Media firms voice grave concerns over TVNZ, RNZ merger

Thursday, 22 September 2022

Broadcasting Minister Willie Jackson says it's TVNZ, not RNZ, that will need to change its attitude.

Commercial media firms have come out swinging against the proposed merger of TVNZ and RNZ in submissions to a parliamentary select committee, warning of the effects it could have on media choice.

Broadcasting Minister Willie Jackson told the economic development, science and innovation committee that it was TVNZ rather than RNZ that would need to change its spots as a result of the merger.

The merger would require a change of culture at TVNZ but not at RNZ, whose management “get the model”, he said.

“TVNZ … We've had a couple of meetings with them and I think they want the best of all worlds at the moment, but we need them to change their attitude,” he told MPs.

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NZME says the merged entity’s online news platform should be free or advertising and paywalls.

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More than 800 submissions on the proposed merger have been lodged with the select committee.

Assuming the merger is approved, TVNZ and RNZ will be combined into a new public media entity currently dubbed Aotearoa New Zealand Public Media (ANZPM) on March 1.

NZME, a listed company whose brands include The New Zealand Herald as well as commercial radio stations such as Newstalk ZB and The Hits, said it was concerned the new public entity would “significantly undermine the sustainability and viability of commercial media in New Zealand”.

The merged entity would benefit from significant public funding “but without safeguards to ensure it competes on an even playing field with other media providers”, it said.

NZME said that if the merger were to proceed, a cap should be placed on the amount of commercial advertising revenue ANZPM could earn, and it should banned from using airtime on its publicly funded platforms to promote content on its commercially or advertiser-funded platforms.

The company was also hoping for clarification that ANZPM’s online news platform would be free of advertisements and paywalls “as is the case with RNZ’s current online platform”.

Even so, a large publicly funded media entity would most likely lead to decreased advertising revenues for commercial media operators, “thereby undermining their operations”, NZME said in its submission.

ANZPM’s focus should be providing content for “under-served and under-represented audiences not already catered for by other media”, it said.

Stuff Ltd, owner of the Stuff and Neighbourly websites as well as a stable of newspapers and magazines, said the legislation paving the way for the merger needed to be redrafted, describing the ramifications for commercial media firms as “grave”.

Stuff funded more journalists than any other media organisation, but the ability of the new public media entity to offer digital content subscription products would “materially encroach on a key revenue stream that news providers like Stuff rely on”, it said.

“The formation of ANZPM, as currently contemplated in the bill, would result in one of the largest media entities in New Zealand competing with private media in both content, talent, and advertising markets, but from a cost base that no other private media operator could replicate,” the company submitted.

That was because the merged entity could use its government funding to subsidise its commercial activities and would probably have larger revenues than any other media organisation but with no profit imperative.

Allied Press, whose publications include the Otago Daily Times, agreed the new public media entity risked “significantly undermining the viability of the private media”.

“If it were a merger of two commercial media entities, it would likely require Commerce Commission approval as it could be anticompetitive,” Allied chief executive Grant McKenzie said.

“We are concerned that it is not actually in New Zealand’s best interests.”

NZME says the proposed new public media entity would “significantly undermine the sustainability and viability of commercial media”.

Radio broadcaster MediaWorks said the merger would substantially lessen competition.

“ANZPM’s market power will enable it to suppress current market players and prevent new entrants to market, which it can do with impunity because of its government ownership and no requirement on it to make a commercial return.”

TVNZ and RNZ were both broadly supportive of the merger.

But TVNZ said the independence of ANZPM should be toughened up, reiterating its concern that the new entity’s proposed status as an “autonomous Crown entity” meant it would have less statutory independence from central government than either TVNZ or RNZ currently enjoy.

While some privately owned media organisations would prefer ANZPM to be less commercial, the Commercial Communications Council, which represents major advertising agencies, said it was concerned by a lack of “commercial imperatives” in the legislation.

Chief executive Simon Lendrum said advertising was a positive force in New Zealand.

“TVNZ has, for decades, provided New Zealand businesses with a powerful, effective and efficient channel to advertise their products and services and for government to communicate with citizens,” he said.

But he said the merger proposal failed to recognise the importance of TVNZ’s current role in “supporting the economy, local business, jobs and revenue generation through the enablement of advertising”.

“We would ask that the bill explicitly acknowledges the need for the entity to deliver commercial outcomes at a level on par, or exceeding, existing levels,” he said.

The Association of New Zealand Advertisers also suggested the importance of TVNZ as an advertising platform had been downplayed.

“Nowhere in the business case, the bill or in the supporting documents is there explicit acknowledgement, or even much interest, in the extent to which advertising supports the media sector generally or ANZPM specifically,” chief executive Lindsay Mouat said.

Lobby group Better Public Media said the proposed merger “represented an opportunity but also presents a huge risk”.

“The risk is the weakening of what little public media we have – currently known as RNZ,” it submitted.

The Asia Pacific Media Network appeared more nonplussed by the merger proposal, saying there was “no vision or substantial rationale for the merger”.

Many submitters indicated they wanted to appear in front of the select committee, which is due to report its recommendations on January 26.