KEY POINTS:
The Government will spend $79 million over six years to establish two digital free-to-air channels - the first beginning late next year.
Both will be commercial-free, with TVNZ aiming to lure viewers into buying the $200 set-top decoder that will be required to receive the new service.
The network's chief executive Rick Ellis today said the first channel, with a working title of TVNZ News 24, would debut late next year and feature news, sport and special interest content.
The second channel - TVNZ Home - would feature children's, families', arts and documentary programming and would hit the air in early 2008.
Both channels would be dominated by local content, but about 70 per cent would be repeats.
Mr Ellis said TVNZ had asked for the Government funding as the two channels' initially small audience would have generated little income. Any income might also have eaten into its existing channels' advertising revenues.
There was also a need to provide viewers an incentive to move over to the new digital platform.
"At the end of the day these are fully funded commercial-free channels," he said.
"This is about offering compelling additional content to New Zealanders to encourage them to go and buy a $200 set-top box so we can move the whole obsolete analogue transmission system to a digital transmission system."
A fully digital transmission platform, would cost about a third of the existing analogue platform - set to be turned off in 2015.
Mr Ellis said some programmes might be sponsored and TVNZ eventually hoped the new channels would be financially self sufficient through licensing fees for content accessed on the internet.
The new channels would not affect the content of TV One and TV2.
CanWest - which runs TV3 and C4 - criticised the Government's decision to give TVNZ funding.
Chief Executive Brent Impey said the money would have been better spent producing programmes and funding independent producers to create programmes - rather than channels.
Broadcasting Minister Steve Maharey said the Government's "modest" contribution was just 3.5 per cent of TVNZ's overall operating costs - far lower than for other public broadcasters which had taken a similar step.
For its contribution the Government expected more local content, more in-depth programmes and a wider range of less commercial programmes aired at accessible times.
Questioned over whether the decision to pour more money into TVNZ was unfair to its competitors, Mr Maharey said the Government had contributed $25 million towards the establishment of the free-to-air digital platform - dubbed Freeview - which would also be used by CanWest.
He said the Government's $79 million contribution and a $70 million special dividend paid last month by TVNZ after capital restructuring were coincidental.
New Zealand First broadcasting spokesman Pita Paraone welcomed the announcement, which he said would provide a better public broadcasting service than TVNZ's failed charter.
"TVNZ now has the chance to regain support by using digital technology to enhance the viewing experience for New Zealanders who want to watch quality television that reflects our culture and also the rest of the world."
But Green MP Sue Kedgley accused the Government of being tight-fisted, questioning whether the $79m could achieve "the digital vision" announced only a few months ago.
"There is no point launching new digital television channels if there is not enough funding for new programmes to ensure it will succeed," she said.
"It is false economics to short change digital television. The Government needs to entice people to invest in the $200 plus for the set-top boxes necessary to receive the digital signal because the days of analogue television are numbered."
Freeview, based on a co-operative consortium model in Britain is expected to involve a dual delivery system - either digital terrestrial television (DTT), delivered to aerials via transmitters around the country - or straight to households via satellite.
The satellite service will enable free broadcasts to be received by isolated households, which currently only have pay television (Sky) as a viewing option.
- NZPA
