17 Feb 2019

TVNZ hints at bold digital moves

From Mediawatch, 9:10 am on 17 February 2019

Two years ago Treasury warned the government it might have to prop up state-owned TVNZ as soon as 2021 - because it was falling behind in an industry in sharp decline. This week the broadcaster’s top brass told Parliament about a “renaissance” in free-to-air TV and fielded questions about taking over rivals.

TVNZ's chief executive Kevin Kenrick and board chair Therese Walsh.

TVNZ's chief executive Kevin Kenrick and board chair Therese Walsh. Photo: supplied / Facebook NZ Parliament

This week TVNZ chief executive Kevin Kenrick told Parliament’s Economic Development, Science and Innovation Committee the broadcaster was “100 per cent committed to news.”

It was costly to produce, he said, but crucial to the company because it pulled in viewers for TVNZ 1 and attracted advertisers.  

But it's a different story online, where established news publishers NZME (owners of the New Zealand Herald) and Stuff attract the eyeballs of most New Zealand news consumers. 

"We've got scale in TV news and we're the market-leading player there," Kevin Kenrick told Mediawatch.

"We want to replicate our strength in TV in the digital world and that's a big focus for us right now," he said. 

Kevin Kenrick also told the MPs on the committee it was hard for TVNZ to make money from news online because - as media all over the world have discovered - Google and Facebook get the vast majority of digital advertising income these days.  

That’s one of the reasons local commercial media companies in the digital era are now worth a fraction of their former value.  

In a sobering survey recently, Stuff reporter Tom Pullar-Strecker reckoned the three biggest private media companies today - Stuff, NZME and MediaWorks - are worth only about one-tenth of their market value in 2000.

The value of all three combined today is about the same as that of Hallensteins and Glassons clothing chain, he estimated.

Two years ago Treasury officials warned the government the Crown may have to prop up TVNZ as soon as two years from now - and TVNZ didn't disagree at the time.  

But last Thursday, TVNZ board chair Dame Therese Walsh told the select committee things were looking up.

"We gained a real sense that there is a future and a sustainable path for TVNZ," she told the MPs. 

Profits were up and she said there had been a "renaissance" in the free-to-air TV business.  

What changed?

Kevin Kenrick told Mediawatch TVNZ was suffering unprecedented decline in TV advertising two years ago. Since then advertisers swayed by exaggerated claims made by online outlets had re-committed to TV advertising, he said.   

Lately the industry chatter has not been all about TVNZ going under or being sold off. Instead, pundits have pondered TVNZ merging with - or even taking over - other local media companies. 

Kevin Kenrick told Mediawatch bluntly; "the New Zealand media is not sustainable in its current form".

"There are too many players that don't have the scale to be commercially viable," she says.

Dame Therese Walsh told MPs on Thursday TVNZ wanted to contribute to "an efficient national media system - public and private".  

The new Australian owner of Stuff - the Nine network - wants to sell it very soon. Absorbing the country's biggest publisher of news and the country's most viewed news website would certainly give TVNZ the digital heft TVNZ wants. 

And, when asked, Kevin Kenrick hasn't ruled out making a bid for it.

But that would radically reshape New Zealand journalism.

TVNZ would end up owning most of the country's newspapers and employing more of the country's journalists than anyone else. It could extend state ownership to a branch of the media that's always been out of the government's reach. 

"We are looking at the industry and asking what would be a sustainable model," he told Mediawatch.

"It would be remiss of us - or any other player - not to consider options which could create a more sustainable future," he said.

Kevin Kenrick won't name names, but he says some New Zealand media companies are "sub-scale players" who have sacrificed quality chasing quantity and that played into the hands of global digit-era operators like Netflix.  

"In this quest for quantity we have seen an erosion of quality and that is showing up in consumers' trust in news and news services," he said. 

Any merger or acquisition would need a green light from TVNZ's shareholding ministers: finance minister Grant Robertson and broadcasting and media minister Kris Faafoi.

Has he sounded them out about merging with or acquiring another New Zealand media business? 

"We have had open conversations about where we see the market heading. Specific conversations are things we would have with appropriate ministers rather than with you," he replied.  

Commerce and Consumer Affairs Minister Kris Faafoi and Minister for Small Business Stuart Nash have today released a discussion paper outlining options to protect consumers and businesses from unfair commercial practices.

Photo: RNZ / Rebekah Parsons-King

Broadcasting minister Kris Faafoi told Mediawatch in December he had taken sounding from local media bosses who told him global online media rivals could put them out of business.  

"When I arrived in this job a number of traditional media players said: 'if this continues, we're gone'," Kris Faafoi told Mediawatch. 

He said he was willing to consider intervention to ensure plurality in the local market.

"I'm willing to have a conversation. If we carry on the course we have now, the big global entities will completely take out the business case of our traditional media companies," he told Mediawatch

Kris Faafoi is also interested in the UK government response to 'news deserts' created by local paper closures. It directed the BBC to employ local reporters there in a Local News Partnerships scheme.

News companies here - including Stuff, NZME and RNZ - are wondering whether this could be a joint solution to the emerging problems here and may ask the government to help.

Is TVNZ's boss part of an effort to persuade the government  - and the minister - to fund a joint service for local news?  

"One of the things we think is exploring is collaboration. If you could get the best of both (public and private investment) that would probably create a more sustainable future," he said. 

"The government is actively engaged in the state of the media sector and what can be done to make it stronger. It's positive we have a minister who wants to work the industry participants to future-proof that," he said.

TVNZ launched an ad campaign this week highlighting its network of reporters in the field.

TVNZ launched an ad campaign this week highlighting its network of reporters in the field. Photo: supplied / TVNZ

TVNZ is heavily promoting its 1 News journalists in an in-house campaign at the moment but does the "100 per cent commitment to news" extend to current affairs?  

Sunday and publicly funded Q+A have just returned to TVNZ 1 for 2019 this week - and Seven Sharp at 7pm on weekdays is simply not a news show any more.

Maori programmes Marae and Waka Huia are back on air for 2019, but production of the shows were outsourced by TVNZ in 2016.

"We will be doing more. Sunday is the market leader. We might do documentaries that support  what's coming out of our news stable. We're working on that right now," he told Mediawatch

"The whole industry at 7 o'clock has moved to a shows that are a hybrid of informing and entertaining, We used to have 60 minutes of TV news followed by another 30 minutes of news. Globally you'd typically get 30 minutes in prime time," he told Mediawatch. 

Kevin Kenrick told the select committee TVNZ has begun research into the future of news.

"But we have to deliver what the audience is seeking. We can't serve up what we think they should be viewing as opposed to what they want to view," he told Mediawatch

One example of the new approach is The Story, the online on-demand pieces by John Campbell, recruited by TVNZ to be a kind of roving reporter and presenter last year.

"The definitions we have used for news and current affairs are changing. The consumers sees it as information - and its about the depth of it. Some if it is short and sharp and not that deep. Others stories there's quite a level of depth and investigation that goes with it," he says.