Heather du Plessis-Allan speaks to TVNZ CEO Jodi O'Donnell about the company's recent loss. Video / Newstalk ZB
THREE KEY FACTS:
TVNZ recently posted an after-tax loss of $85 million - including a non-cash impairment of $62.1m - with more cost-cutting set to impact the state broadcaster
Its overall revenue dropped almost 12% to $288.9m, from $327.6m the previous year.
Bruce Cotterill is a professional director, speaker and adviser to business leaders. He is the author of the book, The Best Leaders Don’t Shout, and host of the podcast, Leaders Getting Coffee.
OPINION
You have to feel for Jodi O’Donnell, the relatively newCEO of TVNZ. Her appointment was announced at the end of last year. That meant that most of the damage for the financial year ended June 30 was done before she took the top seat.
But there she was a couple of weeks ago fronting the media with a shocking result, one largely overseen by those who had gone before her.
In case you missed it, TVNZ recently posted its results for the year ended June 30, 2024. The headline suggested a loss of $85 million, although that’s worse than it sounds due to $62m of impairments. But the operating loss of $28.5m should be cause for alarm and provides another urgent problem for our overburdened Government to have to deal with.
If you look closely at the results, you can see the extent of the problem. In 2021 TVNZ made a profit (earnings before interest and tax) of $69m. Since then revenue has dropped $51m or 15%. Coincidentally, operating expenditure has increased by $51m or 20%. That’s a $102m negative swing in just three years.
I listened to the newish CEO being interviewed by Heather du Plessis Allan on Newstalk ZB. The interviewer was more sympathetic than she would normally be. But that’s okay. She probably recognised that the mess at TVNZ was not the fault of the new CEO.
The discussion was amiable enough, and the talk was of $10m in savings achieved so far and green shoots starting to show in the digital business.
Then this. “We’re at the ideas stage. We are asking all our staff for ideas about how we can increase revenue or decrease costs.” If Rupert Murdoch owned TVNZ, and a loss of $85m just showed up on the company’s books, do you think they would be at the ideas stage?
I once had the privilege of leading a media business. We were losing millions when I arrived and we were making millions when I left almost six years later. It was the most fun I have ever had in business. The people are wonderful and there is a cause at every intersection. Turning around such businesses is a tough proposition. Sure you have to cut some costs, and you have to drop unprofitable business units. But most of all you have to change the attitudes of your viewers and advertisers. And you only do that by continuously improving the quality of your output.
If we’re being honest, the quality of TVNZ’s content is worse than it’s ever been. As I’ve said in this column before, every media organisation needs an anchor, and in free-to-air TV that anchor is the need to dominate news, sport and current affairs. Those three services are the hub around which a TV channel builds an audience and an advertising base.
Through no fault of its own, TVNZ lost control of sport a couple of decades ago. Its current affairs platform, once the domain of in-depth analysis by the likes of Ian Fraser, Brian Edwards and Paul Holmes, no longer exists, despite the need for high-quality local and international current affairs content being greater than ever. The News Hour is no longer worthy of the time it takes to watch it.
If the comedy isn’t funny, and the news isn’t newsworthy, and the sport is on another channel, then we’re not going to stick around to watch wannabee famous people trying to survive on a Pacific island or cops chasing dropkicks on the Gold Coast, or for that matter, yet another cooking show.
The reality is that we viewers are going to go somewhere else for the information and entertainment that we want. And right now, that somewhere else is littered with options that cater to our needs, right down to our own specific personal interests.
During her interview, O’Donnell made much ofTVNZ’s digital strategy being a pathway to profitability. The same company said the same thing in announcing its annual result in 2022. That was the year that the company stated that “TVNZ continues to invest strongly in a digital future”. Its expenses increased by $62m – from $253m to $315m – in a single year, despite flat revenues. That increased cost base has never gone away.
TVNZ's Auckland offices. Photo / Supplied
The great sadness is that TVNZ was one of the first, and possibly the first, television operator outside the US to have a digital strategy. Those were the days under then-CEO, and computer industry veteran, Rick Ellis, who took lessons from what was happening internationally and saw the writing on the wall for free-to-air TV. I wonder what happened to all that work? Who knows?
Whilst I have no doubt that TVNZ’s new paid digital strategy will result in some revenue success, there is a need to be realistic. Firstly, when traditional media is replaced by digital media, the returns are not the same. I used to say that for every dollar lost from media’s core business, you get just 12 cents back in the digital format. I haven’t seen anything over the past 10 years to change that view.
Then there is the fact that there are already a number of digital video services that we all subscribe to already, and I’m not sure if there is room for another one. TVNZ is not even a fast follower in this space. Despite the previous strategies and talk in annual reports past about investment in digital, the reality is that i is very late to that particular party and a long way behind.
But there’s a glimmer of hope for TVNZ. You see, in the new world I don’t think it matters where we get our information and entertainment from. It might be free-to-air or paid. It might be on a mobile phone or a television. What matters is that we want to get it from a specific source.
In my view, the only way back for TVNZ is to double down on quality of content. Produce it and we will come. Give us the “must have” news, sport and current affairs. Currently, the offer in that space is not good enough. Give us great programming and “must watch” shows. Entertain us so well that we will stay with you instead of looking at YouTube or Netflix.
If we’re going to make our own programmes, let’s make sure they add value to life in New Zealand. Isn’t it interesting that a programme like Country Calendar endures. Every now and then there is a programme that is “must watch”. But it doesn’t happen often enough.
Whilst I have no wish to decry the efforts of those driving the news programming, long-winded rambling pieces from the Pacific Islands about their problems with climate change or their residents’ meth abuse is the sort of stuff that has many of us looking for another channel. In my opinion, it’s dull, repetitive and for most of us, irrelevant.
Likewise, a turtle being returned to the wild despite being rescued after losing a flipper, is a lovely story for National Geographic, but it has no place in our news hour.
And I’m sure that political commentary can be stronger than that represented by a prolonged story about the crafting of a letter of invitation to an overseas dignitary planning a visit here, and the language that such an invitation should comprise. The correct answer, incidentally, is the native language of the person you are inviting. But I digress.
Meanwhile, those of us interested in real news, are looking elsewhere to find out about what’s really going on in the world. And there’s plenty going on, much of it quite worrying. We’d like to know more about it. From a trusted source.
And that leads to the matter of trust. Many in the mainstream media, and TVNZ in particular, lost the trust of many of us with the way our response to Covid-19 was communicated and stage-managed. That came at a time when we needed Government accountability more than ever.
TVNZ needs to earn that trust back. We have a massive problem with misinformation in the world today. Many of us are desperately seeking trusted sources of news and current affairs. If only we had a safe place to go to find out what’s really going on. That’s the opportunity, and properly managed, the distribution channels become ubiquitous.
When faced with the current situation, those of us who are interested enough go looking for information elsewhere. The more you look, the greater the variety of viewpoints on any given topic. If we jump online and start following the US presidential election, the protests and riots in the UK, or the immigration crisis in Europe, we quickly discover that there are contrasting views of almost every event. If only we knew what was true and what was not.
The digital challenge is one of distribution only. I concede that there are so many options for entertainment, TVNZ and others will only ever be one of many in that space. But right now there is, perhaps more than ever before, an enormous need for trusted, reliable, accurate and non-partisan news and current affairs content.
With Newshub gone, and Stuff’s replacement programme drifting in the ratings, it would be easy for TVNZ’s news team to be more complacent than ever in the current environment. But there is no time.
O’Donnell says that TVNZ has to find $30m in 12 months. It will take longer than that. And that’s not all it needs to find. It needs to rediscover a passion for news and current affairs that enables New Zealanders to be more informed of the events in both our own environment and those nations from which we are so distant. The eyeballs will follow and so too will the revenue. But words like trust, timeliness, and relevance need to be at the forefront of whatever strategy it plans.
