The TVNZ-RNZ merger: a solution looking for a problem

Appeared in Stuff Business - 29 September 2022

Antony Young is a co-founder of Wellington media planning and buying agency The Media Lab. He has spent 30 years working in media in New York, London, Asia and New Zealand.

OPINION: The Aotearoa New Zealand Public Media Bill (ANZPM) and its proposed merger of TVNZ and RNZ isn’t something that’s drawn as much attention from the public as restructures of the health system or Three Waters. Perhaps it should.

While the aforementioned are attempting to address some significant issues, the ANZPM Bill appears to be a solution looking for a problem to solve.

That solution could see irreparable fall-out to two prized public institutions that contribute massively to our culture and democracy.

In 2019, when this merger was first mooted, the NZ media landscape was fast falling down a sink hole.

TVNZ had stopped paying a dividend and was forecasting losses.

Newsrooms across the country were being stripped and downsized.

Nine was trying to offload Stuff, while NZME, owner of the Herald and half of the commercial radio stations, had a market value roughly commensurate to its debt.

Meanwhile, TV3 and the owner of the other half of New Zealand radio, MediaWorks, had been on the sales block for five years struggling to find a buyer.

A potential bail-out of public media was seen as a much-needed lifeline to preserve its long-term viability.

What’s there to fix?

In 2022, TVNZ seems to be doing all right.

It continues to dominate the TV ratings game with its highest share in a decade. Ad revenues have bounced back and are well ahead of pre-Covid levels.

It is executing a clear strategy of shifting from a broadcast channel to a streaming and broadcast one with significant investment behind TVNZ+.

Its streaming service is viewed by 580,000 each week, up 25% for the year, largely on the back of local, commercially viable content, funded within its own means.

RNZ is fulfilling its agenda as a public service channel admirably. It has largely been able to maintain its listening audience, leading the way for a mainstream medium promoting Māori and Pacific content and te reo Māori. It remains New Zealand’s most trusted news source according to an independent survey.

Journalists in action at Parliament. The different media companies bring different cultures and styles to the news landscape; TVNZ’s and RNZ’s pose a particular challenge for the public media merger plan.

Doing harm, not good

Local media are commercially marginal propositions. One significant concern raised by many operators is that this bill could give birth to an 800-pound gorilla that will leverage its combined resources and with little regard for commercial imperatives, steal audience and precious ad dollars away.

This would upset the already delicate balance of the media ecosystem.

For example, if the share of the 6pm news hour was to swing heavily in 1 News’ favour, who’s to say the execs at Warner Bros Discovery wouldn’t pull the pin on the existing Newshub format and put in its place a slimmed down news service, or alternative less-costly programming?

Last week, it was announced that $85 million of NZ on Air funding would be ring-fenced for the new ANZPM entity.

Half of this comprises the current base-line funding RNZ already receives, but the other half is a reallocation of the NZ On Air funding that TVNZ and RNZ have had to compete for – a blow to the rest of the media industry.

TVNZ CEO Simon Power, speaking to Finance Minister Grant Robertson at a business event. TVNZ has warned parliamentarians that the current public media bill risks eroding its independence.

Playing with independence

The biggest asset that every news organisation possesses is its perceived independence. Blunt that and the public’s trust quickly falls away.

We saw how the $55 million public-interest journalism fund, despite its good endeavours, helped dent the media’s reputation, seen by some as encouraging media companies to toe the Government line. While this assertion was misdirected, it shows the perception of lack of independence hurts media.

One change that has been already announced is that the new entity will be an autonomous crown entity. The autonomous label isn’t as independent as it sounds. The fact is, RNZ and TVNZ will have less statutory independence under this structure.

In TVNZ’s own submission on the bill, it points out that the minister will be able to direct the entity to have regard to a Government policy.

In the bill’s first reading before Parliament, multiple Government MPs commented that misinformation was a rationale for the merger.

I think most reasonable New Zealanders would agree with that. But the perception that the ANZPM entity could be directed by the Government to determine what is an acceptable narrative on a particular issue could further damage the credibility of its independence.

Merging two entirely different entities

Having led or been part of more than a dozen organisation mergers, I can see this one will be fraught from the start.

You have a clash of business models. TVNZ is a commercially driven media company. RNZ is a non-commercial, public service one.

In my experience with mergers, there is always one entity that takes over the other. That will hurt either RNZ or TVNZ.

Further, there’s always a requirement for cost savings. We have two fiercely independent news and content arms, that will be forced in under one management.

Will we see two newsrooms consolidate into one? Most likely. Compromises will be forced, positions will be amalgamated. The impact on talent will be enormous and a major distraction.

This dichotomy of commercial and cultural objectives is almost impossible to reconcile on a day-to-day basis. That’s why the BBC and ABC Australia are almost entirely Government funded.

In the US, NPR (National Public Radio) and PBS (the Public Broadcasting Service) don’t accept advertising.

Sir Hugh Rennie, a veteran of the New Zealand business and legal scene, has expressed his misgivings about the merger.

Being either a commercially funded channel or a publicly funded, public-service model makes sense, but mixing the two doesn’t appear to have a successful model to follow.

I leave you with the words of Sir Hugh Rennie, who was the last chair of the Broadcasting Corporation of New Zealand. This was the former corporation that housed both TVNZ and RNZ before de-merging into separate stand-alone entities in 1989, and essentially what is now being proposed as a return to in the APMNZ Bill.

In his submission on the bill, he states: “I do not believe that the bill will do public media a service by requiring the merger of TVNZ and RNZ. Perhaps it will turn out that it has merit (though I doubt it).”

I hope he’s wrong (but I don’t think so).

Antony Young is a co-founder of The Media Lab (formerly The Digital Café), Wellington’s largest independent media agency. He spent twenty years heading media agencies in New York, London and Asia, before returning back to New Zealand.

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