Last week Broadcasting Minister Kris Faafoi announced the names of a panel to finalise the business case for the merger of TVNZ and Radio NZ. It’s members are:

• Chair—former NZ First party deputy leader Tracey Martin.
• Broadcasting Standards Authority chair Glen Scanlon – a former head of news at RNZ.
• Former MediaWorks chief executive Michael Anderson.
• TV producer, former reporter  and member of Prime Minister’s Business Advisory Council Bailey Mackey.
• Broadcasting and technology consultant William Earl.
• Dr Trisha Dunleavy, Victoria University of Wellington media academic.
• Producer Sandra Kailahi, former journalist at TVNZ’s Tagata Pasifika, Te Karere and Fair Go.
• John Quirk, former chair and director of state-owner transmission company Kordia.

This panel has till mid-year to come up with its plan, to go to Cabinet before the end of the year. Its expected to allow for a mixed model of funding, with monies to flow to the merged entity from both Government and advertising.

Free-to-air broadcasting has seen a considerable decline in advertising revenue to the point where two years ago revenue versus expenditure at TVNZ was even. Consequently, TVNZ announced that there were not going to be paying a dividend to the Government. The decline had come primarily at the hand of online advertising, with Google, Facebook and other digital advertising channels benefitting at the expense of free-to-air.

Over the last couple of years, however, TVNZ’s revenue situation has improved, thanks to an improved share of TV market revenue , growth in digital advertising and a move to more locally produced content and a streamer-forced move away from acquired international content.

TVNZ had astutely recognised the value of a digital video platform and ploughed significant investment and resources into its Advertising Video on Demand service TVNZ OnDemand. In 2014 when NZ On Air started its ‘Where Are the Audiences’ research, TV2’s share of the 5+ audience was 27% while OnDemand’s was 7%. In 2020, OnDemand’s share was 21% while TV2’s was 14%.

Radio New Zealand meanwhile has gone from strength to strength. In 2020, a nationwide survey found that RNZ National has become the first New Zealand radio station to record more than 700,000 different listeners each week. CEO Paul Thompson attributed this to the public wanting a trusted source of news. Understandable in the era of fake news. RNZ has also seen growth in its digital channels.

The key concern for many is the merging of the non-advertising public broadcaster Radio NZ with the highly commercial public broadcaster TVNZ. The boards of the organisations reflect the non-commercial and commercial remits of the broadcasting entities.

If the panel wanted to stick to the adage of “If it ain’t broke, don’t fix it”, they’d leave TVNZ OnDemand and Radio NZ alone, most likely turn TV One into a true public free-to-air broadcaster, and dump TV2. But would the advertising revenue from OnDemand be sufficient?

Even with AVOD revenues in a number of countries expected to quadruple in the next five years, it’s doubtful OnDemand would make a big enough contribution to the bottom line with NZ’s small market.

The U.S.’s public broadcaster, National Public Media (NPM) provides a viable revenue-generation option. NPM, which includes National Public Radio (NPR), TV via Public Broadcasting Service (PBS) and their digital platforms runs a very specific kind of sponsorship and advertising model that is a proven revenue generator alongside a highly trusted public broadcaster brand. You can learn more about it here. Together with advertising-free content on TV One turned into Ad-supported content when moved to OnDemand, there probably would be sufficient revenues and maybe even some profit from the rejigged organisation.

Installing a completely new board for the new entity, putting RNZ CEO Paul Thompson in charge and making Kevin Kendrick responsible for the commercial arm—just like panel member Bill Earl was in charge of TVNZ Enterprises all those years ago—would play to their strengths as well. Kendrick would undoubtedly find other ways to generate revenue if he were willing to stay in essentially a demoted position.

I’ll be interested to see if my back-of-the-napkin business plan is close or wildly off the mark in July.

Tui Ruwhiu
Executive Director