PM’s response to MediaWorks sale
The Government is remaining tightlipped on whether it will step in to bolster MediaWorks’ TV business.
Yesterday, MediaWorks announced it intended to sell its television business, which includes Three, as well as its Auckland property housing its television head office and studios.
The main advertising competitor for MediaWorks’ TV business is TVNZ, the state-owned broadcaster, which is run commercially.
The company has previously called for the Government to make TV One commercial free – a true state broadcaster in the model of the ABC in Australia or the BBC in the UK – with no ads.
It reacted furiously to a government decision to allow TVNZ to suspend dividends that it pays to the government for the foreseeable future and operate at a forecast $17 million loss this year.
But there has been very little appetite for that from the Government, who don’t appear to be keen to pick up the $300 million-odd tab a year needed.
Behind the scenes in the Beehive, MediaWorks’ public statement was met with great interest, with speculation that the business may already have put feelers into the market and not had any response.
The Government’s official response to the news was brief: Broadcasting Minister Kris Faafoi said the decision was commercial and did not want to intrude in sales process, while Prime Minister Jacinda Ardern repeatedly said the announcement by MediaWorks was a commercial decision.
When asked whether it was a level playing field when TVNZ was allowed to run at a loss, Ardern said, the Government was not putting funding into the day-to-day operations of TVNZ ‘‘and I think that’s important to keep in mind’’.
‘‘No doubt we have had a changing media environment globally for some time and a commercial decision has been made and that ultimately is a commercial decision for the operator.
‘‘We need to have a strong fourth estate, we need to have a strong media, of course, to hold to account both political agents but others as well and so that is an area that we as a Government [have] been focusing on,’’ Ardern said.
Stuff understands some in the Beehive have been frustrated at the delay of Faafoi’s broadcasting policy, which is expected prior to Christmas.
It has been speculated to Stuff that the report may just contain half measures for political reasons, rather than a genuine long-term strategy for media. One Labour source believed that MediaWorks was the orchestrator of its own demise with the dumbing down of programming under former chief executive Mark Weldon, and questioned if the move was brinkmanship. It is also understood that a lobbyist has been running a line past MPs that it was all TVNZ’s fault that MediaWorks was struggling.
ACT party leader David Seymour said now the public could see MediaWorks had not been not bluffing about its financial state. ‘‘We depend as a democracy on a free and competitive media and the Government has screwed the scrum by subsidising TVNZ for years. We are back at a stage where we might find the only TV news in New Zealand is provided by the state.’’
The Government should divest itself from TVNZ so there is a level playing field, he said. Potential buyers needed to know they would be able to make a return on investment, he said.
‘‘TVNZ just told shareholders it would not be paying any dividend – it’s absolutely scandalous. In the normal course of events, the Commerce Commission would do them for predatory pricing.’’
Meanwhile, the National Party has not taken a stance, with its broadcasting spokeswoman Melissa Lee simply saying she felt for the journalists during the uncertain time.
MediaWorks chief executive Michael Anderson told Stuff yesterday that he would leave the door open to changing its plan to sell its television business if government media policy changed, while making clear its intention to sell the business was genuine. It wouldn’t work for MediaWorks to try to put everything on hold and wait for the broadcasting policy without knowing what it might be, he said.
MediaWorks was not going through the process to try to ‘‘force some sort of opportunity’’, he added.
MediaWorks first warned it might pull out of television in July last year, if Government policies didn’t change. It told a ministerial advisory group then that if ‘‘structural anomalies’’ in the media market were not addressed ‘‘there is a genuine risk that the Government, through its owned media channels, may become the only broadcaster in New Zealand’’.
There are worse things that could happen to our leading politicians than MediaWorks shutting down its TV arm.
Newshub has caused plenty of problems for the Government since its election, and even more for National. Had someone not leaked the station Simon Bridges’ limo expenses, he would probably still have Jami-Lee Ross in his caucus, and probably much higher preferred PM ratings.
There is one man for whom this would be a catastrophe, however: Broadcasting Minister Kris Faafoi. He’s still the Cabinet’s favourite new entrant but nobody wants to be the broadcasting minister overseeing a whole lot less broadcasting.
Yet on Friday he was very quiet about the news that MediaWorks would be selling its TV business by Christmas, and the rumour that, if it didn’t, it would simply shut the station down. Faafoi said he felt for the staff and noted he wouldn’t intrude into what was a commercial decision.
Faafoi clearly cares about broadcasting. He’s a former TV journalist himself. But you would be hard pressed to say it is top of mind. A browse through his diary of meetings in August shows 10 meetings related to broadcasting, compared with 35 for his associate housing portfolio and 24 for his commerce portfolio. Most people would agree with Faafoi that sorting out homelessness and loan sharks is a whole lot more important than saving our TV, of course.
It was during August that MediaWorks seriously stepped up its public campaign to get the Government to do something about the TV landscape. Stateowned but commercially run TVNZ had quietly announced in late-July that it would not be returning a profit to the Government for the next few years, an option not readily available to the privately owned MediaWorks, which was also losing money on its TV business.
That brinkmanship kicked into overdrive on Friday. Even as the company has said this isn’t the latest bluff in an ongoing campaign, the CEO made clear that the Government could make this all go away.
The solution MediaWorks has been pushing is for the Government to make TVNZ a truly public broadcaster in the mould of the ABC in Australia or the BBC in the UK – and thus commercial-free.
This would remove that distortion in the TV advertising market caused by the profitless TVNZ by creating a huge new one: an effective monopoly over TV commercials for MediaWorks, a private company that has made plenty of questionable commercial decisions in the past decade.
There is very little political appetite for this move. TVNZ booked over $300m in revenue last year, more than six times the $45m the Government currently spends on RNZ each year.
Finding that much money is far from impossible with a decent surplus floating around, but convincing Finance Minister Grant Robertson it’s better spent there than anywhere else would be a very hard sell.
Journalists care a lot about the plurality of media, as it means more jobs and better competition, but it’s not exactly the most pressing issue for voters.
The other option pushed by the political Right would be to finish the job with TVNZ and sell it as well. This would level the playing field between MediaWorks and TVNZ, as the two would both have to return a profit for their owners.
This position runs into the problem that no Labour government has sold a public asset since 1990, and the current deputy prime minister once destroyed a governing arrangement over a sale.
Zoom out and it is clear that we have the worst of both worlds in broadcasting policy.
TVNZ is run commercially so has no concrete reason to produce public interest broadcasting. Partial solutions like the $15m charter were kneecapped and then removed by ministers after public anger over how the funding was seemingly being used to subsidise clearly commercial decisionmaking.
Yet because it is not fully commercial, it distorts the market.
On the other hand, it is also in a bit of a sweet spot for governments. It doesn’t really cost the taxpayer any cash, and gives governments some assurance that, whatever happens to the wider media landscape, there will at least be one 6pm news show left to show them making their announcements.
The real problem is larger than broadcasting policy, and it’s hard to know if Faafoi will really take it on when he finally releases his media rethink, expected in December.
Traditional media – even TV – is a lot less profitable than it used to be. You’re reading this column in a paper or website that was offered up for sale by its overseas owner in the past 12 months.
Outside of commercial radio, every player is making a whole lot less money than it used to. It’s not clear that there will be enough money in the actual advertising and subscription market to fund the tiny number of journalists this country has.
Part of this is Facebook and Google eating all our online ad revenue; part of it is the fact that readers might prefer to watch Netflix to Newshub; part of it is the fact that the way people consume media simply isn’t as conducive to ad-spending any more.
It is all a very complicated story, and not one the public – who at best distrust journalists on principle – are willing to follow in much depth. More switched-on readers might point to a paywall model, which works for the New York Times but is unlikely to ever result in the kind of revenue needed to keep a proper newsroom staffed in a country as small as New Zealand.
It’s a lot easier for the public to simply rail against a presenter they don’t like and use that schadenfreude to celebrate the demise of a whole newsroom, as many did on Friday.
The problem with all of the writing about this is that it’s done by journalists. We aren’t the only ones who care about the media, but we care a whole lot more, thanks to the conflict of interest inherent in having a job.
So even as we might cringe at the deeply political fourth-wallbreaking that Three’s presenters have been engaged in this year, we understand why they are doing it. It’s hard to hold on to decorum when your colleagues keep getting made redundant.
Faafoi knows that journalism is important, but he also knows that simply propping it all up with more government money isn’t really a tenable solution long-term. There are innovative solutions around the edges, like the Government funding journalists to cover local councils up and down the country, and the massive amounts of content-sharing in the industry right now.
Yet the kind of hungry journalism this country deserves needs a lot more than that.
And politicians, who consume more news than anyone else, know it.
Faafoi knows that journalism is important, but he also knows that simply propping it all up with more government money isn’t really a tenable solution long-term.