How long will it take for Freeview to fail?
Frewen | Wednesday January 31, 2007
Can’t Pay? Won’t Pay! – the title of a satirical farce by Italian playwright Dario Fo, winner of the 1997 Nobel Prize for Literature – could be adapted for a similar treatment of TVNZ’s digital plan as Won’t Pay? Will Pay!
Consumers who won’t pay for Freeview’s digital channels will pay for them anyway as taxpayers. The only question is how long it will take for Freeview to fall over. Two years, maybe three, should be enough for the drain on public funds to become a source of political embarrassment and controversy.
The reluctance of consumers to pay for television they were getting for free – or thought they were – will expose the shaky foundation of a broadcasting policy based on an assumption that has never been questioned, and a question that has never been asked.
The assumption, made by Treasury in the late 1980s, is that New Zealand cannot afford a non-commercial television channel. When it was first echoed by Labour’s Jonathan Hunt in 1989, the annual cost of a public channel was believed to be $120 million. Recently guesstimated to be around $140 million, the cost is now well below the total of direct and indirect subsidies being spent one way or another on television.
Coming from a variety of government sources – making it difficult to be precise – the annual spend on television is probably about $180-200 million. Yet Marian Hobbs, Helen Clark’s first broadcasting minister, continues to echo the Treasury line, telling the Dominion-Post earlier this month: “[A] fully taxpayer-funded public broadcaster similar to the BBC was simply too expensive for a small country.”
Nevertheless, when TVNZ’s two commercial channels refused to disrupt their prime-time schedules to screen Maori programmes, the government decided that the taxpayer could afford to pay $60 million a year to start up a separate channel catering to a racial minority comprising 15% of the population.
Now the same thing is happening with the so-called charter programmes. Made with public money and aimed at niche audiences, they were also banished from prime time to protect ratings and commercial revenue.
Once again new channels are being created, this time to carry exactly the sort of non-commercial public television that governments have been insisting the country cannot afford.
Like a guest arriving late at a fancy dress party in suit and tie, Freeview’s handful of channels will be marketed to the 60% of homes that have so far shown no desire to pay for more for their television by subscribing to Sky.
Unable to withdraw its existing channels from Sky without harming advertisers, TVNZ will not be putting its new digital channels on the pay-TV platform, forcing Sky subscribers to get another box and remote in the – rather unlikely – event they should want to add another 24-hour news channel to the half dozen already on offer.
Although Freeview limits costs to one-off payments for a decoder box and aerial, the investment will initially buy only a couple more channels than what’s already available for free. Compared to the UK where Freeview delivers some 30 channels from a mix of non-commercial, commercial and pay-TV broadcasters, its New Zealand namesake will inevitably be dubbed “the poor man’s Sky.”
A 24-hour news channel in a country that struggles to produce 10 minutes of real news on a good day and a “home” channel with nice items about homes and families are unlikely to provide enough incentive to persuade many people to pay for television they are accustomed to viewing for free.
The free-to-air channels to be broadcast on Freeview include Maori Television, TV3 and C4. But CanWest is not planning to put any new channels on Freeview, reserving the frequencies acquired in the initial allocation for high definition television programmes.
In stark contrast to TVNZ’s over-excited marketing hype, CanWest’s wary approach reflects that the move to digital accelerates audience fragmentation to the disadvantage of commercial broadcasters, which rely on advertising revenue derived from screening programmes to mass markets.
Although digital channels can offer advertisers greater precision in targeting specific demographics, this is not so lucrative in New Zealand’s tiny niche markets.
CanWest’s muted enthusiasm for the transition to digital also reflects the hard-edged approach of a broadcaster which – like Sky in the pay-TV business – built its revenue and audience share from scratch.
TVNZ, on the other hand, has gone the other way, starting big and slowly trending down, adopting an overly aggressive defensive strategy that has proved time and again to be unsuccessful.
And whereas CanWest and Sky have enjoyed continuity of purpose and management, TVNZ has had regular changes at the top and constant meddling from politicians and bureaucrats – a textbook illustration of all the reasons governments should not be in business.
That will be the judgement when the spotlight falls on Freeview in a couple of years and politicians are required to find an answer for the question that never gets asked: Why does the government control two commercial television channels?
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