Dialogue: TVNZ certainly aware of its social obligations

By ROSS ARMSTRONG*

David Irving asked in a recent Dialogue article whether the main responsibility of Television New Zealand was to be a successful business which was as profitable and efficient as comparable businesses not owned by the Crown, or to reflect our identity and culture and to encourage New Zealand programmes.

The answer to that question is not an either/or. It is both, as stated in the state-owned enterprises legislation. That is why TVNZ is now addressing the question of balancing those dual responsibilities.

While the State-Owned Enterprises Act does, indeed, direct TVNZ to operate as profitably and as efficiently as comparable businesses, this is not a carte blanche to ignore the company's social obligations. To do so would be to fail to recognise that state-owned enterprises are owned by the Crown in order to provide services that others cannot or will not respond to.

It is, for example, why New Zealand Post takes rural deliveries to remote valleys in Central Otago and Southland, and does so as efficiently and profitably as possible.

Where NZ Post is providing a service directly competing with other operators, it can foot it with the best of them - and where there is a service vacuum that competition has turned its back on, it steps in to meet a very real social need, which justifies its continued taxpayer ownership.

To accept Mr Irving's argument is to believe that the Government shareholder has no responsibility to the public at large and no right to question or require a review of core business. It is to suggest that the public interest must simply stand helplessly by while state-owned businesses or Government departments stampede like Panzer divisions across the Low Countries early in the Second World War.

Mr Irving also suggested that New Zealand On Air was set up to meet the social responsibilities of the broadcaster. I do not believe that was the intent of those who designed the system. If that were the case, TVNZ would have few social responsibilities of any significance, and other broadcasters none at all.

NZ On Air was set up to help broadcasters meet social goals and aspirations - but not to absolve them completely from these responsibilities. For this reason, TVNZ makes decisions every day which are designed to meet criteria other than commercial returns.

Much is made in Mr Irving's article of the dividend stream which TVNZ has returned to the public purse over the years. There is no doubt that the company's contribution to the consolidated fund has been impressive. Sadly perhaps, this substantial contribution to public finances is generally ignored in the heat of public debate over the future of TVNZ.

Perhaps it is in the nature of the human condition but, from my observation, discussion of television generally pivots around what the company has not done, rather than what it has contributed to the public good. We, as a company, are looking to redress that imbalance in the debate.

However, to return to a NZ Post example of how commercial imperatives are balanced by social responsibility. Over the past 13 years the company has reduced the price of the standard letter more than 40 per cent in real terms.

It could, of course, have chosen to hike the mail price several times over and, accordingly, yielded increased dividends and increased shareholder value. The company chose not to. This is the sort of balancing act that is expected of a caring state-owned enterprise.

I find Mr Irving's contention that TVNZ should continue the pursuit of profit and balance its social responsibilities by giving a proportion of its income to NZ On Air somewhat unrealistic. Surely the result of this scheme, which involves NZ On Air redistributing the largesse to a range of interests, would be a situation where the state-owned broadcaster was subsidising its private-enterprise competitors? That is hardly good business management.

Finally, I would like to get a little clearer focus on Mr Irving's concern over the value of companies within the state catchment.

For viewers, the value can pivot on a myriad of individual reasons. In the main, the public will measure worth against the quality and range of the programmes presented to it.

For advertisers, the value also lies in the programming, but for a different reason - the size and composition of the audience are the paramount concerns.

However, the value of a state-owned enterprise for the Government stakeholder largely depends on from where in the political spectrum the stakeholder is coming. As far as the previous administration was concerned, the value of TVNZ was measured by the size of the dividend returns to the public purse and the potential the asset had to attract capital investment if it was put on the commercial market.

This Government has a different perspective of the value of a state-owned enterprise, and particularly the value of TVNZ.

As a consequence, despite what Mr Irving may believe, the company will continue to operate in a highly competitive commercial framework but more weight and focus will be placed on the social and cultural responsibilities that are inherent in the Government's broadcasting policies.

This may not fit the ideals of the commercial model as outlined by Mr Irving, but it does encompass the requirements of the present social and political climate as reflected at the last election.

The challenge for the board and the management of TVNZ is not to argue the criteria outlined by the Government but to ensure that a realistic balance is maintained.

* Ross Armstrong is the chairman of Television New Zealand and New Zealand Post.