MediaRoom column: TVNZ has some bad news on its advertising revenues and, for staff, a prediction of five years of cost measures. And the struggling TV3's unilateral bid for Govt financial relief for the industry looks stillborn.
State-owned TVNZ has confirmed double-digit declines in its advertising revenue and implemented "business-wide cost management initiatives" as it struggles against economic headwinds.
More than four-fifths of the business' revenue, or $260m, comes from broadcast advertising, and TVNZ reports its advertisers are "looking to undergo cost management measures".
Double digit drops in that income, if extrapolated out over a financial year, could equate to upwards of $25m in revenues disappearing.
It estimates its net profit to be $2m in the year ended June, (down from almost $8m in 2022) and to fall to a loss of $15.6m in the 2024 year, with an operating loss within that of $6m.
In its statement of intent for the next four years, published by Parliament, TVNZ says it has been hit by production, technology and employment costs.
It is responding by immediate cost cuts across the business and has made "cost transformation a key workstream" in a five-year change plan known as Horizons.
The broadcaster employs 770 full-time equivalent workers.
TVNZ's three strategic frameworks for this year are to extend its digital audience reach, accelerate digital revenue and to "secure the future viability of the business".
A key part of that will be to bring in a new technology platform this financial year and next and implement an ominous sounding "culture and capabilities" programme to "ensure TVNZ's people are focused on and prepared for the future.
"New ways of working and undergoing a business-wide cost transformation will help TVNZ to deliver on its FY2028 profit ambitions.
"This will require significant investment, to be funded through cash reserves and earnings."
The statement of intent says the threat from international streaming businesses "with the capital of major media conglomerates behind them" and the fact younger audiences have abandoned traditional local media mean TVNZ needs to begin its IT platform build, reaffirm its commitment to NZ content as a differentiator, push TVNZ+ and refresh its entertainment content targeting 18-34-year-olds.
The company says it backs the Government's aim to regulate global players such as Google and Meta. A new bill to force the big platforms to negotiate with NZ news providers was tabled at Parliament last week.
In a separate document tabled in the House on Tuesday, TVNZ's statement of performance expectations for the year to June 30, 2024, the board estimates the firm's current commercial value at $240m, down from $249m a year ago. That is "due to a reduction the value of land and buildings and lower forecast operating cashflows".
It says: "In response to the changing nature of the NZ media industry, TVNZ will continue to review all areas of its business to identify efficiencies and ensure a sustainable business."
It will "manage change with transparency, respect and support for individuals in order to meet the changing needs of the company."
Meanwhile, over at TV3
Discovery, the owner of the struggling TV3 television business, confirmed a Newsroom report that it sought financial relief from the Government in a meeting between its local chief and the broadcasting minister, Willie Jackson.
It had not responded to Newsroom's questions about that meeting but did so to staff after the story appeared last Friday night, confirming its regional executive Glen Kyne had proposed the Government exempt broadcasters from the fees they must pay state-owned infrastructure business Kordia.
TVNZ told Newsroom it had not been consulted by Discovery about this unilateral proposal on the industry's behalf. Kyne would not provide more information on who he was representing at that meeting.
When the Government temporarily suspended transmission fees for broadcasters in 2020 as part of a pandemic media support package , it was estimated to save the industry $20m over six months.
But, in any case, the latest suggestion appears stillborn.
The Prime Minister Chris Hipkins said, flatly, that it was not something that he or the Cabinet had looked at. His minister, Jackson, painted the discussions as "commercially private negotiations" and acknowledged some media companies would have concerns about others getting "concessions". But he would make no further comment on it other than to confirm he and Kyne would meet again "in the next week or so".
Tellingly, the Opposition leader Christopher Luxon, was dismissive.
“Well look, it’s a very large global media company that owns Newshub and TV3, so it’s not something that we’d be entertaining at this point.”
Newsroom revealed the extent of Warner Bros Discovery’s problems back in July when the company filed its annual accounts.
The 2022 before tax loss for TV3 was $35 million. This followed a $21m loss the previous year. In a note to the accounts, Warner Bros Discovery, the US parent, said it was prepared to guarantee the company’s financial operations for 12 months. Kyne says the loss includes some other regional Discovery costs, but those are not specified.
TV3 faces the same pressure on revenue and earnings as TVNZ in a painfully subdued market. The business has implemented its own sinking lid on staff numbers, with only mission critical roles able to be replaced.
