Charter bites into TVNZ's payout

TVNZ's dividend is less than a third of last year's amount, despite record advertising revenue, because of a change in Government requirements.

The TVNZ annual report gives a final dividend to the Government of $10.5 million, well below the record $37.6 million of last year.

Although operating revenue from the TV business was up, the net surplus was down from $28.2 million to $6.3 million.

Chief financial officer Rodney Parker said the dividend was down partly because the Government had removed a requirement that unspent broadcasting charter money be returned to it.

This year's dividend was calculated from a cash surplus of $37.3 million. TVNZ kept $10.4 million for investment and $16.4 million in unspent charter money, which has been allocated to programmes yet to be made. The previous dividend included cash from six months of trading by Transmission Holdings, a subsidiary of TVNZ that was transferred out in December 2003.

Broadcasting Minister Steve Maharey said the low dividend was because TVNZ was spending money on New Zealand programmes.

"This company is a public chartered organisation as well as a commercial organisation. They are required to do things like make New Zealand programmes, so they spent the money on it."

TVNZ's total operating revenue was down by $34 million, to $436.7 million, again due to a boost in 2004 from six months of trading from Transmission Holdings.

Its advertising revenue reached a record of $344.1 million - up $9.1 million on 2004 and from $305 million in 2003. Government funding was up by $10 million to $39.5 million.

The bottom line was hit by a $50.7 million one-off cost due to a change in the way it factors in the licensing or production costs of programmes.

Mr Parker said the change was needed because the commercially successful shelf life of programmes had diminished due to increased competition from other broadcasters. TVNZ could not expect large audiences if it screened repeats in prime time and it was better to expense a programme in the year in which it attracted most revenue. He said this change did not affect the dividend.

Despite record advertising revenue, an expected downturn led TVNZ board chairman Craig Boyce to say in his report that TVNZ would focus on controlling costs this year.

"This will inevitably require us to temper our ambitions regarding further increases in local programming, which is substantially more expensive than foreign-purchased programming."

In 2005, charter funding totalled $25.6 million, which included the $11.4 million dividend reinvestment in the charter last year.

The 2004-2005 year saw 208 New Zealand programmes commissioned.

Eleven per cent or 132 of TVNZ's 1172 staff were on salaries of more than $100,000. The highest paid - believed to be Mr Fraser, who has since resigned - was receiving between $670,000 and $680,000. Three received over $500,000.

News presenter Judy Bailey's $800,000 salary was not included because she is contracted to TVNZ through her company. The next highest paid presenter, Susan Wood, is paid $450,000.

In comparison, CanWest Media Works, the owner of TV3 and RadioWorks stations, has 124 staff earning over $100,000, also 11 per cent of its 1100 employees.

State of state TV

Dividend to the Government:

2004 $37.6m
2005 $10.5m

Net surplus:

2004 $28.2m
2005 $6.3m

Advertising revenue:

2004 $335m
2005 $344m

Staff earning over $100,000:

2004: 124 current and 21 former employees.
2005: 132 current and 13 former employees.

Highest salary band:

2004 $730-$740,000
2005 $670-$680,000

Staff earning over $500,000:

2004 2
2005 3

- additional reporting Ainsley Thomson