Sources have told the Herald that Cabinet has signed off a plan that would disestablish both organisations to create a new entity.
Under this new structure, RNZ properties would remain commercial-free, while TVNZ would still have some commercial imperatives but would not have to pay a dividend to the Government.
It's understood that the new entity will be based on a not-for-profit model.
As a general rule, the public interest emphasis will override the commercial imperative within the firm.
The merged organisation will be an autonomous Crown entity with complete editorial independence.
Faafoi said that the entity would operate under a charter, set out in legislation, and provide trustworthy news as a core service.
Its obligations would include having to provide public media content to all New Zealanders, including groups who are currently under-serviced or under-represented.
In addition to Government funding, the new entity will carry advertising. However, services that are currently commercial-free will remain so once the change happens.
Sources have also revealed to the Herald that TVNZ would no longer have to pay a dividend to the Government.
An establishment board will be appointed next month to oversee the detailed design of the entity and the change process, with the aim of having it operational by July 1 next year.
"We know what we want this new entity to achieve, and a legislated charter will set out the entity's purpose and objectives," Faafoi said.
Faafoi said that he informed staff at TVNZ and RNZ of the decision a short time ago.
He recognised that it could be a period of unease but stressed the importance of the move.
Responding to National-raised concerns that this could reduce media diversity and tilt the balance towards a Government-funded media behemoth, Faafoi disagreed this would be the case.
"Very central to the design of this is to make sure that this entity is not just strong in a public media sense but also supporting the wider sector," he said.
"There were some very 'easy' things that could be done there, in terms of collaboration and infrastructure and resources that would free up investment for other media companies to do other things, like hiring more people or investing in more content.
"The fragility of the wider media market over the last three years has been a big concern for us. We are trying to do more than one thing here, we are trying to make our public media strong and make sure the way that that works keeps the rest of the sector strong as well."
Now that Cabinet has signed off on the plan to proceed, the focus will shift to drafting legislation to form the new public committee. A select committee will then review the draft legislation in the coming months, providing an opportunity for submissions from interested parties.
The announcement today follows a protracted process in which the Government appointed consultancy PWC to assess the case for a new public entity.
Faafoi said that the business case, which looked at the feasibility of and best approach to creating a new entity, emphasised the importance of public media and its role in society to provide trusted news and content that reflects our people and cultures.
"It also confirmed the pressures New Zealand's public media is facing retaining audiences and attracting new ones, particularly young people, in the face of access to global platforms."
Faafoi noted that the current structure was focused on radio and television and that this would need to evolve to future-proof New Zealand's public media.
"New Zealanders are among some of the most adaptive audiences when it comes to accessing content in different ways, like their phones rather than television and radio, and from internet-based platforms," he said.
"We must be sure our public media can adapt to those audience changes, as well as other challenges that media will face in the future."
RNZ chief executive Paul Thompson and newly appointed TVNZ chief executive Simon Power will have to work together to bring this vision to life.
RNZ chairman Jim Mather welcomed the announcement to create a single entity.
"We believe this is a once-in-a-generation opportunity to establish a new public media entity that will have the mandate, scope and resources to provide essential public media services to all the people of Aotearoa New Zealand," he said.
"The crucial building blocks of the entity give us confidence that the policy is a sound response to the challenges faced by New Zealand public media in a rapidly changing global media environment.
"At the heart of this new entity will be the unique voice of Aotearoa New Zealand with
trusted news and current affairs as a cornerstone. As a public service, not-for-profit
media entity, with a Charter and sustainable funding, it will benefit all New Zealanders,
ensuring we stay connected, informed, and part of a cohesive democracy."
Power was similarly enthusiastic about the changes.
"Creating a public media entity for the digital age is an exciting opportunity and we're looking forward to engaging with this process and offering our expertise," he said.
"Te Reo Tātaki's current strategy is aligned with what the new public media entity is seeking to deliver. Our commitment to telling local stories ensures we can positively contribute to the organisation alongside RNZ, and our planned investment in digital services will meet the needs of New Zealand audiences in the future.
"TVNZers will now focus on delivering this transformation while continuing to provide the great content our viewers know and love across our channels and platforms."
But not everyone is convinced that fusing the distinct cultures of TVNZ and RNZ is a good idea.
Speaking to the Herald yesterday, National Leader Christopher Luxon said the TVNZ-RNZ merger was "just not worth it".
"I think the Government is just trying to mash together two irregular jigsaw puzzle pieces.
"You're mixing together two very different beasts in many ways. I think we're much richer for them telling their individual stories of New Zealand to New Zealanders."
Luxon called the process "a bit of a mockery" and said that it was a "forced fit".
"When you look for mergers and acquisitions - and I've done a lot of them in my life - what you're looking for is natural synergies and chemistry and alignment and to put RNZ together with TVNZ doesn't make any sense in my mind."
NZME chief executive Michael Boggs expressed concern about the effect the merger could have on New Zealand's media landscape.
"Additional government investment into this new entity can only add to the intense competition and cost pressures that already exist across New Zealand's commercial media," Boggs said.
"With TVNZ seemingly no longer required to pay a dividend to government, this frees up millions for reinvestment into expanding the new entity's digital platforms, commercial capabilities and journalistic talent pool – further increasing audience and competition for advertising revenues."
Boggs said that more detail was required to fully understand the impact of the move.
"We are also keen to understand how the current public media philosophy will be upheld across a commercially incentivised entity," he said.
"NZME awaits the details of the draft legislation and charter with interest, and we look forward to further engagement with the Government in coming months."
Interested parties, both supporters and opponents, will be permitted to share their views when the draft legislation is considered.
Today's announcement marks the first step in what promises to be a long road to merging the two organisations.
Details on the proposed executive structure and the logistics of bringing the organisations together are still unclear at this stage.
The onus will likely rest on the establishment board to work through these issues in the coming months to meet the Government's preferred deadline.
- Additional reporting by Julia Gabel.
