Comment

MediaRoom: Curran should take MediaWorks boss seriously

Broadcasting Minister Clare Curran says she won’t be pushed into making TV One a non-commercial network despite claims from MediaWorks that it might have to shut Three if the Government doesn’t change its plans.

Curran is determined to move ahead with her vision of RNZ developing a TV channel and leaving TV One alone, but as Mark Jennings writes, she would be unwise to write off MediaWorks’ claims as mere posturing.

Last Tuesday Michael Anderson, CEO of MediaWorks, would have got an uncomfortable call from his PR team.

“Michael we have a problem.”

Stuff.co.nz had published a story revealing that Anderson had told the public media advisory group set up by the Government that Three might have to close down if the current structure of the TV market didn’t change.

"There is a genuine risk that the Government, through its owned media channels, may become the only broadcaster in New Zealand,” he told the group chaired by Auckland businessman Michael Stiassny.

The website had got hold of Anderson’s comments through an official information request.

The reaction of staff at Three, the company's biggest channel, would have been one of instant anxiety.

Morale has barely recovered from the erratic decision-making of previous CEO Mark Weldon, and Chairman Rod McGeoch.

Anderson went into damage-control and emailed all staff that he had no imminent plans to close Three but it would be helpful if they could “get the message out" and that they should raise the role of TVNZ when they were talking to “clients, suppliers and even friends”.

Anderson believes TVNZ's state ownership gives it an unfair advantage over MediaWorks and allows it to act in an uncompetitive manner.

This, with TVNZ's historical dominance of the market with its two powerful channels, makes the playing field “unfair” and “uneven” for its commercial rival.

His solution is for the Government to re-introduce a public service mandate and make TV One commercial-free, instead of pumping money into Broadcasting Minister Clare Curran’s pet project RNZ+.

Anderson’s email to staff sparked a terse response from Curran.

In an interview with Newsroom’s Thomas Coughlan, she said the email was reminiscent of campaigns waged in Australia by the Rupert Murdoch-controlled press to destabilise the position of the state-owned ABC broadcaster.

She pointed to similarities in the language used by Murdoch’s people and Anderson.

Last week, News Corp Australia, Murdoch’s Australian company, told Australia’s inquiry into the competitive neutrality of the national broadcasters that there was a “lack of a level playing field for the distribution of content online”.

News Corp alleged the internet had turned the taxpayer-funded ABC and SBS into publishers and given them an unfair advantage online.

Yes, Anderson used the phrase “uneven playing field” to describe the New Zealand TV market, but it is highly unlikely he decided to indulge in a spot of plagiarism.

Curran also told Newsroom she was “concerned that MediaWorks appears to be running a campaign to influence the Government”.

On the surface this seems a naive response from an experienced politician like Curran.

Groups and individuals run campaigns against government policy all the time. Some succeed, most fail.

It is part and parcel of the democratic society we live in.

Curran also said that MediaWorks has had multiple opportunities to raise concerns with her, including at two meetings she has had with Anderson.

A MediaWorks spokesperson subsequently told Newsroom that Anderson “certainly did raise his concerns. It was the whole purpose of the meeting with her”.
The broadcaster says it wants to have a “conversation” with the Government but it is clearly running a campaign.

It doesn’t want RNZ+, to get off the ground in any meaningful way.

If it does then Anderson’s chances of fixing what he sees as the structural imbalances in the TV market by convincing the Government to turn TV One into a non-commercial public service channel are gone.

The problem for Anderson is Curran seems hell-bent on pushing on with RNZ+ despite most industry participants (publicly or privately) having major doubts about whether another free-to-air TV channel is a good use of taxpayer money.

Obviously, Anderson has a vested interest but it is hardly a case of him crying wolf.

Three and Four (now Bravo) have probably lost the various owners of MediaWorks more than $100 million since TV3 started in 1989.

Anderson, after two years in the job, has come to the same conclusion reached by the three CEOs that proceeded him.

Brent Impey, Sussan Turner and Mark Weldon all came to the view that TV3 would never make a profit, apart from possibly a short period at the very top of the economic cycle, unless the structure of the market changed.

Each, in their own way, tried to solve the issue.

Impey tried hard to do a deal with Sky, whose loss making free-to-air channel Prime is part of the problem, but Sky boss John Fellet wasn’t buying.

Turner looked at rationalising the business by integrating TV and radio but left before it was done.

Weldon pushed on with the integration (particularly with Newshub providing news for both radio and TV) but also rolled the dice and took TVNZ head on.

The so-called “blockbuster strategy”, inspired by board member Julie Christie, involved rolling out big reality shows one after another in an attempt to dominate the ratings and blunt TVNZ’s dominance.

The high-cost, high-risk strategy blew apart and failed.

Anderson is taking a different tack.

His campaign to get the Government to intervene in the market is probably the most realistic way of saving Three.

TVNZ will argue that it acts in a fair and normal commercial way and that it is just better than its rival.

MediaWorks programmers have often claimed that the state-owned broadcaster overbuys and overpays for programmes to shut it out of the market.

They can point to the $50 million inventory write-down in 2004 and last year's $12 million as tell-tale signs.

TVNZ was also allowed to forgo its dividend to the government for two years while it refurbished its building at a cost of $60 million.

In recent times, TVNZ’s return on shareholder’s funds has been low.

But is Anderson bluffing when he says MediaWorks might be forced to close Three? And if it did would it matter now that YouTube, Netflix, Lightbox and Sky’s additional channels have vastly expanded viewing options?

The reality is that MediaWorks would immediately increase its profitability by shutting its television operation. Its patient owners, a private equity fund, must be sorely tempted. This option has been discussed at the highest levels on multiple occasions by previous owners.

The cost of closure would be ameliorated by the sale of its large premises in Auckland’s city fringe.

There would be plenty who would argue that Three’s main fare, reality series like The Block, The Bachelor and Married at First Sight wouldn’t be missed if they disappeared from our screens.

What might give Clare Curran and other ministers some pause for thought though, would be the demise of Newshub and the 150 or so news people who work for it.

Without the television bulletins, MediaWorks’ news operations would not be viable and the company's highly profitable music stations require only a headline news service which could easily be contracted out.

Curran’s desire to see a much more diverse news media landscape in New Zealand could take a big knock if she doesn’t take Anderson and his concerns seriously.

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