Sinead Boucher, CEO (and owner), Stuff

 Will the merged TVNZ-RNZ media entity be too big? And will it be subject to too much Government control?

Those two questions have dominated this week’s hearings into the Bill, which would merge the two broadcasters.

Running through the hearings has been a persistent line of questioning from National MP Melissa Lee, who has asked submitter after submitter whether they have seen a cost-benefit analysis on the proposal.

They haven’t.

But she clearly is opposed to the proposal and questions it consuming any more taxpayers’ money.

But paradoxically, the only way the new entity will be able to reassure “big Media” like Stuff, who worry that it will be too commercial, is by relying more on taxpayer funding.

Alternatively, TVNZ could simply carry on as it is now as a fully commercial TV channel.

But that raises questions about why the taxpayer should own such a beast.

Stuff CEO and owner Sinead Boucher was one of the critics of the size of the merged entity.

She said Stuff was currently the largest news media organisation in New Zealand, with 400 journalists, but she feared the size and power of the merged broadcaster.

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“We are funded by advertising, which has been largely sucked out of the market by global platforms like Google and Facebook,” she said.

“On the other side now, we feel like we are facing this pincer movement from the public media giant that will be able to come in and undercut the rest of us in the advertising market and overpay for the talent that we all rely on to staff our newsrooms and the rest of our business.

“We are already starting to see some evidence of this and the way that our staff are being approached in motion, offered salaries that are well beyond the mark. “

No one asked Bouchier how she contended with the Government’s seemingly endless demand for press secretaries and communications staff and the high salaries they were offered.

It was also unclear how an entity that had not been formed and had not named a head of news could make big offers to attract talent.

Boucher argued that the new entity would sue the public funding it got to undercut the advertising rates that Stuff could charge.

“They can use all of their advantages to go in and undercut the private media sector and the advertising rates because they’re not purely on their own in terms of dealing with their overheads and their other costs,” she said.

The association representing the country’s advertising agencies, whilst it maintained it sympathised with Stuff but wanted no shrinkage of TVNZ’s commercial role.

“The ability for businesses to advertise, to support their growth, find new customers, promote new offerings is a great tool,” said Simon lander, their CEO.

“The issue we have is the lack of commercial imperative or seemingly the lack of commercial imperative in the bill because it’s unclear if there’s a desire for the new entity to continue to deliver advertising revenues at current levels.”

 TVNZ’s main competitor, Discovery (formerly TV3), picked up the theme of how commercial TVNZ would become after it was merged and what the public funding would be used for.

“The new entity’s governance and operating models need to be clear and codified in legislation just how its commercial requirements are going to be balanced with its public media objectives,” said Glenn Kyne, Senior Vice President of Warner Bros Discovery for Australia and New Zealand.

“As it stands, there is potential for creating unnecessary market distortions through the lack of clarifying detail or the exploitation of loopholes and vagaries.

“We believe APM should be formed in the public interest and done so to serve public media goals.

“Anything different to this governance model would allow the new entity to seek ways to undermine the legislation and charter.”

Kyne suggested (perhaps cheekily)  that APM put some of the commercial revenue it made into a contestable fund that other broadcasters — but not APM  — could access for local production.

But that defined the central issue with the proposed entity; how to stop it from using its public service money and possible programming advantages so that it didn’t disrupt the commercial media market.

Media Works CEO Cam Wallace echoed the concerns about the ambiguity of how the new entity would use its funding, and he criticised the way the Bill had been drafted.

“ So the way it’s currently structured is, 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,” he said.

“That would be a very poor outcome for commercial media and New Zealand.”

Wallace also expressed frustration with the failure of the Government so far to get tough with the big digital players, Google and Facebook, and, like Australia, make them pay for local news content they were using.

“The merger comes at a time important that the industry is facing significant headwinds with the enormous global players like Google and Meta being able to participate in the New Zealand market with unconstrained and unfettered access to advertisers,” he said.

“This is despite the ongoing engagement that we’ve had with the Government to try and create Australian-like legislation to put some restrictions on these global media giants. “

The two merger partners themselves had a mixed response to the Bill.

TVNZ CEO Simon Power said: “There’s no doubt in my mind or anybody else’s mind at TVNZ  that if we are to give Kiwis the stories that they want and the manner they want them, then an entity formed between two of the most experienced and trusted news and current affairs and storytelling organisations is the way to do it.”

Power said he was opposed to the merged entity being incorporated as an Autonomous Crown Entity instead of a crown entity company.

“The argument is simple; an autonomous crown entity allows for ministerial direction,” he said.

“A Crown Entity company does not allow for the ministerial direction of public media.

“Independence is the core idea of the new entity.

“Then why would we want to blur that perception?” 

Power reminded the Committee that TVNZ was in the entertainment business and that its main competitor, Warner Bros Discovery, was a very large competitor.

“We’re not just a news and current affairs organisation at TVNZ,” he said.

“We’re also an entertainment entity.

“We are competing against those global giants as part of that as part of that role.

“And the Bill makes it clear that entertainment is part of that remit.

“Thinking about it broadly, Warner Brothers Discovery, $50 billion worth of market cap globally; these are big competitors.

“And so the opportunity to get two entities in New Zealand able to maintain that public media industry focus, I think is positive.”

 There was a suggestion that  TVNZ wasn’t planning to change all that much even though it was about to become a public broadcaster.

Its General counsel and corporate affairs director, Brent McAnulty, said that as far as commercial content was concerned unless the legislation said otherwise, the broadcaster regarded it as permissive.

“Unless the legislation says otherwise, then we believe that will continue,” he said.

“And it’s a really important part of the new entity’s future because every dollar that can be secured commercially for this new entity is a dollar that taxpayers don’t have to put on themselves.”

That argument is likely to foreshadow a considerable tension within the organisation as it tries to implement a dual and mutually conflicting mandate.

The legislation has not resolved that potential tension. That may be the Select Committee’s biggest challenge.