Dialogue: Good public broadcasting needs a profitable TVNZ

Dismembering Television New Zealand by splitting off transmission assets would compromise the Government's public broadcasting ambitions, writes PAUL NORRIS*.

The Government's policy on broadcasting is in disarray. Hard on the heels of the Television New Zealand charter being delayed until July next year come reports that at least one faction in the cabinet is intent on dismembering TVNZ.

The charter requires TVNZ to show some programmes that are not ratings-driven and to focus on its public or social responsibilities as well as making profits. But the delay in implementing the charter is extraordinary.

Until recently the Minister of Broadcasting, Marian Hobbs, had been encouraging TVNZ to act as if the charter were in place and, indeed, a number of new charter-type programmes are under way. Yet last week, in a classic u-turn, it became apparent that the minister had failed to get any money to support the charter and it would have to be put on hold. Round one to the Treasury and the Finance Minister.

Round two is the plan to dismember TVNZ by splitting off those parts of it that are not directly concerned with the making or broadcasting of programmes. The most important of these is Broadcasting Communications Ltd (BCL), a transmission company that distributes the signal for television and radio programmes around the country. It works for TV3 and radio broadcasters as well as for TVNZ.

The problem is that BCL is the financial engine for TVNZ. Revenue from television advertising is flat or declining. All the growth is in what is described in TVNZ's annual report as "other trading activities," which were worth up to $176 million last year. Most of this came from BCL. Other contributors were TVNZ Australia, which provides transmission and consultancy, and TVNZ Satellite Services.

Those who favour splitting off these profitable areas apparently believe that it will enable the television side of TVNZ to focus on its new role of emphasising charter or public service objectives rather than its aggressively commercial approach.

It is certainly true that splitting off BCL will reveal exactly how profitable it is. It would also ensure that TVNZ could not disguise these profits in an all-inclusive profit figure and that it could not use those profits to subsidise the television side of the business.

The Government would continue to get healthy dividends from any new state-owned enterprise made up of BCL and other profitable areas. It has also been admitted that the Government may have to use some of these funds to prop up the ailing rump of TVNZ left to continue making television.

This is the crux of the matter. Despite all those repeated commercials, it is now hard to make money from free-to-air television - a service you don't have to pay to watch in this country of fewer than four million people. In recent years, TV3 has made little profit for its Canadian owners, TV4 has always made a loss, and Prime, also in the red, has had to cut some of its local programmes.

And TVNZ? What of TV One and TV2 - are they not profitable? TV2, with its diet of American sitcoms, does make money, but TV One, with its news and current affairs, documentaries and local programmes, just manages to break even. When the additional demands of the charter are added in, and the revenue from infomercials is taken out, TV One will be in the red.

The forecast can only get worse. Ratings will fall as viewers find more choices in the digital multi-channel environment. TVNZ has warned of a drop in advertising revenue in the last quarter. This trend is likely to continue as ratings and market share decline further and advertisers pursue more targeted audiences or cost-effective options. As revenue dips, TVNZ's ability to buy and make compelling programmes will be compromised and a vicious downward spiral will accelerate.

So here is the question the Government faces: whether to leave TVNZ as it is and allow it to subsidise television, including charter requirements, from its other profitable activities, such as BCL, or be faced with an annual and increasing demand for public money to support a restructured, charter-driven TVNZ.

There are serious arguments for leaving TVNZ as it is. Around the world, public broadcasters are threatened by competition from other viewing choices as they struggle to find adequate funding. To survive, a public broadcaster will need to be big, securely-financed and independent.

What chance will TVNZ have if its key areas for growth and profits are stripped away and it becomes dependent on having to go to the Government for handouts? Direct Government funding is notoriously unreliable. A recession or a change of policy, let alone a change of government, and such funding can be slashed overnight.

Governments do not like spending public money on television, largely because there are few votes in it. The struggles of the ABC in Australia and the CBC in Canada are warning enough.

It must be questioned whether the Government really wants TVNZ to be a strong public broadcaster. On the one hand, we have the Minister of Broadcasting saying that she wants TVNZ to retain its audience, and that charter-type programmes should reach as broad an audience as possible.

On the other hand, this proposed restructuring would not only weaken TVNZ, it would also give the Government a measure of influence and control because TVNZ would become increasingly dependent on the Government for its funding. Conspiracy theorists may see this as the main rationale for the restructuring.

The reality is that we need a strong public broadcaster to be able to compete with the increasingly powerful global companies that dominate so much of our media and who care little for our national culture or the public interest.

TVNZ should be strengthened, not weakened. It should be encouraged to pursue every available commercial opportunity outside television, to diversify its sources of revenue and to develop strategic international alliances.

Those who support public broadcasting and the charter should resist this carve-up of TVNZ at all costs. It should be seen for what it is - an act of wanton folly akin to the asset-stripping by the corporate raiders of the 1980s.

Conversely, leaving TVNZ intact and encouraging it to grow might just allow the Government to achieve the other planks of its broadcasting policy.

One is the quota requiring all broadcasters to achieve minimum levels of New Zealand programmes. A strong, largely self-funded TVNZ would mean that New Zealand on Air could also be left in place to fund appropriate programmes for all broadcasters.

To dismember or to preserve TVNZ is a crucial decision. It will determine whether we can move beyond television which is simply ratings-driven. It may even determine whether free-to-air television will survive here.

* Paul Norris, a former senior TVNZ executive, is head of the broadcasting school at the Christchurch Polytechnic.

Full text: the TVNZ charter (May 2001)

Full text: the TVNZ charter (Sept. 2000 draft)