Kevin Taylor: TVNZ board's humiliation must leave SOEs wondering

TVNZ chairman Craig Boyce must wonder whether his $72,000-a-year job is worth keeping after a tense meeting at the Beehive yesterday over newsreader Judy Bailey's fat salary increase.

He was made to look a political dunce as he faced almost the entire Press Gallery with Broadcasting Minister Steve Maharey.

Mr Maharey and the other shareholding minister, Michael Cullen, made it clear - even after hearing the explanation - that they did not accept TVNZ's decision to pay Bailey $800,000 for a one-year contract.

It was humiliating for Mr Boyce and the board - so much so that he and the other members of the board's remuneration committee, Dame Ann Hercus and Phillip Melchior, offered to resign.

However, the ministers opted to dampen the row by refusing to accept the resignations. Instead they sought a review of processes to ensure the "no surprises" policy requiring Crown companies to keep shareholding ministers informed is strictly adhered to.

The compromise indicated that ministers were mindful that sticking their fingers into TVNZ operations would undermine state companies' ability to operate commercially.

The upshot is that TVNZ's board simply got a very public slap on the wrists.

But the dressing-down also raises questions about how Crown companies are supposed to operate commercially from now on.

How sticky are the Government's fingers really going to be in delving into the operations of the 36 companies and entities it owns? What other issues might trigger similar - or more serious - intervention?

And as one private sector observer of SOEs said yesterday, the handling of the whole affair sends a perverse signal to the private-sector competitors of state-owned companies that politicising an issue can have real benefits.

The issue also highlights the Government's sensitivity to bad headlines.

TVNZ clearly had a commercial problem on its hands. Having lost Paul Holmes and Alison Mau, it believed - and had stated publicly - that it considered itself under commercial attack from TV3 and Prime.

Losing Bailey would have been unacceptable to TVNZ - and probably would have guaranteed more questions in Parliament.

So the board acted commercially, as it is mandated to do, although Dame Ann was against the move. However making a commercial decision doesn't necessarily mean it will be politically and publicly acceptable.

At the end of yesterday's press conference, Mr Boyce was asked if he had been politically naive.

"That's an interesting word. Perhaps."

Mr Maharey chipped in with definitive "yes".

Mr Boyce may have been politically naive but was still sticking with the commercial reasoning behind the decision.

He is no dunce in the commercial world, chairing Smiths City Group. He also has experience on publicly owned companies with directorships on the Labour-dominated Christchurch City Council-owned holdings company and NZ Trade and Enterprise.

He must really wonder whether his role at TVNZ is worth keeping after yesterday's pantomime - which also raises the question whether anyone else would be prepared to take on the job.

So the Government has hosed the issue down for now.

But it has also left plenty to chew over for the directors and chief executives of some of New Zealand's most important companies.