TVNZ seals $7m contract

By SIMON HENDERY

Television New Zealand's fledgling international consultancy business has won a $7 million contract with a foreign broadcaster.

TVNZ is yet to reveal details of the contract, which involves its subsidiary BCL.

However, the deal illustrates the state-owned broadcaster's big push for new business as it battles falling advertising revenue and prepares for a Government-imposed public broadcasting focus.

The company's annual result for the June year, tabled in Parliament yesterday, shows a $30 million net surplus after tax compared with the $43.1 million in the previous period. It will pay the Government $21 million in dividends for the year.

Group revenue was up $7.7 million to $481.1 million. Although advertising income dropped $11.1 million to $284.7 million, this was offset by an increase in revenue from the company's transmission operations, especially TVNZ Australia and the company's satellite business, Satellite Services.

TVNZ chief executive Rick Ellis said its share of the television advertising cake had improved slightly during the year, but it was battling a nine-year trend where television's share of advertising revenue had fallen more than 6 per cent.

In July, CanWest Global Communications - TVNZ's competitor - pointed to the soft advertising market as a big reason for a $9 million loss for TV3 and TV4 during the nine months to May.

TVNZ said its costs also increased because of the expense of screening rights for the Sydney Olympics, the weakness of the New Zealand dollar - which had pushed up the price of overseas content and increased costs for locally produced content. Its internet portal - nzoom.com - was also losing money.

"Media companies worldwide have experienced similar contractions of revenues, increases in content costs and investment in internet-related activities," Mr Ellis said.

"In this context, TVNZ's results compare very favourably with other television companies, both in New Zealand and internationally."

For the first time, the company provided a breakdown for its television and transmission arms, which highlighted the growing importance of funding from BCL and its international transmission businesses.

Of the company's $30 million surplus, $26.2 million was generated by the transmission side (unchanged from the previous year).

Television production, advertising, programme funding and nzoom.com generated a combined surplus of just $3.7 million (down from $16.9 million last year).

Mr Ellis said TVNZ was "absolutely committed" to nzoom.com because it was important as a state broadcaster that it maintained a robust online presence.

Last year, he presented the TVNZ board with a three-year "journey to profitability" for nzoom.com and he said that plan was still on track.

Chairman Ross Armstrong said it had been a "momentous" year for TVNZ. It had been focused on preparing for the Government's television charter that starts next July.

The company's push for overseas consultancy work to boost its income - TVNZ International is targeting contract work in Asia, Africa and South America - mirrors an approach taken by New Zealand Post, also chaired by Dr Armstrong.

TVNZ had planned to launch a digital television service but partner TelstraSaturn pulled out of the deal.

Mr Ellis said although a digital launch was delayed, talks with Sky Television to transmit TVNZ channels through Sky's set-top boxes were progressing.