BusinessMarch 9, 2020

TVNZ and RNZ might soon become siblings. Ireland has some advice


The proposed merger of RNZ and TVNZ has one clear international precedent – Irish national broadcaster RTÉ. Michael Andrew asks what New Zealand can learn from the Irish model.

There’s a touch of comedy in the idea of a merger between RNZ and TNVZ, almost as if the two organisations were unfamiliar step siblings forced to share the same bedroom.

On one bunk will lie RNZ, our national radio broadcaster; a state funded organisation that markets itself – sometimes controversially – on its ad-free public service content. And on the other bunk you’ll have TVNZ, our kind of public-but-not-really TV broadcaster, which earns most of its $310m yearly revenue from commercial advertising and has a history of bucking government attempts to saddle it with public service responsibilities.

With a different audience, different content and most probably different pay scales, it’s difficult to see the two playing nice together. Yet the struggle is real, and the merger has been deemed essential to preserve New Zealand’s private and public media and throw an advertising bone to TVNZ’s struggling commercial competitors.

As of this week, the government’s strategy for the merger remains behind locked doors – even leading media academics have no idea what’s going on. PWC has been hired to oversee a business plan, but at this stage the government’s vision – and how it intends to see it through – remains a mystery.

Because the merger is uncharted territory and the melding of commercial and public media interests is such a paradox, it has been frequently compared with other mixed-funding public service broadcasters abroad to help understand the challenges and benefits that lie ahead. Ireland’s national public broadcaster RTÉ is consistently cited as a case study.

With roots going back to 1926, Raidió Teilifís Éireann is one of oldest broadcasters in the world and serves a country of an almost identical population to New Zealand. It provides a suite of television channels and radio stations, which collectively make it the most popular media outlet by market share in the country. What makes RTÉ especially relevant to New Zealand, however, is that it’s a hybrid – funded roughly equally from advertising revenue and public sources.

How RTÉ is funded

Throughout most of its 94-year history, RTÉ has relied mostly on broadcasting licence fees, which were traditionally added to the cost of a radio set. Because most households had a radio, RTÉ was funded directly by its listeners. In recent years the fee has been applied to televisions, but there has been talk of changing this yet again, as more people shift to consuming media on their phones and thereby avoid paying their fees.

Then there’s advertising revenue, which has formed an increasing share of RTÉ’s funding since the 1980s, reaching a peak in 2007. Despite its age and legacy, however, the broadcaster is not immune to the global pressure on media wrought by the likes of Facebook and Google, and advertising revenue has dropped considerably in the past decade. RTÉ reported €150m (NZD$246m) commercial revenues in 2018, a 39% decrease from 2008. The broadcaster itself has admitted it is in the grips of a cash crisis and has started cutting jobs, selling real estate and valuable artwork – including a William Scott piece for €220,000 – to raise more revenue. Increasingly, it is looking for more efficient ways to capture funding from a more elusive public to balance the books.

RTÉ’s statement when it sold its artwork.

According to Roderick Flynn, a lecturer in communications at Dublin City University, although RTÉ is a traditional public broadcaster, it has evolved to be largely commercial in both market engagement and internal culture, very similarly to TVNZ. Naturally, this can influence the content the broadcaster chooses to run, especially on the main television channel RTÉ 1, which often features programmes that entertain, rather than educate or inform.

“RTÉ has an eye to the commercial market that a fully funded public broadcaster would not, or might not have,” he says.

“We have a show called Dancing with the Stars. It’s really hard to see how you would say, ‘there you have public service broadcasting at its finest.’ It’s populist. And it’s harmless in a sense until you think the space that it’s occupying could be used for something else, maybe something a bit more public service orientated.”

On the radio arm, RTÉ’s Radio 1 is the most listened-to station in the country and features a mainly talk-based service similar to RNZ National. 2FM, RTÉ’s pop station, is a useful case study for RNZ which last month announced controversial plans to establish a youth station to attract more young listeners. While the 40-year-old 2FM also has difficulty attracting younger listeners, Flynn says RTÉ doesn’t seem interested in adapting the station or creating a new one in an already saturated youth radio market, but would rather focus on digital to reach a diverse audience.

The public’s broadcaster

While RTÉ operates in similar ways to a commercial enterprise, what differentiates it is that it is still thought of as the national public broadcaster by the people of Ireland.

“It’s still seen as the channel of record, and it invests a lot more into news and current affairs which commercial channels aren’t in a position to do. It has evaded the perception that it is the state broadcaster or the mouthpiece of the state,” says Flynn.

The RTÉ 1 news studio

According to Massey University media studies lecturer Sean Phelan, who is Irish, RTÉ’s privileged position in the media landscape is thanks to the broadcasting licence fee, which has given people a sense of ownership over their public broadcaster. This could be the biggest obstacle for an equivalent New Zealand model, which doesn’t and probably won’t ever have any such mechanism in place to connect the funders – the New Zealand public – with the end product, the broadcaster.

“The politics of how the public identifies with the public service broadcaster is crucial… and I think that’s probably the huge challenge with New Zealand,” says Phelan.

While RNZ is funded by the crown via New Zealand On Air, there is no specific public tax or levy, something that if applied could bolster a crucial sense of ownership between the public and their broadcaster. TVNZ once had a broadcasting licence free, but it was scrapped in 1999 when the National-led coalition moved to privatise the company and it has since relied on heavy TV advertising. According to Phelan, the frequency of the advertisements on RTÉ is another key difference with TVNZ in its current commercial form, something that may need to change for the merger with ad-free RNZ to be successful.

“One of the reasons that [RTÉ’s advertisements] are not a problem compared to the norms of let’s say TVNZ is you don’t have as many damn advertising breaks on RTÉ as you have in New Zealand. My sense is they don’t impose themselves into the broadcasting space that’s perhaps the norm at TVNZ.”

TVNZ CEO Kevin Kenrick received a $120,000 pay rise in 2019, taking his annual salary to $1.55 million (photo supplied)

Commercial culture

A similar parallel between the commercial nature of the two organisations is also the high – and often criticised – salaries of the broadcasters, with some RTÉ salaries over NZD$800,000. Similar complaints have been levied at the pay culture of TVNZ, which could taint the merger with RNZ should there be a systemic gap in average pay between the two operations.

Peter Thompson, senior lecturer in media studies at Victoria University, agrees that this could be a major impediment to the success of the New Zealand model.

“I suspect there might be a culture clash between the people in radio who get paid significant less – partly because it’s public service broadcasting – and the salaries that still reflect I think the heyday of commercial TV and the idea that we’re all in showbiz.

“This is where the rubber hits the road – you can’t just sack everyone at TVNZ and invite them back at a lower salary, that will go down like lead balloon. But on the other hand you probably can’t say to the people in radio ‘great you’re all getting double salary next year’. Dealing with the anomalous premium that has been attached to TV sector salaries for the last few decades is going to become a public policy issue.”

One of many, it seems. Thompson says that in order to merge RNZ and TVNZ into a functional and sustainable public service broadcaster, the government will need to spend an enormous amount of money to push TVNZ away from commercial reliance and toward a public service remit. This, he says, is one of the biggest obstacles to achieving a model similar to RTÉ.

“First of all, RTÉ is more established as a hybrid operator – but it’s the commercial side that is deteriorating and that creates pressure for increased support on the public side. If you’re looking at RTÉ as a model you’re going to need to find $150m to start getting [TVNZ] up to the level of funding that RTÉ receives from public sources.”

So far the government has made no such commitments, or any for that matter, with details of the business case concealed within the ranks of PWC.

“I don’t know what the government’s thinking because they haven’t told anyone. Quite frankly it’s been one of the closely guarded secrets in broadcasting policy I’ve ever encountered in 20 years of doing research. They’ve played it incredibly close to the chest,” Thompson says.

Whenever the plan is revealed, Thompson says it’s essential for the government to configure both the funding and the structure simultaneously, in order to have a chance at establishing an entity that can provide a sustained and authentic public service.

“We will see, but it will be rather ironic if come the PWC report the next thing the government says is ‘OK well this looks like a plan, where are we going to get the money?’”

While that could certainly be possible, until the plans are public the New Zealand media will continue to wonder about the cost and structure of the new merger, if it will be similar to RTÉ or a new model entirely – and which company, RNZ or TVNZ, will get the top bunk.

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