The planned TVNZ/RNZ merger has been described by one competitor as a ‘chilling prospect’ and a ‘serious threat’ to the rest of New Zealand’s media eco-system
Stuff owner and CEO Sinead Boucher says the country’s two public broadcasters are already beefing up their newsrooms ahead of any planned merger by poaching from commercial outlets offering pay that is 30 percent above market rate.
Speaking on Thursday to select committee members overseeing the Aotearoa New Zealand Public Media (ANZPM) Bill, Boucher accused TVNZ and RNZ of “substantially overpaying the market rate to lure the best talent into that entity”.
“We have in the last couple of months already - sometimes successfully, sometimes unsuccessfully - been fighting off approaches from RNZ and TVNZ who in our view are already trying to build up their armies ahead of this entity being formed to give each one of them a position of strength.
“I would say in some cases the salary offers have been 30 percent above what we have been paying and what we’re paying is very much market rate, not low paying. So, we are already starting to feel the effects of it and the entity is not even formed yet.”
Stuff’s major concern with the new public media entity is that it has a “very real potential to be a significantly market distorting factor in the media eco-system through the combination of its scale, structure and extremely broad remit”.
“It will create a media giant or substantial market power and a combination of a not-for-profit remit plus the ability to act commercially or non-commercially, to go into any format or market or after any audiences it chooses is really a chilling prospect for ourselves and the wider media industry,” Boucher said.
On the commercial side, Boucher says she can’t see how the new entity could collaborate commercially without “falling foul” of the Commerce Commission.
“Whenever we have raised this issue around collaboration…there’s basically been a silence in being able to come up with any examples of what it might mean except for statements like, ‘Oh you can run some of our content if you want’.
“Well, that’s actually zero use to us. We want the ability to be a sustainable company that can create our own content and journalism and contribute to the plurality of public journalism in this country.”
Stuff would like some changes to the bill including: the merger should be subject to the usual substantial lessening of competition requirements of the Commerce Act, the bill should impose specific obligations on the entity to avoid adverse impacts on competition, and it should be prohibited from cross-subsidising commercial activities with public funding.
Stuff chief content officer Joanna Norris raised concerns with MPs about an “inherent assumption that public interest journalism can only be carried out by a public media entity’’.
“We invest heavily into public interest journalism. We’ve invested heavily into representing underrepresented communities, our use of Te Reo across our content has grown 180 percent in the last 12 months while RNZ’s has declined by 9 percent,’’ Norris said.
If Stuff’s coverage was impacted by the market discourse it anticipates the public media entity will cause, then Norris warned “that would have a significant impact on our society and the range of public voices we cover across the country”.
TVNZ says bill falls short
The chief executive of TVNZ and former National Party cabinet minister, Simon Power, started his submission by offering his full support for a stronger public media initiative but identifying there are clear shortcomings with the proposed legislation.
“There are things to like about this bill but there are parts that need some substantial change. TVNZ is unequivocal on the view that independence and trust must be top of mind for the new entity for news and content because that’s what the public wants and deserves and quite frankly that’s what a functioning liberal democracy demands.
“And that’s where we see this bill falling short,” Power says.
TVNZ’s biggest concern in its submission is the model, and Power said the proposed autonomous crown entity model offers less independence than a crown entity company, which is what RNZ and TVNZ both currently operate as.
“We do not believe a case has been made for reducing their independence. The argument is simple, an autonomous Crown entity allows for ministerial direction, a Crown entity company does not allow for ministerial direction.
“If public media independence is the core idea of the new entity, then why would we want to blur that perception?”
Power warned MPs that dangerous misinformation is on the rise and “if we as a nation are to have any hope in that battle against that misinformation, then our most trusted news outlets cannot be seen as being anything less than independent from government influence”.
Last year Power told the select committee TVNZ felt it was “flying blind”.
When asked about that comment by National’s Melissa Lee on Thursday, Power said the entity’s establishment board had done a good job since then of working with both organisations to understand the complexities of the legislation.
Unbridled power
However, RNZ board member Jane Wrightson said a crown entity company was inappropriate, adding it "starts to mess up the competing objectives".
She suggested there was scope to look at ANZPM as an independent entity, which would remove it further away from any government policy influence than an autonomous entity.
“A public media organisation is a unique beast in New Zealand, and therefore the strongest possible constitutional protection of it needs to be made available,” she said.
Wrightson said there needed to be emphasis in the legislation that independence on editorial matters was of paramount importance, and said the board should be given an “overriding obligation” to protect and enhance independence of the new entity.
RNZ also wanted greater clarity of the entity’s purpose, as well as a five-year funding agreement for planning purposes.
RNZ chief executive Paul Thompson said it was the right time to rebuild the country’s public media mandate, saying both RNZ’s and TVNZ’s were no longer fit for purpose.
He described the current media market as "challenging and volatile", with global platforms operating with "unbridled power".
“The new public media entity will have the mandate culture and capability to help New Zealand meet those challenges and ensure we remain a cohesive open and connected democracy.
“The new entity will also be required to collaborate with the wider media sector to ensure the whole ecosystem is healthy and diverse. This responsibility to work in partnership with others for the greater good of the sector is why it is so essential that the new entity has a public media purpose at its heart.”
Save RNZ Concert submitter Elizabeth Kerr said the charter for the new entity required greater detail about what would become of RNZ Concert.
"And it needs to include wording, which ensures that the services will continue."
Merger could impact other NZ investors
Warner Bros. Discovery’s submission raised its own concerns about market distortion, with Senior Vice President Glen Kyne making the point if the New Zealand market was unviable for other entities they could bow out.
“Any changes or distortions to those market settings brought about by the formation of the ANZPM could impact the ongoing success and therefore investment decisions of Warner Brothers Discovery into New Zealand.
The media giants recently merged after buying up Mediaworks’ TV operations, including Three, Bravo, and Newshub in late 2020.
“Successful commercial media operators need certainty, market predictability, fair and unbiased markets and a consistent hand from government,” Kyne said.
Warner Bros. Discovery wants a zero-tolerance approach for the creation of non-public interest content, solely for commercial gain.
Kyne suggested profit created through any commercial content should be put into a contestable fund, that would only be available to other media companies.
“Not only will this help fulfil the weight of these obligations to grow the entire sector, it will turn the organisation's focus away from a purely commercial objective.”
He echoed support for strong public media, but wanted clarity on the governance model, including confirmed editorial independence for the entities’ newsrooms, a clear operating model and information on how the mixed funding model would work in practice and what the residual effects on the rest of the industry might be.
Unintended consequences
Mediaworks chief executive Cam Wallace said giving the new entity both public funding and a commercial arm gave it “a scale and size that no other commercial operator could compete with”.
He said the dual-funding model “simply won’t work”, there would be disruption to the current level media playing field and criticised the lack of detail within the bill and the speed at which the changes were happening.
“In our view, the legislation will grossly distort the market and poses a significant threat to the sustainability of the commercial media in New Zealand, and certainly will make it less attractive for future investment, giving local commercial players less opportunity and less ability to produce local content.
“Our expectation would be a thorough cost benefit analysis of this entity and we would expect that cost benefit analysis to include what the impact would be on the commercial market, and we would also expect it to have oversight from the Commerce Commission.”
He noted staff poaching and under-cutting for advertising revenue as some of the biggest risks.
“The way it's currently structured is it gives pretty much broad flexibility for the executive and leadership team to be as aggressive as they want to be to attract or retain staff, or to drive as much advertising revenue as they possibly can.
“So that would be a very poor outcome for all commercial media in New Zealand, I would have thought.”
Wallace said bigger wouldn’t necessarily mean better.
"On one side we've got these massive, unconstrained global players and then on the other side, we'll have the largest media, government-owned commercial and non-commercial entity that we're fighting.
“So we feel we're being squeezed between those two segments.”
Ghosts of mergers past
NZME managing editor Shayne Currie said the impacts of a merger needed to be thoroughly assessed, something he said hadn’t been done yet.
“The impacts need to be assessed through a thorough cost benefit analysis to ensure the legislation delivers net benefits for New Zealanders overall, and to ensure the new entity doesn't undermine the ability of ourselves and other media operators to compete.
“We're still wearing some of the scars of the process that we had to go through and ultimately were found by the Court of Appeal, that the assessment of net benefits of media mergers were highly relevant and important in the landscape.”
He said consideration also needed to be given around what it would mean for two newsrooms, with different editorial guidance and management, to join as one.
“And this was a key factor in our own process that we went through, back in 2016, with Stuff, but newsrooms becoming one means that there's a single direction and focus, and we do lose that plurality of voice and opinion and diversity of news stories and topics.”
General counsel Allison Whitney said a section 47 test under the Commerce Act to determine the impacts of the merger on market competition should be undertaken.
Currie added “guard rails” might be appropriate for the new entity, although exactly what they could be wasn’t probed.
