately, it's almost too late for local channels which lost most of their viewers in the transition from analogue to digital. Too bad.

by on June 27, 2011

Last year, our six major free-to-air networks delivered first-run local content for just 21% of hours they broadcast between 6:00am and midnight - about the lowest level of TV local content for any nation in the developed world.

Let's be honest here - forget the quantity, what about the quality? A large proportion of NZ content is ad-laden rubbish - why would you want to increase the amount?

by David Beatson on June 27, 2011
David Beatson

Hundnz - you're right on both counts, and the number of New Zealanders who want to see New Zealand content increased from its currently pitiful level has actually been decreasing. NZ On Air's public perception reports show that 54% of respondents wanted to see more New Zealand content on screen in 2006... By 2009, only 30% wanted more. It would be interesting if they were asked why that decline has occurred. I suspect many New Zealanders share your view.

by donna on June 27, 2011

Why do so few of us want to see NZ content? Probably because what we currently get served up as local content are remakes of overseas reality shows. Local schmocal.

As it stands I wonder how many of us will simply not bother making the change to digital TV and instead invest in a better stereo when our old TVs become redundant? Reality shows, crime porn and evening news edited by people with orders not to offend the politburo. Why spend money to keep access to any of that?

by on June 28, 2011

I wrote to Jonathan Coleman when he was still the shadow broadcasting spokesman. I basically made the same point in somewhat more diplomatic tones, i.e. that the local content on offer was hardly top quality. He rebuked me saying that whether or not I agreed, the success of the programmes proved that people wanted to watch them. Ergo, there is no problem.

Of course people will watch what is served up to them - if you don't have a choice people will watch a fly crawling up the screen. I'm sure the ratings are very high for North Korean state TV too (in North Korea, that is), even if it is abysmal - simply because there is nothing else to watch.

But you know what? When NZ had some genuinely intelligent programming - which contrary to popular belief in some golden age was still ad-laden and very much in isolated patches, think Belich's New Zealand Wars documentary of 1998, for example - people watched that too!

If you only have a choice of one restaurant, people will eat what is on the menu. It doesn't mean that the food is good.

by DeepRed on June 29, 2011

And symptomatic of the rot is that TVNZ Kidzone (formerly part of TVNZ6) pushes all the right buttons - but only if you have SKY. The BBC or the ABC would never allow this.

I fear there'll be more Cheeky Darkie and Sheila Dickshit debacles before things get better - if they ever will. Welcome to MiniTrue.

by on July 20, 2011

Hundnz - you make a good and relevant point about regional television. Triangle Television - which I was responsible for starting back in the early 1990's  - was the country's first "regional" television channel and now 14 years after first going to air, its still there - against the odds.

Now, over the past 5 years we at Triangle conceived of and spent an inordinate amount of time proposing a "regional backbone"  - a nationwide service that would carry offerings from regional channels on our sister channel Stratos. Stratos would have been ideal because it has both a national satellite AND terrestrial footprint. The concept of our backbone was initially agreed to by government and deemed to be economic Indeed it reached the point where Culture and Heritage called  for expressions of interest for what they now referred to as an "aggregation service" After reaching the point of the expressions being assessed and two having been deemed " workable" - the whole concept went out the window in favour of a one off grant of $70,000 to assist regional channels to transition to digital. This is a measily, and unworkable figure - one which rather than assist will, IMHO see some regional channels fall over if not before DSO then shortly afterwards. It is also interesting to note that a similar concept in the UK also fell over - not becaause of a lack of support but becasue the major networks - BBC included were not prepared to concede transponder space for such a service.

To be honest my concern  frankly was, and still is, the amount and the quality of TRULY original  regional content that would be available,  of it as well. In my opinion of some 18 years of promoting its worth, I now tend to believe its all very well to extol the virtues of regional TV  - but if quality isnt there it may as well be on Youtube!

Theres  the old saying - "content is king" - currently there is simply  not enough content for a totally national - or in some cases even a local - regional television service. There is not likely to be for some considerable time


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