TVNZ will need Crown support if revenue keeps shrinking, Treasury says

New broadcasting minister Clare Curran has said TVNZ will stay in Crown ownership

The Treasury advised the previous administration to think deeply about its ownership of commercial broadcaster Television New Zealand, which will need a Crown lifeline if the collapse in advertising revenue continues.

Officials put a report back in front of ministers in February this year after a scheduled meeting with TVNZ's chief executive and chair didn't go ahead, saying if the broadcaster's revenues continue to fall Crown support will be needed to keep it operating, something that could happen as soon as 2021. The report was among a number of documents published on the Treasury's website in response to an Official Information Act request.

The state-owned broadcaster forecast it wouldn't meet the commercial objectives under the TVNZ Act, which are to provide a commercial return, quality content including local content, and provide channels free of charge.

"Under current settings, TVNZ's revenue and profitability is in a long-term decline and the Treasury does not see TVNZ's financial position improving," the report said. "This means that without structural change, ministers would eventually need to provide ongoing operating funding for TVNZ to continue broadcasting."

The Treasury said a sale of the broadcaster could potentially deliver the highest value commercial option and that it was unclear what TVNZ offered from a public policy perspective that couldn't be achieved through other mechanisms. The paper said the Ministry for Culture and Heritage wanted to do more work on the issue, and had an early view that TVNZ "remains important to keeping the contestable funding model, via NZ On Air, viable" and "serves a more diverse audience demographically than strictly commercial considerations would dictate, and this is reflected in the range of NZ On Air content that it carries, both for mainstream and more specialised audiences, compared with other broadcasters or platforms."

Speculation of a merger between TVNZ and rival free-to-air broadcaster MediaWorks surfaced last year, although the Commerce Commission's rejection of a tie-up between publishers NZME and Fairfax New Zealand was seen as largely quashing the likelihood of such a deal getting over the line.

New broadcasting minister Clare Curran has said TVNZ will stay in Crown ownership and is promising a shake-up in public broadcasting with an extra $38 million a year set to beef up public interest journalism and programming.

In the Oct. 25 response to the request, TVNZ said the report was "an excellent summary of where things were" in February and since then things have deteriorated with rivals MediaWorks and Prime TV's performance worsening, Australian broadcasters struggling and TVNZ writing down the value of its Disney contract.

TVNZ reported a profit of just $1.4 million in the June 2017 year due to the Disney writedown, although revenue slipped 2.5 percent to $316.5 million and underlying earnings more than halved to $17.4 million. The broadcaster's annual report, tabled in Parliament yesterday, shows TVNZ's net profit was just 0.6 percent of equity and underlying earnings were 5.5 percent of revenue, both substantially lower than the previous four years.

The documents also show the Treasury recommended ministers consider further use of the mixed ownership model for other Crown entities, in a similar fashion to the New Zealand Superannuation Fund and Accident Compensation Corp investment portfolio taking a stake in Kiwibank. The March 2017 report singled out Transpower as the "single most value-adding option", however, then state-owned enterprises minister Todd McClay's handwritten remarks on the paper said "I didn't ask for this, send it back to them!!".

Another paper shows the Treasury was approached by an unnamed party in February wanting to buy its 25 percent shareholding in Christchurch International Airport. The report noted double right of refusal with Christchurch City Council and Ngai Tahu, although the preamble to the documents said ministers chose not to proceed with the deal.

(BusinessDesk)


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A good start would be to reduce executive team costs; counter to the latest increase in the CE salary.

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"TVNZ chief executive Kevin Kenrick received a pay bump of more than $200,000 and is now earning nearly $1.4 million a year despite the company's 89 per cent fall in profit."

So the CE gets a 15% pay rise while revenues fall 3.5% and profit gets absolutely slammed, sitting just above the CE's total renumeration. No less than a Dame defending it all as well. Then they have the absolute gall to go begging for public money. Where does the madness end?

Jesus wept...

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Wait til we find out Mike Hoskings salary no wonder he is so touchy about it. Time is now I think. Him and Kevin can man the sausage sizzle out the front to raise more funds...

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For Hoskins to run a sausage sizzle, you are presuming that he is a practical hands on sort of man. From what I've seen of him, he more comes across more as a talker, while putting hand cream onto his soft little white hands. All mouth and trousers.

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Close it down,if I run a business like that I'd be broke,all over paid, get rid of that clown Hoskings , god does that guy think he is someone, he's just a loud mouth piece trying to justify his existence for his over paid job.

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Simple fix.
What will happen. The govt will just pump in more borrowed money to keep it going.
What should happen. Management team reduced by 50%, and all salaries dropped by at least 50%.

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What should happen. The best waste and stream lining, removal model of all. Private enterprise?

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Is this not typical of a normal government approach. How many agencies, councils, commissions, ministries, departments, boards etc in the government sector could be eliminated without any consequences to our average NZ citizens.

The citizens that pay taxes for their existence. There is no competition and the image of so called importance is never questioned.

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Just like Korea + Russia
Option of TV3 the lefties
Thank god www tv saving us

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Clare. Not enough revenue is the economic system telling you the organisation is not needed.

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Or nine years of mismanagement and reality shows has come home to roost.

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It seems like nothing much has changed since the days of paying $700.000 to a newsreader to read a cue card for parts of an hour. God knows how much the sports-reader, and weather reader was getting during that same hour. Then a small fortune to Holmes for half an hour after that.
Wow, I'll bet there's no unhappy employees in that place.

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probably cheaper to shut it down and subsidize netfix for everyone.

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Well, that 38million would cover a good portion of two months netflix for every household in NZ.

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TVNZ content & scheduling are appalling a mix of food, Yankee cop propaganda and sport makes it as appealing as a glass of Arsenic which is why Netflix & Internet streaming is becoming the mainstream source of programmes and news.

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Many of the young don't watch much TV these days anyway. Gaming seems to be their thing now days.

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I am not young.

I haven't watched TV for years. I stream or surf. I also game. I use an appletv, and TVNZ took two years to create a garbage app for it while their competition TV3 produced one in a month. This resulted in my wife not watching shortland street, so it was really a blessing. Thank you TVNZ for being incompetent.
Now not even sky with their Neon competitor can get an appletv app going. Pretty simple coding, but obviously competes with their normal overpriced subscription model, so ... good riddance to them.

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Radio New Zealand provides a good example of a successful broadcaster for the public good (perhaps the BBC and NPR too), rather than where TVNZ has been forced to go in recent times. Perhaps the government should be looking there instead - liberate the organisation to provide a decent service rather than some of the trash they're peddling at the moment in service of returning the government a dubious dividend.

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