2016/17 Annual review of Television New Zealand Limited

Transcription

1 2016/17 Annual review of Television New Zealand Limited Report of the Economic Development, Science and Innovation Committee March 2018 Contents Recommendation... 2 Introduction... 2 Television viewership... 2 The media market and funding... 3 New Blood initiative... 3 TVNZ s views about RNZ Representing Māori and Pasifika in the video content business... 4 Changing demographics in New Zealand... 4 Bullying and harassment in the workplace... 5 Approaches to pay equality... 5 Current contract agreements... 5 Broadcasting games of national significance... 6 Television standards and complaints... 6 Operational issues... 6 Regional representation... 7 Broadcasting content from non-traditional sources... 7 Copyright Act... 7 Appendix... 8

2 Television New Zealand Limited Recommendation The Economic Development, Science and Innovation Committee has conducted the annual review of Television New Zealand Limited for 2016/17, and recommends that the House take note of its report. Introduction Television New Zealand Limited (TVNZ) is a Crown entity company. It is fully governmentowned but operates commercially as a national television broadcaster and digital media company. Most of its funding comes from advertising revenue. It operates six channels as well as an online site offering video content (TVNZ OnDemand) and the news site 1 News Now. TVNZ s operations are governed by the Television New Zealand Act Kevin Kenrick is the chief executive. TVNZ s board of directors reports to the Minister of Broadcasting and the Minister of Finance (the shareholding ministers). Dame Therese Walsh is the chair, appointed in April Financial and service performance TVNZ generated net profit after tax of $1.4 million in 2016/17 a decrease of nearly 89 percent from the previous year. This is the lowest level of profit in six years. Operating revenue has been declining since 2011/12. In 2016/17 operating revenue was $316.5 million, compared with $324.7 million in 2015/16. TVNZ s revenue is primarily derived from advertising, and television advertising revenue has been declining since This decline is a result of an expanded range of marketing platforms for advertising, leading to downward pricing pressure on TV advertising. In the last financial year, 5.7 percent of TVNZ s advertising revenue derived from online advertising. The Auditor-General rated TVNZ s management control environment and its financial systems and controls as very good. TVNZ no longer receives direct Crown funding (last received in 2015/16) and therefore is no longer required to prepare a statement of performance. As a result, the auditor rated TVNZ s performance information and associated systems and controls as not applicable. TVNZ informed us that, financially, the 2017/18 financial year is looking to be in better shape than 2016/17. In the short to medium term, TVNZ is very confident of its financial position, but it cannot predict what the media landscape might look like in the longer term. Television viewership Terrestrial TV had an average of two million viewers a day in 2016/17 (compared with 2.2 million in 2015/16). Interest in TVNZ s online content offerings continues to increase, with 135 million online streams across all devices compared with 128 million in 2015/16, and 97 2

3 million in 2014/15. Terrestrial TV has seen a decline in viewership over the years, but TVNZ believes that TV still offers significant benefits to viewers and advertisers. The media market and funding TVNZ believes that it operates in a converged media market and competes on the basis of its content. Competitors include Facebook, YouTube, Netflix, and Amazon. How people view TV content continues to evolve, so TVNZ sees itself as a video content business, rather than a TV business. We heard that advertisers are trying to balance the way they spend their money, between digital TV and other media. TVNZ believes this is beneficial for all players which, like it, offer video content. The most critical measure for advertisers is whether they sell more products and services as a result of advertising than they would have done without it. We heard that TV outperforms other media quite consistently in advertising. TVNZ said that the challenge it faces in terms of competition parallels the challenges it has with funding content. We heard that co-production with other local companies is an area TVNZ is exploring to challenge global media outlets, as well as working with NZ On Air, New Zealand s independent broadcast funding agency. New Blood initiative In 2016/17 TVNZ launched the New Blood programme, involving a team of people from across TVNZ working together to advance its thinking on content initiatives for younger viewers. Early New Blood initiatives include esports on DUKE and TVNZ OnDemand, an online web series competition, establishing the TVNZ content creation hub, and an emerging talent scheme. The most successful initiative of the programme is Re: a socially driven alternative news brand that creates video content covering issues that affect young New Zealanders. Launched in July 2017, Re: has had its content streamed 14 million times through social media. TVNZ s views about RNZ+ Before the 2017 general election, the New Zealand Labour Party said it would provide additional funding worth $38 million for New Zealand programming and journalism. Part of this funding would include the development of RNZ+, a multi-media service including a freeto-air non-commercial television channel. We asked TVNZ about its views on the creation of RNZ+. TVNZ said it has had introductory conversations with Radio New Zealand (RNZ) to understand how it intends to use RNZ+. TVNZ said that it would be disappointed if the funding for programming was spent on a duplication of infrastructure and capability that already exists. Ongoing conversations with RNZ will discuss how to make best use of RNZ+ for the taxpayer in New Zealand. For the television industry in New Zealand, TVNZ said that it is important that local players, both Crown-owned and others, work together to compete more effectively with global digital 3

4 media organisations. TVNZ does not consider RNZ+ as potential competition, as it does not know enough about what RNZ+ will offer to New Zealanders. We asked TVNZ whether it would collaborate with RNZ+ on a commercial basis. TVNZ said it was premature to reach any conclusions, but it is always looking at commercial options that would benefit the organisation. The board will continue to advise the shareholding ministers of any options it deems to be in TVNZ s best interests for a commercial return. Representing Māori and Pasifika in the video content business Under the Television New Zealand Act, TVNZ has an obligation to reflect Māori perspectives. TVNZ said that it is important to engage with Māori and it is committed to continuing programmes to New Zealanders from a Māori and Pasifika perspective. This includes Te Karere (which celebrated its 35th broadcasting anniversary in 2017), Waka Huia, Marae, and Tagata Pasifika. The Crown also has an obligation under the Treaty of Waitangi to actively protect and promote the Māori language through television broadcasting. Māori make up around 15 percent of New Zealand s population. We asked if TVNZ was proportionally representing the Māori population by having 15 percent Māori content. TVNZ said that 15 percent of its content is not Māori content. We heard that integrating te reo Māori and Māori perspectives into its mainstream programmes reaches more New Zealanders, and has more impact, than some of the 100 percent Māori content that it broadcasts. TVNZ is continuing to work on ways it can encourage greater viewership of Māori content. We suggested that TVNZ include its Māori strategy in its annual report. We heard that TVNZ closely monitors the diversity of talent it has working at TVNZ, both on screen and behind the screen. TVNZ has a number of fluent speakers of te reo Māori in its presenter line-up and reporting team. At the time of our hearing, TVNZ was in the process of appointing someone to its Māori and Pacific commissioning role. Working with Māori TV TVNZ is currently exploring with Māori TV ways they could achieve more together, as opposed to working independently. This includes the possibility of providing back-up to each other in the event of technical failure. We also heard that TVNZ is in discussions with Māori TV to create better daily news in te reo Māori. Outsourcing Māori and Pasifika content In recent years, TVNZ has outsourced some of the work around Māori and Pasifika content. TVNZ said that this supports Māori and Pasifika production companies such as SunPix, a media content production company focussing on engaging Pacific communities in New Zealand. In partnership with SunPix, TVNZ is working on a tailored Pacific package for the Commonwealth Games. Changing demographics in New Zealand TVNZ recognises that New Zealand is increasing in diversity and its demographics are changing, particularly in Auckland. To achieve its goal of reaching a big proportion of New 4

5 Zealand viewers every day, TVNZ said that it needs to understand who those viewers are, and how that audience is changing. As well as Māori and Pasifika audiences, we asked TVNZ what it is doing for ethnic communities after Asia Downunder stopped being broadcast in 2011, and Neighbourhood lost NZ On Air funding. TVNZ said it was disappointed that it did not receive funding support for Neighbourhood. We heard that, in order to broadcast shows that represent ethnic communities, TVNZ regularly works with the production community to discuss content opportunities that it could then seek funding for. Bullying and harassment in the workplace We asked TVNZ whether it has policies dealing with bullying and harassment in the workplace, particularly as this issue has been receiving global and national attention recently. TVNZ said it used the recent media stories about workplace misconduct to remind staff of its policies, and who people can talk to about any concerns. We heard that TVNZ has been committed for some time to ensuring there is gender balance on its board. The current TVNZ board comprises four women and four men. TVNZ said it benefits from this gender balance because the board proactively engages in discussions about the working environment for all employees. Every year, the women on the board of TVNZ host a session for women leaders throughout the organisation. The aim is for women who are employed by TVNZ to have an accessible way of engaging with board members on issues relating to the workplace. TVNZ also said its attitude towards behaviour in the workplace is demonstrated by the launch of So This Happened in March 2017, a web series aiming to help New Zealand women have their stories of sexual harassment heard. Approaches to pay equality TVNZ said it monitors the parity of its remuneration on an annual basis, taking into account gender, ethnicity, and any other bias which might have an influence on pay. For example, it makes a conscious effort not to single out people who are on screen in preference to those who are behind the camera. Often, the personal details of those who are on screen are revealed because of equal pay concerns, and TVNZ said it thinks this is inappropriate. We heard that there is strong gender parity among TVNZ s on-screen employees, and that it has no concerns about its performance in this area. TVNZ is working to ensure that there continues to be as many women in senior roles within the organisation as men. Current contract agreements We asked whether TVNZ had any concern about the viability of its current contractual arrangements, such as the contract it signed with the Walt Disney Company in 2012 worth $12 million. The Disney contract has reduced in value significantly since 2012 because most of the content is streamed online by rivals. It is likely that during the rest of the contract with Disney, TVNZ will pay more than it will earn from advertising the programmes. TVNZ said it 5

6 paid for exclusive rights, but received non-exclusive benefits, particularly in the example of the Disney contract. In the last financial year, TVNZ reviewed all of its contract agreements. The main challenge for TVNZ is that the television landscape is much different now than when many of its contracts were signed. We heard that TVNZ has successfully renegotiated some of the contracts. Broadcasting games of national significance The Broadcasting (Games of National Significance) Amendment Bill was introduced in December 2016 but was withdrawn after its first reading. The bill proposed to define, in law, games and sporting events that were to be broadcast live on free-to-air television. We asked TVNZ for its thoughts around broadcasting games of national significance. TVNZ said it is very motivated to deliver more sport to New Zealanders and is excited about broadcasting live and free coverage of the Commonwealth Games to all New Zealanders. TVNZ sees the games as an opportunity to showcase what it can do in the sporting context. It said Sky TV, New Zealand s principal producer of sporting content, is suffering from a decline in subscribers, which currently represent about 40 percent of the New Zealand population. We heard that if TVNZ s coverage of the Commonwealth Games is a success, sporting bodies will be attracted to use TVNZ as a broadcaster because they want sport to be available to as many people as possible. Television standards and complaints We asked TVNZ how it decides when it will screen certain programmes with potentially offensive or graphic content, after we heard concerns that people expect some programmes to start later. TVNZ said it is bound by the Broadcasting Standards Authority s code of practice for free-to-air television, which sets out when it can show different content. We heard that the process starts with TVNZ classifying the content, and then placing it into an appropriate time in the schedule. TVNZ sometimes receives complaints about when it broadcasts some of its content. These are handled by an internal complaints process. Once the complainant receives a response from the broadcaster, they have the right to go to the Broadcasting Standards Authority if they wish to take the complaint further. Less than 1 percent of the complaints that TVNZ receives are taken on to the authority to determine. Operational issues In January 2018, TVNZ s broadcast of the news at 6pm was interrupted when its Auckland studio was evacuated because of a fire alarm. TVNZ said its priority when events like this occur is to avoid going to a black screen, so it replaced the news with other content. For TVNZ, the health and safety of its staff was most important during the evacuation. We heard that within two minutes of being back in the building, the news was back on air. 6

7 Regional representation In the 2016/17 financial year TVNZ redesigned its organisation structure. As part of this, it renegotiated core content agreements and wrote off lease commitments for content and accommodation that it considered unsustainable. During the redesign, TVNZ identified regional representation for its news reporting as an area of priority. We heard that TVNZ has increased its representation in regional New Zealand for news gathering. Self-sufficient video journalists now live in rural communities. These journalists gather stories, shoot and edit them, and then the stories are published. TVNZ said it is an efficient process, based on models used overseas. Broadcasting content from non-traditional sources We asked TVNZ whether it had any plans to broadcast programmes from countries which it has not traditionally sourced content from. TVNZ said that it has to cater for the New Zealand audience, and will continue to produce content that creates revenue to sustain the business. Through its OnDemand service, TVNZ can broadcast content that might appeal to more niche audiences. Copyright Act Given that the broadcasting industry is influenced by changes in technology, we asked TVNZ if it thought the Copyright Act 1994 was overdue for reform or a comprehensive review. TVNZ said it is engaging with the Ministry of Business, Innovation and Employment about the parts of the Act that it thinks are no longer fit for purpose. 7

8 Appendix Committee procedure We met on 15 February and 22 March 2018 to consider the annual review of Television New Zealand Limited. We heard evidence from TVNZ and received advice from the Office of the Auditor-General. Committee members Jonathan Young (Chairperson) Tamati Coffey Hon Jacqui Dean (until 21 March 2018) Paul Eagle Andrew Falloon (from 21 March 2018) Hon Christopher Finlayson (until 21 March 2018) Hon Paul Goldsmith (from 21 March 2018) Gareth Hughes Melissa Lee Clayton Mitchell Dr Parmjeet Parmar Hon Aupito William Sio Advice and evidence received We received the following documents as advice and evidence for this annual review. They are available on the Parliament website, Office of the Auditor-General, Briefing on Television New Zealand Limited, 1 March Office of the Clerk, 2016/17 Annual review briefing paper, 1 March Television New Zealand Limited, Response to committee questions 1 106, 26 February Television New Zealand Limited, Responses to additional written questions , 15 March