Simon Power looks to the future for TVNZ after abandoned merger

Friday, 24 February 2023

TVNZ chief executive Simon Power says it too soon to talk about following the BBC by discussing ambitions and deadlines for a switch to online-only television.

TVNZ chief executive Simon Power says he doesn’t view a decline in the broadcaster’s financial performance as evidence that the merger of TVNZ and RNZ was needed.

But he also denied being secretly pleased that the merger has been scrapped, saying he was “ready to make sure TVNZ was ready to go regardless of what the government decision was”.

The state-owned broadcaster reported on Friday that its interim profit for the six months to the end of December dropped by 68% to $4.8 million.

Advertising revenues, which made up the all but $9m of its revenues, were down 1.1% at $171m and expenses climbed 7.3%, roughly in line with inflation, to $166m, which Power said reflected an investment in its people and in its “digital future”.

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TVNZ’s latest financials were released less than three weeks after the Government backtracked on its proposal to merge TVNZ and RNZ into a new public media entity.

Power said TVNZ had spent $1.2m preparing for the now-abandoned merger, but said it expected the bulk of that to be reimbursed by the Ministry of Culture and Heritage.

It had also had up to 50 people working on the merger at times, he said.

Power said it was a good question whether that represented an additional “opportunity cost” for the broadcaster, but that he hadn’t really thought about it in those terms.

“I wouldn't necessarily describe it as an opportunity cost, because we learnt some things as part of those discussions.

“There were actually some good lessons around how to refine our technology thinking. There were some good lessons around thinking about both those ‘harder to reach audiences’.

“These insights will help inform TVNZ’s strategy and direction,” he said.

Power said TVNZ had paused some of its investment in new online platforms and digital upgrades earlier during the Covid pandemic but planning had continued in parallel with the merger discussions “and we need to get cracking with that”.

The Ministry of Culture and Heritage has said the Government had spent $16m on the abandoned merger as of the end of December but that there would be additional costs in January and February and some wash-up costs.

Fellow media business NZME said on Wednesday that it had experienced a “soft start” to 2023.

TVNZ said in a statement accompanying its interim results that inflationary pressures and interest rate increases were likely to deliver a softer domestic advertising market through the remainder of 2023.

“Maintaining our balance sheet strength will be a priority so we can continue with our transition to a fully digital future,” Power said.

Fellow media business NZME reported a one-third drop in its annual profit on Wednesday and rival radio business MediaWorks proposed laying off about 50 staff and axing another 40 vacant positions in January in a bid to cut costs ahead of the expected downturn.

But Power described its own interim result as “solid” and said that while it was aware of “economic headwinds ahead”, it was well-positioned to weather the conditions.

“I wouldn't frame it as being an example of why a merger was needed. I’d simply say, it's a refection of a solid result at a time when the landscape on several fronts was quite uncertain,” he said.

TVNZ grew its digital revenues 16% during the six-month period, from the same period in 2021, and Power “TVNZ future is undoubtedly digital”.

“Broadcast television audiences will continue to move to streaming options and transitioning these audiences to our digital offerings and growing the accompanying digital revenue is critical for our future success.”

But Power said it was too soon to comment on whether that had implications down the track for TVNZ continuing to broadcast traditional linear television via the digital terrestrial radio network and by satellite.

Tim Davie, the director-general of Britain’s BBC, said in December that it would have “fewer linear broadcast services” in the next decade as it began switching to an online-only model.

“I know the BBC has talked publicly about particular ambitions and deadlines lines in that regard. I'm not going to do that today,” Power said.

Former TVNZ chief executive Kevin Kenrick made clear in 2019 that he felt TVNZ had not done enough to crack the market for local online news that is currently largely served by Stuff and NZME, during his tenure.

There had been speculation the merger with RNZ would have resulted in a stronger combined push into that area.

Commenting on the extent of TVNZ’s ambitions in that market now that the merger was off, Power said it would be “focused on what we can do better in that area”.