TVNZ boss Kevin Kenrick is betting big on local and live content in 2020. Photo / File
TVNZ is set to put an additional $20 million towards local content in the coming year - including a bold move back into sports rights bidding.
The state-owned broadcaster had backed away from live sports broadcasting over the past decade, focusing instead on entertainment programming.
But TVNZ changed tack last year by airing the Commonwealth Games, and is now looking to add to its sports portfolio.
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The move is a direct response to the growing competition from global streaming giants, which spend billions annually on acquiring the best shows.
"The worst thing we can do is just be a smaller version of a global player," TVNZ chief executive Kevin Kenrick told the Herald.
"We believe that local content is our most sustainable point of difference."
He says the state broadcaster had 2.9 million viewers tune in across the Rugby World Cup, which shows that New Zealanders still have a huge appetite for live sports.
TVNZ already has the 36th America's Cup, the 2020 Paralympics and some T20 matches on its schedule and Kenrick would like to see further sports added.
He would not comment publicly on which sports he would be going after, but will almost certainly face tough competition from Sky and Spark, which are embroiled in an ongoing sports content fight.
One thing TVNZ has in its favour is its well-established live broadcasting capability – which could help to win the confidence of sports bodies nervous about the quality of streaming services.
Kenrick is pragmatic on this point, however, saying that the problems we saw at the beginning of the Rugby World Cup are unlikely to exist in future.
"The technology will never be worse than what it is today. It will only get better," he says.
"Roll the clock forward, I think most of the problems will be ironed out and we'll forget these teething problems."
The strategic shift in the business will lead to some personnel changes at TVNZ in the coming year.
"We need less people to go and acquire international rights than what we need to commission and create local content," Kenrick says.
In parallel with the strategic shift, he is also looking at ways to simplify processes across the business and remove duplication where possible.
"There will be some areas where simplification will lead to us automating something, and therefore we need fewer people in that space," Kenrick says.
"Equally, we've added a whole lot of new capabilities around sport, we've beefed up our local commissioning team and we are investing more in terms of digital capability right through the organisation.
"What we're doing is trying to create headroom to add resource where we need it."
Kenrick says he does not believe those strategic and structural changes will lead to an overall reduction of labour costs in the coming year.
"In the last year, we have actually increased our labour costs and it will modestly increase this year again. And then we think it will start to flatten off."
Research commissioned by the Better Public Media Trust this week showed that 60 per cent of New Zealanders would support making TVNZ One completely non-commercial, with only 9 per cent opposed.
This comes after strong criticism from MediaWorks of TVNZ's state-funded position in the local market.
Despite those numbers, Kenrick is unimpressed.
"To be brutally honest, I think you could have drawn those conclusions without conducting the research. If I asked you, would you like free content with no ads, we all know what the answer is going to be," he says.
"It's like asking: 'Would you like shorter waiting queues at hospitals, would you like a lower teacher-pupil ratio or would you like car registrations to be cheaper?'"
As is often the case, the question really comes down to how much of their tax dollar Kiwis would like to see contributed to such an initiative – and also whether that money can perhaps be used on something else.
Another criticism TVNZ has had to weather in the past year is based on the idea that the Government has allowed the broadcaster to become what MediaWorks employee Jesse Mulligan called a "not-for-profit".
But Kenrick rejects that idea.
"TVNZ made a profit in the last financial year. It has zero debt. It has generated and accumulated cash reserves to prepare for the environment that we find ourselves today.
"We are now drawing on those cash reserves right now to reinvest in the business."
The business has, however, forecast a $17.1 million loss for 2020, thanks to investments it will make during the financial year.
Kenrick says local and global players are in a race for audience, and TVNZ can't afford to put in a half-hearted effort.
"We had a choice: we could have preserved near-term profitability. But the risk in that is that we couldn't compete to the best of our ability in this strategic race. We would find ourselves two or three years down the track in a much weaker position.
"We've decided to front-end load this and to really play the best game we can at the time the race is being run. And that requires us to take some near-term financial pain in terms of profitability, but we've fully provided for this, we've got the cash on hand and we're not looking for any handouts."
Kenrick says speculation of MediaWorks closing its TV arm would mark a "disappointing outcome" for local media.
"It would be a loss for the sector," he says.
"There are some remarkably talented people in that organisation and there are some shows that have got a huge following in the marketplace. But if you look at what's happening globally, the status quo business model for local media is unsustainable, particularly in small-scale markets."
He says the changes affecting media throughout the world are felt more acutely in places where the overall audience is smaller. There's simply less room to move when budgets get tight, he says.
"In that context, consolidation is inevitable in some shape or form."
We've already seen this play out across Australia and New Zealand, with Nine acquiring Fairfax (and Stuff), QMS buying a stake in MediaWorks and Seven's recent purchase of Prime.
Asked what this consolidation trend might mean for TVNZ, Kenrick says that is really a decision for the Government.
With Broadcasting Minister Kris Faafoi having pledged to make an announcement on the future of New Zealand media before the end of the year, there have been rumours of an impending merger between TVNZ, Radio NZ and Māori Television.
Faafoi has kept his cards close to his chest about what his media strategy will entail, but Kenrick is confident an announcement will come by the end of 2019.
The consolidation of these organisations could create some executive intrigue in terms who would take the reins at the mega organisation between Kenrick, RNZ's Paul Thompson or Māori Television's Shane Taurima.
Given that there is likely to be room for only one of them in the case of a merger, they'll be waiting in anticipation for word to emerge from Faafoi's office.
The event is described as a series of aggressive sales pitches.