After barrelling along quietly for months, yesterday saw the government’s attempted merger of its biggest media assets suddenly erupt, writes Duncan Greive.
“This Bill creates a ‘not-for-profit but commercial’ mega-entity that has real potential to distort competition in the market,” says Sky. “[We have] significant concerns that the establishment of ANZPM would significantly undermine the sustainability and viability of commercial media,” says NZME. “The legislation will create a media giant with substantial market power, a not-for-profit remit and a highly effective commercial operation. These factors combined… will grossly distort the market,” says Stuff.
This is the degree of fear in New Zealand’s media as it assesses the prospect of a merger of TVNZ and RNZ in a raft of submissions to the ANZPM bill, currently before select committee. The bill creates a new entity, Aotearoa New Zealand Public Media, which will take over ownership of TVNZ and RNZ and be given a major $100m-plus annual funding boost on the express proviso that it meet the needs of communities and audiences – predominantly younger and more diverse – that both organisations currently struggle to serve nearly so well as they do older Pākehā.
That alone would have represented the worst day yet for the merger – but broadcasting minister Willie Jackson made statements which took rumours of a simmering tension between TVNZ and the government public, baldly telling the television giant that it was failing to properly engage with the government’s plans. The merger was “going to require a change of culture, particularly from TVNZ, not so much RNZ because I think they get the model,” he said. Of TVNZ he said, “We’ve had a couple of meetings with them and I think they want the best of all worlds at the moment, but we need them to change their attitude.”
Finally, in an act which in the current context has more than a whiff of passive-aggression, TVNZ’s arch rival Three was selected alongside RNZ to be the TV partner for its official Queen Elizabeth II memorial broadcast. This is the governmental equivalent of being removed from the chat ahead of a big party, and it all adds up to make what was previously a relatively small part of the spring legislative programme suddenly appear shaky.
Submission moves
It’s striking how similar the submissions from the private sector are, most taking a near-identical form in which they express support for the idea of the merger, but grave fears for what it might do to their businesses should it fail to be properly designed. This all boils down to the fact that it has a mixed funding model – making it a very rare bird in the public media world.
It’s far more common for public broadcasters to be fully non-commercial, like the ABC in Australia, BBC in the UK or CBC in Canada. (Incidentally, RNZ CEO Paul Thompson is currently off on a lengthy study tour, taking in the latter two organisations – his absence from the debate might be one reason it’s tilting on its axis.)
The mixed funding model means that the new entity will combine the commercial juggernaut that is TVNZ, probably the country’s most voracious media sales machine, and top it up with around $109m in extra funding from the government. It is essentially untagged – it’s for ANZPM to figure out what to do with it.
This is what has the rest of the media freaking out. The new entity could use that capital to pounce on parts of the market commercial operators depend on. It could seek to poach their key staff, which would make their costs go up while also depriving them of crucial talent. It could offer discounted commercial rates, making an already borderline loss-making industry even more unsustainable. It could make way more hit shows and products, and buy the rights to big sporting events, and take their audiences that way. There’s every chance it does all of that – and the prospect of a $500m behemoth which only has to earn $350m is rightly viewed as a doomsday machine if improperly handled.
Jackson vs TVNZ
Broadcasting minister Jackson has only been in the job a few months, but already has been more forthright and vigorous than either of his predecessors were in years. His public chastening of TVNZ, of its attitude and culture, represents a huge escalation – it is essentially being told to get on board this bus, in no uncertain terms. Implicit in that is that this will be a public service entity, with commercial considerations much lower in its hierarchy than they are now.
How this will be achieved is the issue – the bill has almost nothing to say on the matter, hence the consternation from the private sector. TVNZ is now being led by Simon Power, a former National cabinet minister who appears to be playing this process using skills honed over a decade in parliament to steer this toward a conclusion which suits TVNZ.
There is a sense that TVNZ assumed it would be the senior partner in the merger – not unnaturally, given its relative scale – and that it would be allowed to continue to operate commercially largely as it had done before. Jackson appears to be saying that neither of those things are true, and the government seems to much prefer the prospect of Paul Thompson as leader and RNZ’s non-commercial public service culture being the dominant strain of the new organisation.
Will it make it to the finish line?
Rumours have circulated within media for some time that, contrary to Power’s public statements, TVNZ would quite like the merger not to go ahead at all. It is rightly proud of its digital transformation, which is as good as any in our media. It has changed its public facing brand as much as Stuff, and worked as hard on its operating model and revenue as NZME. With an election next year, and neither National nor Act remotely as excited about the merger, perhaps some foot dragging might mean it just goes away?
Under Kris Faafoi, the previous broadcasting minister, that was probably a fair assumption. But Jackson is a very different operator, a former union organiser who relishes a battle. You can see from the way he’s ratcheting up the pressure on the tech giants to make settlements with the media that he is very comfortable using his power in public. Yesterday was him telling Power and TVNZ that this is happening, whether you like it or not – and it’s happening according to the government’s vision, not TVNZ’s.
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The situation is not helped by most involved having only had months in their roles. Thompson is away and TVNZ brutally lost its head of news just weeks ago, leaving most of the public lifting to Jackson and Power. There is a sense that this is all happening very fast and steered by people who don’t have years of experience in their roles to draw on.
It could simply collapse, but the government will be wary of having another signature policy fall away, and further burnish the opposition’s critiques of its ability to deliver. Mostly though, it is Jackson’s determination which seems the last and strongest asset the merger has at this point.
Was there another way?
It’s interesting to imagine a counterfactual at this point in the project. Lost among the noise of the merger and its far-reaching consequences is NZ on Air, which has up until now been the biggest funder of public media in this country. While not without its issues, it is generally considered an honest broker, and one which has strong and established leadership in its chief executive, Cameron Harland, and head of funding, Amie Mills. It is now staring down the barrel of an enormous funding cut, from around $180m today, to as little as $40m.
None of this is confirmed, but it would represent a radical change from a 30-year bipartisan experiment in a decentralised model, whereby public media could play anywhere eyes and ears might find it. It has had an enormous cut in funding in real terms over the past 30 years, thanks to its budget failing to keep pace with inflation and GDP growth. At the same time, its job has got far more complex, with audiences splintering across infinite online channels.
Could the $109m a year which has been allocated to the new entity instead have been given to NZ on Air, with an explicit mandate to meet those underserved audiences wherever they might be found? It’s too late for that now, but with all parties involved – except maybe RNZ – seemingly unhappy, this merger, which began with such promise, stands poised on a knife-edge. Its fate rests on a battle of wills between a brand new CEO and an even newer minister, which has next week’s select committee hearings shaping as the best show on our screens. Ironically, the place to watch it all go down is Facebook.
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