Broadcasting Minister Kris Faafoi expected to set out thoughts on RNZ, TVNZ merger

Wednesday, 5 February 2020

It could be all change for TVNZ from 2023.

ANALYSIS: Broadcasting Minister Kris Faafoi looks set to finally outline his thoughts on the future of the public media, after coming under pressure to open up from both sides of the political spectrum.

Stuff learned early on Tuesday afternoon from sources separate from the Government that Faafoi planned an announcement on public broadcasting at the New Zealand Broadcasting School in Christchurch on Friday.

Cabinet discussions that were leaked to RNZ last month revealed that ministers had agreed to continue work on a proposal to fold RNZ and TVNZ into a new public media agency that could be in business by 2023.

But NZ First has voiced reservations and a final decision won't be made until officials draft a detailed business case.

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Pity the bureaucrats who will need to make that business case sound authoritative, when even seasoned commercial media executives wouldn't claim to know what the industry might look like by 2023.

Barrie Saunders, chairman of the Taxpayers Union lobby group, has described the secrecy surrounding the discussions to date as 'disgraceful', arguing that the restructuring of public broadcasting should be a cross-party project, involving the wider public, that kicked off with a White Paper.

Broadcasting Minister Kris Faafoi has said little about the Government's vision for public media, until now.

Better Public Media, a lobby group that argues for more resources for the media, probably shares few views in common with the Taxpayers Union, but it has echoed the call for more transparency.

It argued last week that it was 'high time the Government announced its public media blueprint'.

'What is missing so far is greater public input to the decision-making process,' chairman Peter Thompson said.

There are three key questions the Government should consult on before any serious work on a business case can begin.

It appears clear that the new merged media agency will receive significant ongoing government funding, but that it will also be allowed to earn some commercial revenues – as TVNZ currently does from television advertising.

That raises the question of how the mixed funding model will be managed to prevent commercial imperatives from diluting its 'public service' mandate.

This is the key concern of Better Public Media, which had concluded that the functions currently fulfilled by RNZ need to remain 'non-commercial'.

'Once a media operator starts factoring ratings and revenue into every commissioning and scheduling decision, the incentive to provide programming that appeals primarily to minorities or takes a commercial risk is inevitably diluted,' Thompson says.

The other side of that coin, he notes, is that commercial broadcasters will raise questions over whether publicly-funded programming is 'competing unfairly for audiences and ad-revenue, thus distorting the market'.

The second, related question is whether the new media agency will be required or allowed to be a significant player in the online news market, as opposed to largely confining its journalism business to more traditional mediums such as radio and broadcast television.

That will help determine the extent to which it competes with private sector media businesses Stuff and NZME, both of which continue to face their own challenges.

NZME is due to report its annual results on February 25 and will be under pressure from investors to show it is making headway not just in paying down its debt, but also in reducing its debt gearing ratio, after suspending its dividends in 2018.

Stuff's earnings have been falling at a faster rate than NZME's and while its Australian-owner Nine has the deep pockets to play a longer game – after failing to sell the New Zealand offshoot at a desirable price last year – it will want to see progress in arresting that decline.

The Government can't pretend it is making decisions about the future of public media in a vacuum.

Turning a blind eye to the implications of its decisions on the health of wider media plurality won't wash.

A third major dilemma facing the Government is whether the new public media organisation should be expected to produce a commercial-free television channel and, if so, what if any other sources of commercial revenue are being envisaged to fill the resulting gap.

Thompson notes that removing advertising from TV One would cost at least $150 million annually, though it is possible that revenue stream might have dried up somewhat by 2023 anyway.

There will be little point in Faafoi setting out his thoughts on the future of public media without at least touching on those three topics.

But the Taxpayers Union and Better Public Media are right that the Government should not try to pull any rabbits out of the hat, and that these are decisions that should be reached only after a public and non-partisan conversation.

It appears any transition towards a less commercially-oriented public television service beyond 2023 will come far too late for the foreign owners of MediaWorks to reconsider their decision to pull the firm out of the television business.

MediaWorks chief executive Michael Anderson says it had always been very supporting of a 'proper public broadcaster' in New Zealand.

Combining RNZ and TVNZ 'seemed a solid move towards establishing a strong public broadcasting ethic', he says.

'Is it too late?' for MediaWorks, he asks himself with what appears a resigned sigh.

'It has always been a factor in our decision-making in this market, so before we start thinking about what it might, and might not, mean we just 'wait and see' for the detail.'

MediaWorks formally put its loss-making television business on the block in October and has since sold its Auckland headquarters in a lease-back deal to free up capital, so if a sale can be easily done it should be imminent.

Australian television companies Seven West Media, Stuff-owner Nine and Ten Network Holdings appear among the more likely suitors.

Southern Cross Austereo – Anderson's former employer – has previously shown interest in MediaWorks' radio business and could perhaps be another candidate.

The question may then become whether a buyer feels the Government's public media plan has implications either way for the future of MediaWorks' Newshub journalism business.