Unto God or unto Caesar? Television after the TVNZ Charter

Unto God or unto Caesar?

Television after the TVNZ Charter

Peter Thompson, Unitec New Zealand

Abstract
One of the more significant media events in 2003 was the final ratification of the
TVNZ Bill, transforming TVNZ from a State–Owned Enterprise into a Crown-Owned
Company with a public service Charter. This sets out a range of social, cultural and
democratic objectives which the Labour-led government acknowledges cannot be
fulfilled by a solely commercial broadcaster. However, TVNZ’s new status as a
CROC does not dispense with its obligation to maintain commercial performance.
This raises a number of normative and theoretical concerns about balancing the
seemingly incompatible imperatives of producing quality Charter programming and
maximising audience size and revenue. It also raises a several related policy questions
about the transparency of funding structures and the criteria by which Charter
performance can be gauged. Taking a critical political-economic perspective and
drawing on relevant archival documentation along with interviews/correspondence
with the Minister for Broadcasting and TVNZ managers, this paper intends to explore
the extent to which TVNZ’s ability to fulfill its new role as a public service
broadcaster is likely to be constrained by contradictory pressures imposed by
government and the commercial broadcasting sector. In doing so, it will highlight
some important practical and ideological tensions assumed within the government’s
current approach to regulating the broadcasting sector in New Zealand.

Keywords

Public service broadcasting; TVNZ Charter; state owned enterprise; crown owned
company; media policy

We have a dual remit. Our job is to deliver the Charter while
     maintaining our commercial performance. I am confident we can
     do it and at TVNZ we feel a real sense of mission in tackling the
     challenge… It’s the challenge of rendering unto God and unto
     Caesar at the same time. A delicate sense of balance is required,
     matched by a strong unyielding sense of purpose.
     -Ian Fraser, CEO of TVNZ (2003a).

     We may recall the euphoric dreams articulated… when mass TV
     broadcasting was about to become a reality… But the cultural dream was
     cruelly mocked in its realization. This magnificent technology, more than
     Wagnerian in its proportions… What does it deliver to the masses? An
     occasional gem buried in immense avalanches of the ordure of everything
     that is most banal and insipid or pathological in our civilization.
     - Joseph Weizenbaum (1980, quoted in Elliott, 1986, p.105-6)

   Introduction and approach
   This study is the latest in an on-going research programme examining
New Zealand broadcasting policy reforms. The article is intended to both
update and extend pre-Charter analyses published in the Communication
Journal of New Zealand (Thompson, 2000) and the NZ Political Review
(Thompson, 2003). As recent publications confirm (Norris et al., 2003;
Ministry for Culture and Heritage, 2003), public broadcasting is both a
significant and a contentious issue. It is significant because the manner in
which a society’s media system operates shapes the balance of relations
between polity, economy and civil society, just as those relations in turn
establish the conditions under which the media must operate (see
Galtung, 1999). It is contentious, because there is both academic and
political disagreement about the how specific modes of economic operation
and state intervention can ensure or inhibit the provision of particular
versions of public service. Developments such as the emergence of a
globalised market for media productions, the deregulatory measures
ushered in through various international trade agreements, and the
convergence of formerly discrete media forms through digitalisation
constitute a shift in the material and ideological conditions under which
broadcasters must operate as well as in the context in which policy must
be understood and evaluated. Moreover, such changes invite questions
about the nature of public service broadcasting and its future.

   The analysis of recent developments in the New Zealand is important
not only for understanding the specific national broadcasting context but
also to understanding how well such a heavily commercialised media
sector might be rebalanced to reflect a revitalized conception of public
service. The research involves a systematic survey of archival material
dating back to 1999. This includes ministerial policy papers and media
releases, annual reports and media releases from broadcasters, and also
coverage of the broadcasting sector in the NZ Herald online archive. The
data is used as the empirical basis for identifying the objectives and
rationales behind various decisions, policies and practices in the

broadcasting sector and inferring the extent to which particular political
and economic factors motivate or inhibit particular decisions, policies and
courses of action.

   The political-economic analysis which follows assumes that
interventions in the sector by various government ministries and
commercial pressures imposed by audience and/or advertiser demands
shape the agency of broadcasting actors in significant ways. However,
such influences are not necessarily deterministic or unilinear. Political
and economic “base conditions” may delimit the scope of broadcasting
practices, for example, by determining “in the first instance” what is legal
or affordable (see Murdock, 1997). Nevertheless, part of the reason for the
continual debate about broadcasting principles and policy is the variety of
ways in which agents in the broadcasting sector may interpret and engage
with policy directives and respond to economic possibilities and pressures.
Actors involved in the broadcasting sector behave so as to optimise the
realisation of particular goals and/or conform to particular norms/
principles in a manner that is rational relative to their institutional
contexts and priorities. This means that any particular set of institutional
and policy arrangements may potentially be articulated to a range of
practices and outcomes. Institutional structures and policies may
determine the broad contours of media operations, but they do not
preclude contingencies in interpretation and response. Thus policy
discourse which serves to legitimate a particular set of arrangements may
not always correspond with the way that policy is understood and
internalised by those who are charged with implementing it.

   Identifying and critiquing the specific modalities of articulation and any
discrepancies between rhetoric and practice in the broadcasting sector
involves a degree of informed speculation in attributing particular
behaviours to various motives and contextual constraints. The secondary
data sources have therefore been triangulated by soliciting primary data
through correspondence and interviews with several sources within
government and TVNZ. This has helped to confirm and, in some cases,
modify initial analyses, thereby allowing a higher degree of academic
confidence in the validity of the conclusions being drawn. Indeed, it is
precisely the access to the accounts of institutional agency from key actors
within government and the broadcasting institutions which permits valid
assertions to be made about the how specific political and economic
arrangements shape and constrain that agency.

  Background: The structural transformation of the public broadcaster?

   When the new Labour-led government came into office in 1999, its manifesto
promised to reform broadcasting in a manner scarcely imaginable under the neoliberal
agenda of the preceding 15 years. Throughout the 1990s, under the previous National-
led administrations, TVNZ had successfully maintained its dominant market share
through aggressive commercialism. As an State Owned Enterprise (SOE), the
primary concession to social responsibility was the payment of significant dividends
to the Treasury (over $200 million between 1989 and 1999). The outgoing National-
led government’s final contributions to broadcasting policy included positioning
TVNZ for privatization (see Ord Minnett, 1998) and the decision to abolish the
unpopular license-fee.

Labour’s broadcasting manifesto explicitly acknowledged the inadequacy of a
purely commercial broadcasting system in performing cultural and democratic
functions and addressing the public as citizens, not just consumers (Labour Party,
1999). The new Minister of Broadcasting, Marian Hobbs, emphasised the need for
broad sector-wide reform, observing that the problem with New Zealand broadcasting
was not the shortcomings of any individual broadcaster but with the
underperformance of the broadcasting model as a whole (Hobbs, 2000). Although a
significant change in policy trajectory was being heralded, specific initiatives
remained vague, and it was only after the machinations of several ministerial
committees (Office of the Minister of Broadcasting, 2000)ii that the scope and
direction of the new broadcasting policies became transparent.

   It soon became apparent that several factors would delimit the scope of policy
options available to the broadcasting portfolio. Firstly, Helen Clark’s interventions in
broadcasting policy (via her position as Minister of Arts, Culture & Heritage) ruled
out a priori any prospect of exploring the possibility of commercial-free television
and (following Treasury advice) cancelled TVNZ’s plans to establish a digital
platform (Thompson, 2000). Thus two important policy issues were determined
before the government had even received policy advice from its own commissioned
reports. Importantly, this effectively committed the government to a model of
television combining public service and commercial principles which has come to
characterise its “third way” philosophy.

    Secondly, officials from the Treasury and CCMAUiii were prominent in the various
committees exploring broadcasting and telecommunications policy options (Frewen,
2000). Ministerial bureaucrats and accountants ensured that fiscal considerations
would be accommodated in public service initiatives. Consequently, a range of
potentially interesting approaches to broadcasting governance and public service
implementation were sidelined without substantive debate. For example, the
possibility of introducing levies on commercial advertising to subsidise public service
policies was discarded, and other potential options such as the “Channel Four” model
iv
   were ignored (Atkinson, 2000) v.

   Thirdly, broadcasting policy was subject to the priorities of other ministerial
portfolios, most notably the Ministry of Economic Development (formerly
Commerce) and the Communications portfolio, which are responsible for governing
telecommunications and radio spectrum rights. Partly because of media convergences,
the Communications portfolio overlapped with that of Broadcasting. While the
government had changed, a neoliberal mind-set within the Ministry of Economic
Development and the Treasury was still very much intact, as evidenced by a range of
documentation and policy statements conflating notions of public good with economic
efficiency (Thompson, 2000). Apart from the auctioning-off of spectrum management
rights, a particularly significant broadcasting policy development determined by the
Ministry of Economic Development/ communications portfolio was the decision not
to regulate Sky’s set-top box decoder. Given the shelving of TVNZ’s digital proposal
and Sky’s first-mover advantage in the digital pay-TV market, this effectively gave
the seal of approval to the latter’s continuing monopoly vi without extracting any
binding “common carrier” agreement in return.

   Fourthly, it became apparent that policy intervention in the broadcasting system
would be limited to the public sector, while the private sector would remain
deregulated. For example, when the idea of local content quotas was being discussed,
CanWest approached the Treasury and intimated that it would consider disinvesting in

New Zealand if such a policy became compulsory vii (NZ Herald, 10.11.01).
Compulsory quota policies were subsequently dropped when it transpired that they
might violate New Zealand’s obligations under the GATS and CER trade agreements
viii
     . Along with the telecommunication sector, the commercial broadcasting sector
remained highly liberalised. There was no question of extending the public service
Charter obligations being developed for TVNZ to its private sector competitors.

   These issues highlight the fact that there are competing ideologies and agendas
within and between different ministries and state institutions. Policy is therefore never
formulated in a vacuum and is inevitably subject to structural constraint both from
within government and from external political-economic pressures. Broadcasting
policy therefore has to be understood in the context of the “third way” philosophy
espoused by the “New Labour” government (see Eichbaum et al, 1999; Giddens,
2000) ix. This approach attempts to pursue social democratic policies alongside
neoliberal economic policies. However, critics have pointed out that while the rhetoric
suggests a synthesis of left and right-wing agendas (Fairclough, 2000), in practice, the
Third Way tends to promote the pursuit of social-cultural-democratic goals in
whatever policy space remains after market imperatives have been accommodated
(Thompson, 2000).

   This has an important application to broadcasting. Despite the well-documented
contradictions and tensions between the respective priorities of commercial and public
service systems (e.g. Graham & Davies, 1997; Thompson, 2000), Labour has been
unwavering in its assertion that commercial principles and public service principles
are compatible. This is outlined most clearly in a recent policy discussion paper issued
by the Ministry of Culture and Heritage (Ministry of Culture and Heritage, 2003). The
paper acknowledges that the respective principles and priorities of commercial
broadcasting and public broadcasting differ, but maintains that a synthesis is possible:

     “It is important to recognise the differences and areas of tension between
     the principles underpinning public and private broadcasting, but equally
     that there are areas of intersection. Both sets of principles have a place in
     promoting and protecting the core values of civil society… The
     government recognises that the broadcasting sector as a whole can
     function most effectively for citizens if there is a balance of public and
     private principles within a mixed economy.” (2003, section 15).

    While space precludes a more in-depth interrogation of the argument outlined here
(see Thompson, 2004 for a more detailed discussion) it clearly raises questions about
the nature of “balance” and “mixed economy”, and also about the conception of
citizenship/ civil society assumed to be underpinned by private/ commercial
principles. This ambivalence pervades the political discourse on Labour’s “third
way” philosophy, most notably in regard to the promotion of the “knowledge
economy” in which the cultural and educational sectors are conceived as an integral
dimension of an increasingly postindustrial market. As Fairclough observes, “A
crucial assumption [of the “third way”] is that the measures necessary to strengthen
enterprise in the new knowledge-based economy are also the means of achieving
greater social justice.” (2000, p.22).

   In Labour’s first term, Hobbs had faced a steep learning curve in the broadcasting
portfolio. Her challenges included limited expert policy advice (Comrie & Fountaine,
2003), intense pressure (and criticism) from various lobbying interests, and an
obligation to shape broadcasting policy in a manner congruent with other ministerial
portfolios. It was in this context that the decisions were taken to retain the commercial

basis of TVNZ’s operation but to change its status as a State Owned Enterprise (SOE)
to that of a Crown Owned Company (CROC) with a public service Charter. As Hobbs
remarked on the compromise,“You have always been driven by returning a dividend.
I’m going to ask you now to meet the commercial demand but at the same time I want
you to start saying, ‘All right, this programme does not bring in the viewers that
advertisers want but it meets a goal that we have.’ ” (Hobbs, quoted in Thompson,
2000 p. 33).

   Labour entered its second term of office in 2002 (partnered by United Future and
Progressive Coalition), having appointed a new broadcasting minister, Steve
Maharey, to take over from his embattled predecessor. By this time, New Zealand on
Air and Te Mangai Paho were being funded directly from the consolidated fund.
Although TVNZ remained an SOE, its board and management line-up had undergone
some significant changesx, suggesting a somewhat more favourable predisposition
toward Charter implementation. Meanwhile, bills for the TVNZ Charter and the
Maori Television Service were in an advanced stage of progression, voluntary local
quotas for the radio industry (and later, for television) had been agreed, and Radio
531pi had been selected as the provider for the new Pacific Radio Network (Niu FM).
When the TVNZ legislation was finally enacted in February 2003, and TVNZ
officially became a Crown-owned company with a Charter from March 2003, Steve
Maharey announced that;

     “The primary value of broadcasters lies in their contribution to
     the cultural and social wealth of the nation. With a Charter to
     guide Television New Zealand I am looking forward to seeing
     more innovative and high quality programming on air. It will
     better reflect the expectations of all New Zealanders, rather than
     solely focusing on programmes which attract the biggest
     audiences… I look forward to seeing our public television
     broadcaster flourish as a Crown-owned company, no longer
     restricted to the pursuit of purely commercial objectives. I look
     forward to its response to the direction provided by the Charter
     and to the cultural and social benefits that will result.” (Office of
     the Minister of Broadcasting, 2003).

   The final version of the TVNZ Charter (TVNZ, 2002b) included a range
of public service objectives and expectations. These include directives for
TVNZ to:

     “Strive always to maintain the highest standards of programme
     quality and editorial integrity; feature programming across the
     full range of genres that informs, entertains and educates New
     Zealand audiences; provide shared experiences that contribute to
     a sense of citizenship and national identity; provide
     comprehensive, impartial, authoritative and in-depth coverage
     and analysis of news and current affairs in New Zealand and
     throughout the world; include in programming intended for a
     mass audience material that deals with minority interests; [and]
     play a leading role in New Zealand television by setting
     standards of programme quality and encouraging creative risk-
     taking.”

These specifications are certainly a radical break from the limited
clause on social responsibility in section 4 of the SOE Act to which TVNZ
was previously subject. Indeed, the specific social objectives in the Charter
for TVNZ are actually more detailed than those of the BBC Royal Charter
(BBC, 2003). This may reflect the extent to which a public service culture
was perceived by policy makers to be as lacking in the former as it is taken
for granted in the latter. It would certainly be naïve to expect the Charter
to transform TVNZ into the New Zealand version of the BBC. However,
the extent to which its new public service remit can be realised depends on
several inter-related variables over which TVNZ has differing degrees of
control.

   These factors will be roughly themed and discussed as follows: First,
the theoretical and normative coherence of TVNZ’s dual remit and the
balance between public service and commercial functions; second, the
extent to which TVNZ’s internal culture has embraced the new Charter
requirements; third, the constraints imposed by the funding mechanisms
for the Charter (after Treasury expectations for dividend payments are
factored in); fourth, the way in which TVNZ has made changes to its
programming and schedule, fifth, the legitimation of the Charter and the
ethos of public service among different sections of NZ society, and finally,
TVNZ’s position within the wider broadcasting sector and its structural
relations with other media and government institutions. The following
sections will identify the key issues and tension in relation to the above
themes, and then draw some conclusions about the extent of the Charter’s
success in changing the complexion of New Zealand television.

   A discourse on method and policy

   As Born (2003) contends (drawing on the actor-network theory notion of
“performativity”), the way in which particular conceptions of broadcasting are
discursively framed within broadcasting institutions influences how agents internalise
and manifest them in practice. A given set of policy and institutional arrangements
may circumscribe certain possible responses but still permit more than one mode of
articulation between those arrangements and actual broadcasting practices. This does
not mean, however, that any set of institutional arrangements is compatible with any
intended broadcasting policy outcome, even if the policy directives are specific.

    An examination of the relation between the discourse of politicians and
broadcasters on broadcasting policy and their respective regulatory and programming
decisions often reveals tensions between the rhetoric and reality. Consequently, there
is a need to be precise about what type of policies, funding mechanisms and
institutional arrangements are compatible with the desired operational or content
outcomes and which are not. Indeed, the interplay of these variables in any specific
context will often involve subtleties and idiosyncrasies that cannot be captured by any
single theoretical model (Horrocks, 2002). The coherence of the government’s
broadcasting policy and its efforts to re-establish the legitimacy of state intervention
in the sector and rehabilitate a model of public service broadcasting therefore deserves
detailed scrutiny. Likewise, TVNZ’s approach to Charter implementation, given the
current funding mechanisms and institutional characteristics of the NZ broadcasting
sector also needs to be investigated in order to reveal what models of public service
might be realised in practice.

The government’s philosophy is premised on the notion of a “mixed
economy” for broadcasting, in which the respective principles of the public
sector (cultural/ democratic) and the private sector (economic/commercial)
intersect. The recent broadcasting stock-take paper acknowledges that,
“The power and pervasiveness of broadcasting as a form of communication
and shared experience means that broadcast media play an especially
significant role in the functioning of civil society, and can either promote or
undermine its core values and goods” (Ministry of Culture and Heritage,
2003, section 6). It duly notes that private/commercial principles became
dominant in the broadcasting sector during the 1990s, and that a purely
commercial system may not adequately fulfil cultural and democratic
functions, hence the need for rebalancing. However, it also contends that,
“Private broadcasting may promote, protect, and embody core values in
civil society, in much the same way as may private/commercial activity.
Private/commercial broadcasting may result in types of desired
programming, efficiency benchmarks and industry development that would
otherwise not exist.” (Ministry of Culture and Heritage, 2003, section 14).
This argument appears to entail a contradiction between, on the one hand,
an acknowledgement of the market failures attributable to a
predominantly private/commercial model of broadcasting and, on the
other, an expectation that private/commercial broadcasting can
nevertheless address those failures.

  The contradiction is not simple, however. The government’s “third way”
philosophy and insistence on the compatibility of public service and
commercial principles is premised on a denial of any dichotomy between
them. The Minister of Broadcasting acknowledges that during the 1990s;

     “In its embracing of market-driven policies, government
     distanced itself from what I believe is its responsibility to ensure
     that New Zealanders have access to a genuinely indigenous
     broadcasting system … Since 2000 there has been a fundamental
     shift in the way government in New Zealand thinks about
     broadcasting and how it sees its own role in broadcasting. The
     government … has reclaimed the right and the obligation to
     involve itself meaningfully in the broadcasting sector.”
     (Maharey, 2003b).

  Maharey goes on to argue that;

     “We have done much to ensure that we have in place a mixed
     broadcasting economy in which both public and private interests
     have a role to play … In charging our publicly-owned television
     broadcaster with the dual remit of implementing its public
     service charter while maintaining commercial viability we have
     created an arrangement to meet our particular needs as a nation.
     We are forging a new approach that combines social and
     commercial objectives for public service television. In a country
     with the tax-base the size of ours, the government cannot hope to
     make sufficient funding available to fully support a public
     television service. While the government provides extra money to
     support the charter, TVNZ nevertheless relies on commercial

revenue from advertising to pay for much of its local content.”
      (Maharey, 2003b).

   The approach to policy outlined above is highly nuanced and requires careful

interpretation. For example, state involvement in the broadcasting sector as a whole is

equated with intervention in the publicly-owned sector. Similarly, the claim that a

“mixed economy” approach incorporating both public and private interests will meet

“our needs as a nation”, suggests that private interests are part and parcel of the

collective interests of civil society. In fact, the notion of “mixed economy” could be

understood in several ways. For instance, it might refer to a television sector

combining state-owned and private-owned commercial media (New Zealand 1989-

2003), a sector consisting primarily of private commercial media but with a public-

owned institution ostensibly serving both commercial and public service functions

(New Zealand present scenario), or a sector where both public and private institutions

with discrete and complementary commercial and public service functions co-exist

(UK present scenario). Such ambiguity may facilitate an expedient conflation of these

very different models so as to legitimate the former two through the connotations of

the latter.

   The government’s claim that the tax base cannot provide sufficient funding for a

public television service might be currently realistic, but it nevertheless depends on

assumptions about the legitimate scope of social policy and the political will of the

government (see Frewen, 2003b; Norris, 2003). Moreover, while Maharey

acknowledges the tensions between commercial and public service objectives implicit

in the TVNZ Charter, by demarcating alternative policy options as outside the scope

of realistic consideration and by foregrounding the notion that a “mixed economy”

favours the collective interest, the latent contradictions are obscured. As Fairclough

(2000) observes, the representation of economic reality as fixed and immutable,

coupled with an emphasis on the convergence of commercial and public interests

while downplaying (without completely denying) implicit contradictions is a

characteristic feature of “third way” ideology.

    Responding to questions about the way in which TVNZ’s obligation to
maintain commercial performance might limit the extent it can fulfil
Charter expectations, Steve Maharey comments, “I am in general
comfortable with the ‘mixed economy’ broadcasting model. A dual role for
TVNZ is a compromise in way, but I hope not too awkward a one. I think
it’s quite significant that the government has moved to re-commit to a
public television company with public broadcasting objectives rather than
treating it as if it were a private company.” (Maharey, 2003c). The change
in policy trajectory certainly is significant, but questions about how far the
Charter objectives will be fulfilled remain. The minister concedes that
TVNZ’s obligation to maintain commercial performance may limit the
extent of its public service functions, suggesting that the Charter’s
specified objectives are “indicative, not prescriptive” (Maharey, 2003a).
The uncertainty is acknowledged in the following comment: “I wouldn’t
pretend that the Government or the company know exactly what the end
result of this will be- because no one else in the world has tried to do this
before.” (Maharey, 2003, quoted in the NZ Herald, 12.10.03).

   Ian Fraser (2004) similarly acknowledges that one of the more difficult challenges
he has faced is in articulating precisely where TVNZ is heading. As CEO, his
mandate is to “Deliver the charter but don’t screw the business.” (NZ Herald
4.01.03). Accordingly, a plethora of statements about the Charter, both from
government and TVNZ itself come with the suffix ”and maintain commercial
performance”. Fraser does make the following clarification, however:

     “What will change is the balance. Under the Charter, we will be driven by
     content considerations, where creative and cultural objectives are as
     highly valued as commercial ones. This does not mean ‘worthy but dull’.
     Nor does it mean we are becoming elitist. We are constructing a home
     place for more New Zealanders, not an ivory tower for a few of them. But
     the charter encourages us to invest in talent and imagination, to take
     creative risks and to provide a more diverse menu, particularly in prime
     time… The Charter is not a licence to bore our viewers. If we do our job
     well… we expect that our viewers will have difficulty identifying what is,
     or is not, a Charter programme. Put simply, the Charter becomes the
     blueprint from which all programming decisions are made from now on.”
     (TVNZ, 2003a).

   The rejection of any simple dichotomy between Charter objectives and commercial
objectives is central to Fraser’s approach to rationalising and implementing the dual
remit, but as he readily acknowledges;

     “That balance is really hard to find… We’re not running TVNZ according
     to a discounted cash-flow analysis any more… [But] for all the words of
     the Charter, we’re not operating in a world where there are two clearly-
     defined poles, one of which- at one extreme- is hard commercial, and the

other being the commonly accepted definition of public broadcasting.
     There’s no question that the models of public broadcasting are now many
     and the definitions have changed… We’re not going back to a particular
     model of public broadcasting, nor clearly do we have a mandate to turn
     TVNZ into a version of Radio New Zealand with pictures… The most
     important thing about the balance is to convince ourselves that the
     balance is achievable.” (Fraser, 2004).

   The precise conception of “public service” in the context of TVNZ’s dual remit
therefore remains contested both in principle and in practicexi. Interviewing Michael
Jackson (former CEO of UK Channel Four) at the recent Wellington conference on
the future of public broadcasting, Fraser quoted Jackson’s controversial remark that
the idea of “public service” has become “A battle standard we no longer need rally
to”, “a pointless juju stick of British broadcasting”, and “a term now drained of all
meaning and purpose”. Fraser then asks, “So who should define public broadcasting
in 2003, the viewers, or the broadcasters or the commentariat, who? Who takes
control of the definitions? Because there’s some incredible power in that.” (Fraser,
2003b).

   In response, Jackson points to the need for government to engage the public in on-
going debate about broadcasting, and emphasises the importance of a strong not-for-
profit broadcaster. Explaining that his suspicion of the term “public service” stems
partially from its historical, paternalistic connotations, he also comments, “The other
reason I don’t like the term ‘public service broadcasting’ is that all too often it is
used by the enemies of intervention in the marketplace to quarantine that intervention,
and what I mean by that is we’re happy to have a little bit of public money, provided
that it’s going into things that don’t really matter, that don’t really affect the
marketplace too much…” (Jackson, 2003).

  Bob Collins (former director-general of RTE in Ireland), speaking at the same
conference, expressed similar concerns about politically expedient conceptions of
public service:

     “No discussion about the role of broadcasting would proceed very far
     before someone demands a definition of public service broadcasting.
     Sometimes this call for clarity is genuine and disinterested. But frequently,
     it is the opening shot in a campaign to reduce its scope and ultimately its
     resources: The definition that is being sought is limiting and restrictive,
     rather than clarifying and liberating… And perhaps the reality is that the
     question to be asked is not, ’what is the definition of public
     broadcasting?’ but rather, ‘what are the goals of public policy in
     broadcasting in any given society now and in the medium term?’ The
     question is no longer one of definition; instead it is about the appropriate
     scope for public policy to intervene in the broadcasting environment.”
     (Collins, 2003).

   Collins goes on to argue that restricting public service interventions to mechanisms
that merely compensate for market failures in some areas of programming not
considered attractive by the commercial sector is “a fraud on the legitimate
expectations of the audience”. While acknowledging the challenges, he considers a
hybrid public/commercial broadcaster to be viable in principle, suggesting that “the
public remit and commercial revenue are not mutually exclusive”. Nevertheless, he
warns that;

“[The] public service character and obligations are of the essence and
     must inform the very fabric and texture of the broadcaster. It is not simply
     a case of welding on some areas of defined social responsibility to an
     otherwise wholly commercial organization. It also follows that the public
     character is reflected in the overall schedule and is not something which
     inheres in individual programmes which are then distributed across a
     schedule, somewhat like sultanas in a fruitcake.” (Collins, 2003).

   The concerns of Jackson and Collins about the deployment of particular definitions
to circumscribe debate and policy are important. As Fraser rightly suggests, the
definitions are contestable, and the control over the definitions of public broadcasting
is a politically significant issue. Insofar as policy discourse defines public service as
merely the compensatory provision of programming otherwise overlooked by
commercial broadcasters, or in terms of local production irrespective of genre or
quality, it risks normalising that impoverished conception, thereby delegitimating
more progressive alternatives as unattainable or unaffordable. Indeed, that is precisely
one of the criticisms of the necessary, but ultimately insufficient, function of NZ On
Air in funding local content productions which would otherwise not be attractive to
commercial operators (see Thompson, 2002, 2004). The TVNZ Charter is specifically
intended to broaden that conception, even if some of the more qualitative outcomes
are not easy to evaluate.

    However, the Charter is only part of TVNZ’s dual remit, and consequently, there
remain problematic questions about the notion of “balance” between commercial and
public service functions. The notion of balancing Charter and commercial functions
potentially describes several different approaches. For example, it could take the form
of half the programming content decisions being made on the basis of maximising
audiences and advertising and the other half being made according to Charter
principles (e.g. innovative risk-taking and representation of minority interests),
irrespective of ratings and revenue. Finding a balance could also mean implementing
Charter principles in approximate ratio to the amount of government funding to
commercial funding. Although some Charter programming would be commercially
viable, this would currently entail a heavy bias towards commercial operation.
Alternatively, TVNZ could continue to operate on a broadly commercial basis but
allocate its public funding and any surplus revenue towards maximising the
proportion of commercially viable programmes which also met Charter criteria.
However, this might entail neglecting key aspects of the Charter which could not be
commercially accommodated (e.g. innovative risk taking and minority interests).

   The first scenario seems highly unlikely because of TVNZ’s need to maintain
overall commercial performance. If government contributions remain relatively small
compared with TVNZ’s dependence on commercial revenue, then there is a chance
the second scenario might prevail. Were this to happen, then the danger would be
precisely as Collins (2003) describes, i.e. that TVNZ would remain an advertising-
dependent broadcaster with some welded-on social responsibilities, providing a few
public service sultanas in an otherwise commercial cake. However, it is the latter
scenario which is ostensibly most congruent with Ian Fraser’s “blueprint” conception
of the Charter (which denies any clear distinction between commercial and public
service programming). This may go some way to avoiding the limitations of the first
two scenarios. Ultimately though, if an emphasis on the mainstream, commercially-
viable aspects of the Charter could lead to higher quality commercial television it
would nevertheless be achieved at the expense of compromising on the broader range
of public service functions. To gain a more realistic assessment of what kind of

balance between Charter and commercial imperatives will emerge, it is necessary to
consider some of the cultural, political and economic challenges facing TVNZ.

   TVNZ’s cultural turn

   Prior to the 1999 election, (with remarkable prescience of his future role) Fraser
himself commented on the notion of TVNZ being restructured as a chartered public
service broadcaster funded by commercials, claiming that, “I want a broadcaster that
will do better than just making the programmes advertisers want… [but] to achieve
the paradigm shift, you’d need inside TVNZ a neutron bomb.” (Fraser, 1999).
TVNZ’s commercial success over the past decade reflected an internal culture which
identified with beating the competition in the ratings and excelled at making top-
rating programmes to deliver big audiences to the advertisers (Drinnan, 2003).

   Given TVNZ’s enormous success as an SOE, there was understandable suspicion
and, indeed, resentment (Comrie and Fountaine, 2003) of the Labour government’s
plans to fix what, in the eyes of many TVNZ employees, was a system that worked.
As Bill Ralston (recently appointed as head of news and current affairs) remarked
back in 2000, “The government fears that TVNZ as an organisation will lie, obstruct,
and generally sabotage any attempt to turn it into a public broadcaster in the hope
that it can delay any restructuring until after the next election- when, perhaps, a new,
more sympathetic government might rescue it from the wussy status of public
broadcaster.” (2000, pp.40-41). Thus without an internal shift in broadcasting values,
TVNZ’s change in status from an SOR to a CROC with a public Charter would be
insufficient to ensure the desired changes in content. Hugh Rennie (2003) underlines
the problem xii: “I’m slightly depressed by the TVNZ Charter. There’s nothing wrong
with it at all except it’s so obvious, it’s disappointing that it ever had to be said.” Yet
as Hobbs (2002) points out, it was not necessarily obvious to TVNZ: “Why I actually
wrote a Charter was because I had people from TVNZ and the industry saying, ‘What
does social responsibility mean?’ ”

   The extent to which the commercial mind-set had eclipsed any vestigial sense of
public service within TVNZ, and equated social responsibility with dividend
payments is indicated by the fact that the government considered it necessary to
specify Charter values in legislation. Asked about his previous assertion that
transforming TVNZ’s culture would need a neutron bomb, Fraser (2004) remarks;

      “[The] fairly wide-ranging mandate for change… is provided not just by
      the Charter but by a government which makes it clear, almost on a daily
      basis, that it does have different intentions for public broadcasting, and
      you could say that that is the neutron bomb… It’s very easy to
      underestimate how important it is for TVNZ to have a Charter. If you look
      back… we’ve never had one before and arguably in the early days of…
      TVNZ, you didn’t need a Charter. There was a form of consensus about
      what public broadcasting really meant, but I don’t think it was one that
      was frequently debated- which is one of the reasons that when we ended
      up moving down the road… to a very hard commercial model, there
      seemed not to be a great deal of debate about that either.”

   Both Fraser and other TVNZ managers claim that the Charter philosophy has now
been broadly accepted by the staff. Indeed, Fraser (2004) comments that “Everything
I hear now… suggests that there is now quite clearly a culture change, and we’ve
worked very hard to achieve that. In broad terms, we know that the Charter mandates
change… but what we talk about a lot is not just change, but our commitment to be a

better broadcaster… and there aren’t many left in TVNZ who are cynical about
[that].” There has certainly been a significant turnover of personnel in TVNZ since
1999, with Roseanne Meo (chair of governors), Rick Ellis (CEO) and Paul Cutler
(head of news) being the highest profile departuresxiii.

   However, it is interesting to note there has also been some high-profile turnover
even among the new people appointed to implement the Charter. The new chair, Ross
Armstrong resigned in the midst of a scandal over misuse of funds, the new head of
news Heaton Dyer resigned for “personal reasons” xiv, and the head of business
development, Marty Behrens resigned citing TVNZ’s lack of vision and risk-taking:

     “I joined TVNZ because I welcomed the new socio-cultural focus and the
     TVNZ Charter and I also welcomed the challenge of… balancing the
     business objectives with the social and cultural goals… [but] without a
     culture of risk-taking and experimentation it’s going to be very difficult to
     invent the new world of public service broadcasting and commercial
     performance at the same time” (Behrens, 2003).

   Initially, Fraser was certainly cautious about implementing radical major
organizational overhauls, (Drinnan, 2003). According to the (then) head of public
affairs, Glen Sowry (2003), the most significant structural changes are intended in the
area of programme commissioning and production, where job descriptions and key
performance indicators are being changed to better reflect Charter requirements; “The
Charter does not call for operational changes- it is very much focused on outputs and
outcomes… The area that has seen the biggest structural change with reference to the
Charter is the commissioning team. Most other parts of the business will remain
structured as they were prior to the Charter.”

   Fraser (2004) acknowledges that there has been a significant amount of internal
turmoil generated by the Charter-inspired changes, but suggests this has been
exacerbated by the “ferocious” and “absurd” media scrutiny of TVNZ’s every move,
regardless of triviality. The evidence of internal disruption at TVNZ may well indicate
a shift in internal values, but that still leaves questions about the way the Charter will
be implemented in practice. There are still many sceptics who consider the current
evidence of progress toward Charter implementation to be inadequate (see Frewen,
2003a; Chalmers, 2004). Even assuming that there is now some degree of conversion
to the mission to balance public service and commercial imperatives, there is no
guarantee that TVNZ’s cultural turn would be sustained were future changes in
management or government to discontinue the current political commitment to
Charter values.

   Responsibility without power or money

   There is no escaping from the fact that TVNZ’s primary source of revenue
demands programming which will still attract significant audiences. Some
commercially viable content will certainly be compatible with Charter objectives, and
the audience’s appetite for content which informs and educates as well as entertains
ought not to be underestimated. However, prevailing audience preferences reflect a
decade of cultivation on increasingly commercial content. While ratings may indicate
relative popularity, they are historical, in the sense that they demonstrate audience
responses to existing genres and formats. They do not provide a guide to the potential

appeal of original types of programming. Consequently, a significant tension exists
between the ideals of the Charter in promoting innovative, quality programming and
the commercial temptation to stick to tried and tested commercial formulae.

   Nevertheless, in recognition that fulfilling Charter obligations will require TVNZ
to make programming decisions that reflect criteria other than revenue maximisation,
the government decided to directly subsidise TVNZ, beginning with $12m in 2003
and rising to $17m per year by 2006-7 (Maharey, 2003d). TVNZ had originally
estimated the costs of Charter implementation to be between $20 and $50 million per
year (NZ Herald, 9.05.02) and even $17m of Charter money represents less than 5%
of TVNZ’s annual operational revenue. While relatively modest, this direct funding is
politically significant for three reasons:

   Firstly, the subsidy from general taxation constitutes acknowledgement
that the provision of public service broadcasting requires that
programming decisions be insulated from normal commercial criteria (i.e.
ratings maximisation). Secondly, it recognises that the government must
intervene financially in the broadcasting sector in order to ensure the
market does not ignore cultural and democratic considerations. Thirdly, it
confirms that the function of New Zealand On Air (itself now funded
directly from government) in commissioning the production of local
broadcasting content, is a necessary but ultimately insufficient provision
for public service broadcasting.

   On that point, Maharey’s ministerial briefing papers from the Ministry
of Arts, Culture and Heritage specifically state that, “The Ministry will
administer, on behalf of the Minister of Broadcasting, the funding provided
in Vote Arts, Culture and Heritage to fund Charter related initiatives by
TVNZ. This appropriation is for $12 million per annum (GST inclusive),
and is for initiatives that are not commercially sustainable, and for which
NZ On Air funding is not typically available. xv” (Ministry of Arts, Culture
& Heritage, 2002).

   The direct funding of TVNZ was expected to be accompanied by a
diminished expectation of dividend payments and soon after the Charter
legislation was ratified, Ian Fraser stated that he would be “really
surprised if there was an expectation that TVNZ should continue to deliver
any kind of substantial dividend” (NZ Herald, 9.05.02). It would certainly
seem obtuse to provide TVNZ with additional funding at the same time as
demanding continued dividend payments. However, the Treasury has been
reluctant to reverse the flow of revenue from TVNZ to government coffers,
and the expectation of a dividend has not been rescinded. Indeed, the
TVNZ Statement of Intent for 2004 (TVNZ 2003c, section 12) states that
“It is intended that surplus funds generated from operating activities will
be distributed annually to the Shareholders. Surplus funds from operating
activities has been defined as net operating cash flow less funds invested in
an required for the continuity of business activities.” The document lists
the estimated surpluses for 2004-2006 as $19.3m, $15.9m, and $20.9m
respectively, which is in excess of the Charter subsidy provided by
government. Thus according to these figures, the government’s net
contribution to the Charter will actually be negative. It would therefore
appear that the Ministry for Culture and Heritage is giving TVNZ money
with one hand, only for the Treasury to take it back with the other.

Steve Maharey and Ian Fraser were both asked about this seemingly
contradictory dividend payment arrangement. Maharey (2003c) explained
that,

     “The Crown Company Monitoring Advisory Unit (CCMAU)
     advises government on the commercial operations of TVNZ (as it
     does with other Crown entities such as State Owned Enterprises).
     As, in terms of the legislation, the company [TVNZ] is still
     expected to be profitable, CCMAU expects it to make a dividend
     payment. This is based, partly, on the view that a requirement to
     pay dividends acts as an incentive to the company to maintain
     its commercial viability.”

   Maharey has publicly reinforced this expectation: “I’ve said to them, ‘you
should be under no illusions the government wants a return… Because if
we don’t get a return, then our concern will be that the company is not
running in a commercially successful way’.” (Maharey, quoted in NZ
Herald, 12.10.03). The dividend requirement certainly imposes a bottom-
line discipline on TVNZ, but it raises questions about how far the dividend
may be a disincentive or impediment to Charter implementation.

   Fraser (2004), meanwhile, has a somewhat different interpretation, and
considers that TVNZ’s financial obligation to CCMAU should not be
conceived as a conventional dividend: “What the government has accepted
is that from hereon in, we will pay back to the government what’s left- the
surplus cash flow- at the end of the financial year… I actually don’t see it
as dividends at all; I just see it as ‘you didn’t need that money, you didn’t
spend that money, we’re going to take it’, and it’s difficult to argue with
that.” He contrasts the dividend system under the SOE structure
(whereby particular formulas determined a percentage of revenue to be
paid to the Crown), with the current system which will allow TVNZ the
flexibility to make Charter investments, so long as the company remains
solvent and pays back any spare change to the government: “We invest in a
generous-spirited but obviously commercially responsible way to the limit
of what we believe our cash flows accommodate.” (Fraser, 2004).

   Apart from the fact that anticipated dividend obligations would
influence the estimated cash flows and surpluses available for investment,
there is evidently a discrepancy between the projected surpluses for 2004-
2006 and “generous-spirited” Charter investment. On this point, Fraser
concedes that there would always be an internal demand for any available
funds, and suggests that the surplus projections in the Statement of Intent
could change, citing the mid-financial year separation of BCL/THL from
TVNZ as one reason why the calculations were speculative. Whether the
Treasury would welcome such apparent financial uncertainty is a moot
point. Asked whether it would be tenable for TVNZ to inform CCMAU that
no dividend would be forthcoming, Fraser (2004) comments;

     “TVNZ could realistically elect to pay no dividend under the
     current arrangement, and the mopping up of cash left over at the
     end of the financial year might not be presented publicly as a

‘dividend payment’ in any case… To pay nothing, however, could
     be construed as a provocative act. We are aware of the climate
     within which we operate and I think we shall be searching for a
     balance here”.

   This reveals an important contradiction between pursuing the
cultural/democratic imperatives demanded by the Charter and
maintaining commercial performance on the terms of the
Treasury/CCMAU. On this point Fraser (2004) confirms that, “Of course
there’s a tension. It means there’s an on-going debate- and it’s often pretty
full blooded- between TVNZ and the financial monitoring agencies.” Asked
who ultimately decides the size of TVNZ’s contribution to the Treasury,
Fraser candidly concedes, “I don’t know whether it will be determined by
the governors or by CCMAU”.

   However these tensions are resolved, and irrespective of whether
CCMAU, the Minister of Broadcasting, the TVNZ board or Ian Fraser has
the final word on dividend/surplus payments, even the relatively modest
amounts money being put towards the Charter are contested. This is
evident in the decision to amend the TVNZ Charter Bill prior to
ratification, resulting in TVNZ’s transmission subsidiary, BCL, being
separated from the TVNZ CROC, and re-established as a stand-alone
SOE, Transmission Holdings Ltd. (THL), late in 2003. The original plan
would have involved setting up BCL and TVNZ with different sub-boards
under a third over-arching board. However, amidst ostensible concern over
the governance structure and financial transparency between the
television and transmission operations, the Bill was subsequently
amended xvi.

   Interestingly, the ministerial news release announcing the split prominently
featured Michael Cullen, the Minister of Finance, who remarked, ”The split will result
in increased transparency and accountability and allow the two parts to each focus
on their core business. A different mix of skills is needed for the governance of each
business and this can best be achieved by having separate companies.” (Office of the
Minister of Broadcasting, 2002b). In the same release, Steve Maharey also
commented that, “The loss of BCL’s earnings will not result in a loss of revenue for
TVNZ. Funding decisions about how and to what extent TVNZ should be compensated
to fulfill its charter are more appropriately made by the government, not TVNZ
directors.” . Be that as it may, it would appear that different interests within the
government have different expectations about how much that should be.

  When the TVNZ Bill went through its final reading, the Minister of Broadcasting
conceded that the BCL split would have financial repercussions for TVNZ:

     “A decision not to separate the businesses would have mean that the
     TVNZ group might have been inclined to extract revenues from BCL to
     fund the television interests at BCL’s expense… Clearly there will be a
     loss of income to TVNZ if it can no longer extract dividends directly from
     BCL… [but] it is questionable what benefits might have been derived from
     distracting members of the Board and management of TVNZ onto matters
     associated with BCL’s operations and development… Under this
     legislation, the Board of TVNZ will therefore be in a position to focus on

the its primary objective of implementing the charter- while, of course,
      maintaining commercial performance.” (Maharey, 2003a).

   Thus the premise underpinning the decision to split BCL/THL from TVNZ is that
the transmission section’s operation as a profit-driven SOE is incompatible with the
television section’s role as public service broadcaster. While this pretext may be valid,
it directly contradicts the government’s rationale underpinning the decision to
restructure TVNZ as a CROC with a dual commercial and public service obligation.

   The Minister of Broadcasting is correct to assert that the split means TVNZ cannot
now extract surplus funds from BCL xvii. Indeed, TVNZ’s dividend payment in the
2003 financial year came entirely from the BCL subsidiary (Fraser, 2004), which was
one reason why the Treasury was in favour of the split. Now restructured as part of a
separate SOE (THL), BCL will be expected to continue contributing to the
consolidated fund. TVNZ will still have access to the contestable NZ On Air funds, of
which it has historically been the principal beneficiary, receiving approximately 80%
of the $60m allocated to television (Norris, 2003). That source of funding existed
prior to the Charter, however, and it is important to recognise that its availability did
not prevent the market failures of TVNZ’s operation as an SOE. Fraser (2004)
considers the Charter obligations to warrant the allocation of NZ On Air’s entire
television budget to TVNZ. However, this is strongly opposed by NZ On Air (which
would become largely redundant if this were to occur), TV3 (which currently receives
around 20% of that money) and also the independent producers (who fear that their
autonomy would be subordinated to TVNZ’s scheduling priorities were it to become
the sole outlet for their programming xviii).

   The current levels of state funding via NZ On Air and the Charter subsidy provide
TVNZ with around 10% of its overall revenue before any dividend repayments
(Fraser 2004), which is considerably less than RTE (the Irish Broadcaster with which
TVNZ is often compared because of its dual public/commercial role), which was still
receiving 35% at its lowest point of license fee subsidy (see Collins, 2003). While the
government’s new Film Commission funding may provide an additional source of
revenue in the future, it is unlikely to be on a scale sufficient to make a substantial
difference to TVNZ’s heavy dependence on advertising revenue. This puts TVNZ in a
difficult situation whereby the public funding is disproportionately small compared
with the expectations of non-commercial Charter objectives. As Stephen Carter, (CEO
of Ofcom in the UK) poignantly observes, “Experience from elsewhere in the world
shows that public funding and advertiser funding make poor bedfellows within a
single broadcaster; as it lurches between conflicting incentives, its public service
programming suffers” (Carter, 2004). Compromise is therefore inevitable, but to
understand the nature of the likely trade-offs between commercial performance and
Charter goals, some more specific examples need to be considered.

   Twilight of the (NZ) idols?

   Fraser (2004) accepts that TVNZ’s dual remit will necessitate compromises,
although he hopes to a lesser degree than under the SOE structure. One example of a
largely insoluble conflict between commercial and Charter goals is the inclusion of
“minority” and “special interest” programmes in peak-time slots, and here Fraser
concedes that the commercial imperative makes this hard to justify. As Sowry (2003)
likewise points out, “Our primetime schedule must continue to attract strong
audiences and ratings. We would expect that quality Charter programmes can be
screened in primetime and attract good ratings. Shortland Street, for example, is
definitely a Charter programme. A niche Charter programme would not typically