TVNZ plans $20m spend up this year, saying media firms need to choose to invest 'or not'

Thursday, 29 August 2019

TVNZ CEO Kevin Kenrick's salary increase last year was criticised by the E Tū union.

TVNZ plans to invest about an additional $20 million in local content, including online news, this year as it kicks off a three-year plan that has already ruffled MediaWorks and could see it become a more direct competitor to Stuff and NZME.

Hal Crawford, head of news at television channel three owner MediaWorks, this month blasted a decision to allow TVNZ to suspend dividends to the Crown for the 'foreseeable future', saying its state-owned rival had been allowed to operate 'in a non-commercial way'.

TVNZ chief executive Kevin Kenrick indicated on Thursday that the dividend policy could be reassessed after three years, but hit back at the criticism saying every business had 'choices to make about whether they wish to invest or not'.

'MediaWorks' majority owner, last time I checked, had about US$120 billion (NZ$190b) of money they were investing so I don't think there is a shortage of cash – there might be a shortage of appetite to invest it in the local market.'

* Plot thickens for TVNZ as a $17.1 million loss looms

* Television channel Three owner MediaWorks rules out buying Stuff

* Another bumper pay rise for TVNZ's CEO Kevin Kenrick sees packet rise to $1.4 million**

Commenting further on the suspension of dividends, Kenrick said the media industry was at a stage of the cycle where businesses were either choosing to 'invest and compete and be part of the future or not'.

'I see Sky is choosing to invest, NZME is choosing to invest and both of those players have put a halt on dividends.'

Local, online news, would be a significant component of the extra content TVNZ was preparing, he said.

That could 'potentially' see TVNZ move more into the market that was predominantly serviced at the moment by Stuff and NZME, he agreed.

'What we are looking at is how we could replicate our leadership position in TV news in the digital world. That is not something that is going to occur overnight, but something we expect to take some great strides towards addressing in the year ahead.

'The good thing is we think there are more and more technology tools available to enable us to do that. In a digital news sense, people are looking for 'snackable' searchable content. Increasingly there are technology tools available to enable us to do that at scale.'

Kenrick said the industry needed to confront the question of how to preserve or enhance media plurality, but he said that conversation had been clouded by 'people looking for plurality of entities'.

'I think you could well see consolidation, but the opportunity is to get plurality of voices within those consolidated entities.'

TVNZ reported a 44 per cent drop in its profit to $2.9m for the year to June, and Kenrick said he expected revenues to remain broadly stable this financial year thanks in part to the RWC, but the company has forecast a $17m loss which reflects its spending drive.

The total investment in new local content could be of the order of $60m over the three-year period but would probably be less than that, he said.

'We have got greater visibility over the next 12 months, than 24 and 36 months. The near-term is 'locked and loaded' and once it gets out to 36 months it is a bit more conceptual.'

Kenrick said TVNZ would provide more detail in November on how it planned to apply the extra spending in the year ahead, when it presented its annual 'content showcase' to advertisers.

'What we are going to do in the next three years is we are going to double-down in terms of our investment in local and live content,' Kenrick said.

'We are intending to shift from 'international' to 'local'.

'We are prepared to incur some losses to achieve that because we think that is going to put us in a much stronger position.'

The move was necessary because TVNZ expected overseas studios to increasingly distribute their content direct to consumers, he said.

Kevin Kenrick has hit back at criticism over its suspension of dividends, saying media firms have 'choices to make'.

'Our competition has shifted from local players to international players and in that environment, local content is our sustainable point of difference.'

TVNZ's three-year plan to boost local content comes amid speculation the Government is considering merging TVNZ and RNZ and turning TVNZ 1 into a non-commercial channel.

Broadcasting Minister Kris Faafoi has declined to comment on that speculation but has said he is 'having a good look at public broadcasting to make sure it is fit not just for now but for the next 25 to 30 years'.

Kenrick would not say whether the Government had presented a merger and a commercial-free TVNZ 1 as an option to the company.

'I have heard a whole bunch of speculation about a whole bunch of potential outcomes. I am not aware of any decisions that have been made.

'Obviously the Government is looking at the media sector and like everyone else we will be keen to understand the outcomes of that, when that is made known.'

Kevin said the result for the year just past was pleasing in the context of 'challenging market conditions'.

The company experienced a 'single digit decline' in TV advertising which was partially offset by double-digit growth in online advertising revenues, with total revenues falling 2.5 per cent to $311m.

'The standout achievements for the year have been the stellar ratings performance of our local news and entertainment content, and the growth in TVNZ OnDemand,' Kenrick said.

In January, the E tū union criticised Kenrick's total salary of $1.43m for the year to June 2018, which was boosted by bonuses and higher holiday pay, prompting Faafoi to urge TVNZ to be wary of how much it was paying its CEO.

TVNZ said it screened '19 of the top 20' television programmes 'including New Zealand's most watched news and current affairs shows'.

TVNZ OnDemand experienced 80 per cent year-on-year growth, streaming 184 million videos, with its advertising revenues up 31 per cent.

Viewers had responded well to the availability of 'live sport back on free-to-air television', the company said, with TVNZ's coverage of the T20 Black Clash 'the most watched live cricket event in the last 10 years, reaching more than a million viewers'.

Twelve RWC matches will be shown on TVNZ 1, including the semi-finals and final which will be broadcast live.

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