Kris Faafoi announces the merger proposal in Christchurch (image: screengrab)
Kris Faafoi announces the merger proposal in Christchurch (image: screengrab)

BusinessFebruary 8, 2020

The RNZ/TVNZ merger is on. The rest of the media should be very afraid

Kris Faafoi announces the merger proposal in Christchurch (image: screengrab)
Kris Faafoi announces the merger proposal in Christchurch (image: screengrab)

The merger of TVNZ and RNZ is a huge boost for government-controlled media. Duncan Greive asks what that means for the rest of the sector.

Last year, NZ on Air convened a meeting of senior executives from almost all the main news organisations in New Zealand. Around 20 surrounded a large table at the Heritage Hotel in downtown Auckland. While there were representatives from RNZ, TVNZ and the Ministry for Culture and Heritage in attendance, the majority of the group came from the private sector – which has historically provided the largest audiences and biggest players within print and radio, and the media more broadly.

The word “crisis” was thrown around a lot, with minister of broadcasting Kris Faafoi challenged to take the ministerial advisory groups and concerned sounds emanating from the government and convert them into action which might benefit the sector. Specifically the private sector – the one feeling the pinch, the one unable to suspend dividends or wait for a funding increase. By the meeting’s end there was an agreement to have this become an open dialogue, facilitated by Paul Thompson, head of RNZ.

Over the coming months, representatives from the group met regularly with Faafoi, to talk about what might be done to help the sector confront its challenges – the audience fragmentation wrought by the internet, and the impossible-to-win advertising competition with internet giants which create no content, but facilitate its distribution on a massive scale.

Faafoi is an excellent listener, and was as engaged with the detail of these issues as most in the media itself – no small thing, given the multi-dimensional complexity of the challenges at stake. Near the end of one, when pressed, he promised to have a concrete announcement to make before the end of the year.

None came, though various leaks gave a sense of what the government was up to. Yesterday Faafoi took to a dais at the broadcasting school in Christchurch to make official the worst-kept secret in media: that it had hired the consultancy PWC to look into the business case for a merger of TVNZ and RNZ, the government’s largest and most-prominent media entities. Via an ominously glitchy Facebook stream, he announced that they were aiming to build “a new, fit-for-purpose public media entity… designed for a 21st century media environment.”

Which is to say that after a year of hearing the howls of pain from the private sector of the media, the government has decided what they really wanted was a bigger, better-resourced and more powerful competitor.

On one level, this is understandable. To take one easy-to-digest metric – one that we also use in marketing our Members programme – the number of journalists working in New Zealand has halved in less than two decades. Journalism is a fairly important element of a democracy, so it’s unavoidable that the rapid shrinking of its population is evidence of market failure. 

It’s not particularly radical for the government to intervene in cases where a public good is not provided in adequate volume by the private market. Legal aid is one example. Social housing another. Yet in both those cases, the government interacts with the private market to ensure provision of those services. It contracts many of its defence lawyers from private practice, and is using a number of private developers to create new housing infrastructure.

In this case, it has assessed the decline of the media more broadly and decided that the best way of arresting that is to amplify its own media channels, providing unspecified additional funding and merging two already imposing entities into one giant to loom over the entire sector. 

This will be a monumental undertaking. It has taken two-and-a-half years to arrive at the point where a business case has been commissioned. If it’s approved, and the government re-elected, the process is imagined to be completed by 2023. This timeline might be optimistic, as the two entities are very different, culturally.

TVNZ sent a message from CEO Kevin Kenrick to its advertisers in the aftermath of the announcement, saying “TVNZ fully supports the critical role of advertising in building brands and driving sales of products & services… we will continue to proactively champion the need for New Zealand businesses to reach large relevant audiences as an integral part of any future public media plans.” Which is to say that it will aggressively defend its commercial status. RNZ, meanwhile, is preoccupied with a rather different situation: what to do with its ad-free classical music station.

That contrast tells you all you need to know about the gulf between the two organisations. Equally telling is the respective histories of innovation. RNZ’s daily schedule is seemingly immovable, with programmes lasting for decades, and often hosts too. Its last attempt at a new brand was the Wireless, which was quietly shuttered a couple of years ago. TVNZ launched a number of new channels when told to by the last Labour government, but seemed pleased to be rid of them when the opportunity arose. TVNZ U suffered a similar fate. TVNZ On Demand is a different story, a highly successful and increasingly well-resourced platform. But it alone doesn’t fill you with hope that the new beast would be “nimble and agile”, regardless of how frequently Faafoi repeated the phrase at the press conference.

Which is to say that it’s no small thing they’re attempting here. So it’s important to confront the problem they’re attempting to solve in making these two very different animals become one. It’s not just the scale of the New Zealand media. It’s the diversity and plurality of voices, of outlets. There is one certainty with the merger: that the number of truly independent newsrooms in the country will be reduced by one when this happens. After that, that the strain on the rest of the sector will increase: if you run the newsroom of NZME, Mediaworks or Stuff, two of your biggest competitors will soon join forces, and likely expand. (Recall when two private sector competitors tried to join forces: the commerce commission repeatedly turned them down). 

The merged entity’s status as a not-for-profit actually makes it a more fearsome competitor, as it has to be assumed that any shortfall in ad sales will be made up by public funds. (An aside: paying a multinational consultancy to assess the business case of a not-for-profit also seems somewhat strange). And even if you believe that its mixed funding model – some commercial, some not – won’t expand the government’s ad inventory (a big if), losing a significant amount of eyes and ears to non-commercial content cannot help but make the private media sector significantly worse off. Given the intense war for attention from the biggest companies in the entire world, the CEOs of NZME, MediaWorks, Stuff and Sky would be forgiven for thinking that it’s time to pack up and go home. To put it another way: PWC is assessing the business case for this merger – but what about the journalism case? The democracy case?

Kris Faafoi revealing the government’s media plans (image: screengrab)

It’s worth noting that there were other paths the government might have chosen, and it has other levers to pull. Its keenness to see films made here has seen it create an enormous rebate scheme called the Screen Production Grant, which offers a cash grant matching up to 40% of film budgets spent here. Likewise, its desire to see investment in R&D means that the government offers a 15% rebate on expenditure. A similar scheme to either of those could have been set up to encourage ongoing private sector investment in media. It also has, in New Zealand on Air, a well-run funder of local media – it could easily have expanded its remit and upped its funding, allowing it to create streams better suited to funding journalism or always-on programming.

It could still co-opt any of those things, or do something different again. Yet so far there have been no indications it is interested in anything but shoring up its own media house. With the storm bearing down on it – the ever-growing scale of Google and Facebook, and the billions being pumped into the likes of Netflix, Disney+, Amazon Prime and more, the competition for attention is more globalised and better-funded than ever before. To reach local audiences with local content will require New Zealand’s remaining journalists, editors, commissioners, writers, producers and executives to work harder and more creatively than ever. 

It’s manifestly clear that many will not survive this era. Yesterday we received confirmation that the government has assessed the situation, heard from all concerned and decided that it will first and foremost look out for its own. The rest of the media could be forgiven for believing it has been told to fend for itself. This business case will take six months to assemble, essentially the same timespan as separates today from the 2020 election. The large but shrinking parts of the media which aren’t controlled by the government will be watching closely to see if more announcements are to follow. Or whether the concern for the welfare of our media extends only as far as its own entities.

Duncan Greive hosts The Fold podcast, discussing the New Zealand media, at least monthly. It’s available where all good podcasts are given away free – including Apple Podcasts, Spotify and all Android platforms.

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