Tuesday 2 September 2014

A Policy A Day: NZ Broadcasting

In the lead-up to the election, we are going to examine one policy per (working) day. We've selected policies to be as balanced as possible across a range of policy areas and across the political parties. The idea is to explain the background, analyse the policy to investigate the pros and cons, and give a verdict on the policy at the end. Inevitably, some opinion will make its way in and we make no apology for that - after all, we're voters too. Also, I say 'we' because this series will feature some guest posts from other young people, to share their thoughts and ideas as well. A list of all the articles is available hereEnjoy!

Today's policy comes from New Zealand First. It is a little difficult to track down the original source of the policy; it appears that the proposal was first put on the table back in 2010 when the National government had to consider what to do with TVNZ 6 and 7, which were only viable due to $79 million in taxpayer funding allocated by the previous Labour government. The proposal to merge TVNZ and RNZ was one option of many floated. In 2010, the National government chose to do nothing, and the funding evaporated along with both TVNZ channels. However, the policy is now on the NZ First website:
- Combine Television New Zealand (TVNZ) and Radio New Zealand (RNZ) under one state-owned enterprise known as New Zealand Broadcasting (NZB)

All broadcasters in New Zealand benefit in some way from public broadcasting policy, mainly due to funding derived from NZ on Air, which makes sure that there is at least a certain level of NZ-made or NZ-centric programming available. However, the two main publicly funded broadcasting entities are Television New Zealand (TVNZ) and Radio New Zealand (RNZ), with Maori Television holding a more unique status as a state sector organisation that is not a Crown entity but accountable in the same way as Crown entities (I get confused by this, so let's just say it's not part of this discussion for now). TVNZ is able to derive a lot of its income from advertising; in fact their operating revenue is roughly 10x more than their government funding, making it essentially a commercial network. RNZ on the other hand has no advertising, and pretty much solely relies on roughly $35 million of government funding a year to survive.

Analysis of the Policy
At the center of this discussion on this policy is the concept of public broadcasting - free from commercial interests, these broadcasters are able to produce what they want to produce without having to worry as much about attracting or satisfying advertisers. How free and independent this broadcasting is differs from country to country, but in New Zealand at least our public broadcasters have a high degree of editorial independence to use government funding as they see fit. In some cases, the idea behind the funding is to ensure that someone is producing the news, free from commercial/corporate interests, in order to keep the population informed in an unbiased manner. Public broadcasting is something that New Zealanders generally want - for example, 88% agree that it is important for NZ to have a public sector radio broadcaster.

There are some ideological issues surrounding public broadcasting that make it more of a political football than it perhaps should be. Those further to the left believe that public broadcasting is an essential service that no society should do without because it enlightens the population and helps ensure that minorities are represented and have their needs met. Meanwhile, those further to the right believe that broadcasting should be left to the free market, and if people truly want the types of programming that public broadcasting provides, they should vote with their viewership to make it financially viable without government support. I'm not going to say which side is correct, but if we assume that public broadcasting is something that is going to happen, then we should look at the best way to achieve that for our taxpayer dollar.

There is something to be said for increasing economic efficiency by removing duplicated fixed costs. The biggest problem that public programming faces is funding; it's stayed relatively static over the last couple of years, and it has been difficult for TVNZ or RNZ to grow their operations. The broadcasting nature of both organisations means there is a duplication of effort that can be simplified. For example, both TVNZ and RNZ have separate newsrooms, with separate sets of journalists reporting on essentially the same news. There is also some basic infrastructure that can be consolidated, from administrative staff and offices to broadcasting technicians and equipment. We would potentially be able to see the taxpayer dollar go much further and produce a higher quality or quantity of public broadcasting for the same funding. So a merger would probably save money in the long run and keep public broadcasting more viable.

However, a shotgun marriage between TVNZ and RNZ delivers a suboptimal outcome for both organisations. Mixing a TV broadcaster that now has primarily commercial interests (even if it does continue to produce some public broadcasting) with a radio broadcaster that is entirely public just doesn't make sense - each organisation is currently trying to move in very divergent directions, and trying to unify them would be chaotic. If forced together, we would create this body that loses the advantages of both organisations - TVNZ's ability to be competitive against Mediaworks (TV3 and FOUR), and RNZ's ability to produce public programming without necessarily having to be profitable for advertisers. Neither group would be able to focus on their core competencies.

Furthermore, the management and staff at both organisations do not want a TVNZ/RNZ merger to happen. An interview between Susan Wood (TVNZ presenter) and Paul Thompson (RNZ CEO) in April 2014 included the following exchange:
Susan: Quick last question. Do you fancy, or would you be in favour of a joint newsroom with TVNZ?
Paul: No.
Susan: That was a good answer.

Trying to force the people who are these organisations (TVNZ and RNZ have some assets, but their true value is produced by the human capital within) to do something they really don't want to do would be challenging, and without the full buy-in of all involved it would likely turn to custard very quickly. This is ultimately a management problem, but a very challenging one indeed.

Verdict: There may be a fiscal argument for merging TVNZ and RNZ, but there certainly are marketing and management arguments against. Strategy is one thing; implementation is another and just as important. I just can't see a happy ending for either broadcaster if they were to be merged together. If we want to keep public broadcasting viable, we need a different solution.

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