Warner Bros Discovery, the global conglomerate owner of TV3, has asked for Government support while it transitions the broadcaster to a digital-led business. Mark Jennings reports.
TV3 boss Glen Kyne has gone cap-in-hand to Broadcasting Minister Willie Jackson as problems mount at the struggling broadcaster.
Kyne and Jackson meet regularly to discuss the state of the television industry but at a meeting in Wellington recently Kyne is understood to have asked the minister for financial help.
Newsroom revealed the extent of WBD’s problems back in July when the company filed its annual accounts.
The 2022 before tax loss 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.
It is likely the company’s financial position has deteriorated further this year with advertising, TV3’s only significant revenue source, dropping due to the tougher economic climate.
Newsroom asked WBD New Zealand in July if the parent company was prepared to continue its financial guarantee past the 12-month period. It didn’t respond.
Broadcasting minister Jackson wouldn’t discuss details of the meeting with Kyne citing “commercial sensitivity.”
“All I can say is that we did meet, and I don’t think you have to be a genius to work out that TV3 has long history of finding a way through tough times. He is coming back to talk to me in two weeks.”
There is precedent for struggling media companies to get help from the Government. In 2009, during the GFC, the Key National Government offered broadcasters deferred payment terms on licensed renewals.
MediaWorks which then owned TV3 and a network of radio stations deferred $43 million in payments. It paid back the money, with interest, over a 50 month term.
In the early nineties when TV3 desperately needed investment the Government came to its rescue and changed the rules on foreign ownership to allow Canadian broadcaster, Canwest, to take an equity stake and management control. Canwest eventually sold out to private equity interests in 2007.
Laden with debt TV3 struggled under a succession of private equity owners. While TVNZ poured money into its digital platforms, TV3 underinvested. In December 2020 the television business was bought by Discovery (now WBD) for $20 million.
The expected investment in digital has so far not eventuated. Instead, WBD has extended and enhanced its deal with SKY. WBD supplies premium content to SKY’s Neon channel and has other specialty channels like CNN on Sky’s platform. Meanwhile, TV3’s digital platform, Three Now, has been left to battle on with lower impact programming and inferior technology against TVNZ + and the other streaming services.
This year TV3 has been chopping cost out of its free-to-air operations with a sinking lid policy on staffing impacting Newshub and other departments at the network. This week Newshub axed some of its off-peak news programming.
The timing of WBD's bid for Government help is hardly favourable. A Government facing the polls in a couple of months is unlikely to give a network owned by one of the world’s biggest media companies a handout.
WBD has a market capitalisation of US31 billion dollars.
Kyne’s decision to ask Jackson for help would indicate that WBD’s enthusiasm for its NZ free-to-air investment is waning.
Newsroom wanted to ask Kyne about his plea to the Government but a requested interview this week did not materialise.
Following publication of this story Newsroom was contacted by a Government press secretary. He told us that at a recent meeting there were discussions around support for the media, but there was no request for direct government funding.
Newsroom understands that the support referred to was for a reduction or scrapping of the fees Kordia charges for the government-owned transmission network, which could apply to all players in the industry. Last night TVNZ told Newsroom it was not part of any approach to the Government.
