More than $16m spent on TVNZ/RNZ merger before it was called off

Wednesday, 8 February 2023

$16.1m spent on merger to date, with some costs yet to be tallied.

The Government spent more than $16 million preparing for the merger of TVNZ and RNZ that has now been called off.

The spending includes millions of dollars spent on consultants that helped prepare business cases for the creation of the now-abandoned new public media entity.

It is not clear whether it includes all spending by RNZ and TVNZ themselves. The broadcasters indicated last year that they had spent about $1m preparing for their merger.

Some other costs have yet to be tallied.

* What would become of TVNZ and RNZ if their merger is shelved?

* RNZ warmer than TVNZ on merger in front of MPs

Emily Fabling, deputy chief executive of the Ministry of Culture and Heritage, said the total costs for the proposed merger from the time it was conceived in 2019 until the end of December last year, added up to $16.1m.

“January and February costs are yet to be totalled and we expect some more final costs to accrue in closing down the programme,” she said.

Prime Minister Chris Hipkins killed off the merger on Wednesday saying there was a clear need for further support for public media, “but it needs to be at a lower cost and without the need for significant structural change”.

National Party broadcasting spokesperson Melissa Lee said that was the right decision but the “millions” spent on the merger were a big waste.

The Government had budgeted about $40m for the merger and had planned to increase funding for public media by about a net $58m a year once the new media entity was created.

Hipkins indicated a portion of the gross sum of $327m that it had allocated in extra operational spending for the merged entity over three years would be redirected to RNZ and NZ On Air, but that some would go back into the public purse.

A spokesperson for Hipkins said the Cabinet had yet to make a decision on the details of that split.

TVNZ chief executive Simon Power indicated it intended to move on quickly, now a decision had been made.

TVNZ had “always shown support for the new public media entity and the opportunities it presented”, but would “adapt quickly” now that there was clarity from the Government, he said.

The challenges the media industry faced had not disappeared and TVNZ could not stand still, Power said.

“Our priority is accelerating our digital transformation so we can continue bringing the stories of Aotearoa to viewers across the platforms they want to watch them on.”

RNZ chairperson Jim Mather also said the challenges facing the broadcaster and the broader media industry had not gone away.

Those included rapidly changing commercial models, “the rise of international media giants and foreign content”, increasing costs and the spread of misinformation and disinformation, he said.

RNZ had often appeared keener on the merger than TVNZ.

RNZ chief executive Paul Thompson suggested that RNZ could independently take on some of the new tasks that the merged media entity would have fulfilled, thanks to the promise of better funding.

Commercial media companies had lobbied against the merger, voicing concern it could create unfair competition for their own operations.

Cam Wallace, chief executive of radio and outdoor advertising business MediaWorks, said it was “a shame so much has been spent on this proposal at a time when the industry as a whole in New Zealand is dealing with decreasing advertising revenues in the face of a likely recession”.

“The proposed merger has created a degree of uncertainty for staff at both entities and in the wider industry and we’re pleased that everyone can now concentrate on delivering for New Zealanders,” he said.

Stuff chief executive Sinead Boucher said she was also pleased Hipkins had put a stop to the merger as there were “too many question marks” around the impact on the rest of the media ecosystem and it didn’t address the health of the industry overall.

“Good public interest journalism is produced by many in the media ecosystem and we look forward to continuing to work with the Government and wider media industry on measures to support the sustainability of local journalism,” she said.

A senior media industry source suggested last week that both TVNZ and RNZ would be able to carry on essentially as normal in the absence of the merger, but that a crunch time could come for TVNZ when it was forced to consider whether to reinvest in its terrestrial transmission network in five to 10 years time.

By then it might need to decide whether to switch to only broadcasting its programmes via satellite and streaming them online, he said.