Television New Zealand and the Charter: the Uneasy Reconciliation of Public Service and Commercialism
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Television New Zealand and the Charter: the Uneasy
Reconciliation of Public Service and Commercialism
Dr Trisha Dunleavy
Senior Lecturer
Media Studies Programme
Victoria University of Wellington
Wellington
New Zealand
trisha.dunleavy@vuw.ac.nz
Introduction
Public service television (PSTV) has rarely enjoyed a satisfactory level of provision or performance in
New Zealand, the medium and country of focus for this paper. However, the last ten years – a period
during which new technological capacities have facilitated the burgeoning of an intensely competitive
digital era – have seen the advent of some new provisions for the delivery of New Zealand’s
television’s ‘public service’ objectives. Although technological changes were an important impetus for
the strengthening of ‘public service’ that these new provisions have attempted, they were also
politically motivated. As part of a larger ‘cultural recovery’ agenda pursued by the Helen Clark-led
Labour government from 2000,1 the new provisions in television were the reaction of a left-wing
government to a perceived crisis developing around PSTV in the late 1990s, the consequence of
funding neglect during that decade. Whilst the new initiatives have been largely successful – these
including the establishment of a Maori TV network, the inception of two new non-commercial
channels for the state-owned Television New Zealand (TVNZ), and the establishment of a free-to-air
digital platform as an affordable alternative to that of subscription network Sky Television – this paper
examines what became the most ambitious initiative of all, whereby the commercially-oriented TVNZ
was given a ‘public service’ charter. Whilst this was expected to transform TVNZ, resolving its
uncertain fate as a public network which had operated on a ‘strictly commercial’ basis for thirteen
years, the unprecedented public criticism to which TVNZ was subjected between 2003 and 2008
1
This agenda began with an ‘arts recovery’ package, as announced by Helen Clark in May 2000, through which
NZ$146 million in public funding was allocated into New Zealand screen and broadcasting industries. See for
details “We Get the Full Monty” (2000) Onfilm, June, pp.1 and 11.
1underline that, for reasons that this paper will examine, the TVNZ charter initiative was ultimately a
failure.
TVNZ before the Charter
The challenge of reviving TVNZ’s ‘public service’ profile by means of a comprehensive, ambitious
charter requires some contextualisation. In the late 1980s, and along with most other state-owned
companies, TVNZ was subjected to a neo-liberal-styled transformation. Considered to be a radical
restructuring, this reorientation of TVNZ was accompanied by an equally extreme deregulation of New
Zealand’s broadcasting sector, which left it among the least regulated in the world. The restructuring
and deregulation of New Zealand television was intended to prepare its market for the impending
launch of TV3 and Sky, the first private TV networks, which would end the lengthy monopoly that
TVNZ had enjoyed since 1960.2 But testifying to the influence of neo-liberal ideology, these changes
entailed the rejection of traditional approaches to PSTV, specifically the notion that its outcomes could
be delivered by TVNZ’s ‘mixed’ model. Instead of the traditional route of a non-commercial or semi-
commercial public network, New Zealand’s PSTV outcomes were vested in a new public broadcasting
agency, New Zealand on Air (NZoA). Established in 1989, NZoA became the resounding, albeit
isolated, success of New Zealand’s neo-liberal experiment in television.
Until the inception of the charter in 2002, TVNZ’s remit remained ‘strictly commercial’. But the
door to TVNZ’s commercialisation was opened long before, in that it had operated semi-commercially
since the 1960, with advertiser funding increasing in proportion and influence as public funding
declined. However, underlining the radical nature of its restructuring, two conditions for TVNZ were
new from 1989. One was that it became almost 100 per cent reliant on advertising revenue. Whilst in
its in-house producers could compete alongside independent TV producers for NZoA funding for
qualifying productions, TVNZ received no direct public funding. The other, was that, as with other
state-owned companies, TVNZ was required to justify its new status as an income-earning asset by
returning a share of its profits. Commercially reliant and also profitable in this capacity because of its
ratings dominance, TVNZ proved a very efficient ‘cash cow’ through the 1990s. However, this did not
prevent New Zealand’s more zealous neo-liberal politicians from attempting to sell it in 1998. What
did prevent this outcome was the ‘cultural recovery’ agenda of the Clark-led Labour government,3 one
element of which was to retain TVNZ in public ownership rather than selling it, a decision whose
political justification seemed to necessitate giving the network a ‘public service’ role.
2
TVNZ was created in 1980. Its predecessor public networks held different names, initially the NZBC (1960-74)
then the BCNZ (1975-79). During the BCNZ era, the two public channels operated as semi-independent
corporations, Television One and South Pacific Television. It was the amalgamation of these corporations that
formed TVNZ in 1980.
3
For more detail about what this included see Dunleavy, Trisha (2005) Ourselves in Primetime; A History of New
Zealand Television Drama, Auckland: Auckland University Press, p.279.
2A Public Service Charter for TVNZ
Offering New Zealanders an opportunity to resolve the crisis into which PSTV had fallen in the late
1990s, three indicators of which were the failure of pilot Maori TV network Aotearoa Television, an
insufficient flow of funding to NZoA, and the preparation of TVNZ for sale, the Labour government
stood to consolidate its public popularity by assuming a contrasting position on public television to that
of its National Party opponents. This meant targeting all three of these touchstone areas in which PSTV
was perceived to be failing. Whilst NZoA needed increased funding rather than any more fundamental
change, the creation of Maori TV and the return of a public role to TVNZ were sufficiently challenging
projects to operate as cornerstones for the strengthening of PSTV that Labour had promised voters.
While Maori TV finally gained the level of planning and funding that it needed to be successfully
established, a ‘public service’ charter was imposed on the ‘strictly commercial’ TVNZ. With
repercussions for its institutional orientation, profitability and programming, the charter was given to
TVNZ in 2002 and formalised in a new piece of legislation, the Television New Zealand Act 2003.
Whilst the charter was certainly well-intentioned, it was flawed by its very high ambition, yet
meagre funding provision. Testifying to the former, the 2003 Act devoted extensive detail to
instructing TVNZ about its approach and philosophy, before outlining the range of programme forms
that the network would be required to screen and the audience groups it would be expected to serve.4
Emphasising the charter’s evocation of traditional ‘public service’ values, its requirements, as
registered by Comrie and Fountaine, took four main themes: “the role of building community and
citizenship capacity, the call for quality and integrity, the role of nurturing the creative industries and
pushing creative boundaries, and the provision for a wide range of interests with a special emphasis on
neglected minority interests.”5 While it also ascribed a ‘public service’ function to certain imported
forms, the charter’s local-content expectations were its most challenging feature. In vivid contrast to
the absence of local-content requirements for TVNZ in the 1990s, the charter gave it obligations to
commission productions across the range of forms, including the very costly areas of news and
information, drama and comedy, documentary, history and the arts. Whilst the charter included
obligations to different audience groups, Maori, young people and children were the most frequently
specified.6 In philosophical as well as economic terms, the charter’s comprehensive set of requirements
were far more appropriate to the uncompromised ‘public service’ position of a well-resourced, non-
commercial broadcaster such as Britain’s BBC than they were to a commercially reliant TVNZ.
4
The charter requirements are included in full in the Television New Zealand Act 2003, Section 12 (2a) and (2b),
pp. 6-7.
5
Comrie, Margie and Fontaine, Susan (2005) “Retrieving Public Service Broadcasting: Treading a Fine Line at
TVNZ”, Media, Culture and Society, 27:1, p. 110.
6
The charter requirements are included in full in the Television New Zealand Act 2003, Section 12 (2a) and (2b),
pp. 6-7.
3This disjuncture between the commercialised network that TVNZ was in 2002 and many non-
commercial activities and outcomes that the charter required it to undertake, was an insurmountable
challenge whose resolution would most certainly require major public investment. Yet the idea of a
non-commercial TVNZ was a situation for which no precedent then existed and for which no
significant resources were being created. Accordingly,
the charter requirements were strikingly under-responsive to TVNZ’s position as a commercially
reliant public network operating in a deregulated market whose limited population size had long left it
vulnerable to ‘market failure’ in certain production areas. Putting even more distance between the real
TVNZ and the public network that the charter seemed to imagine, was that rather than making the
significant adjustments to TVNZ’s commercial obligations that the charter made necessary, these were
left unaltered. Immediately preceding the 2003 Act’s long list of charter expectations was the
instruction that, “In carrying out its functions, TVNZ’s principal objective is to give effect to its
Charter…while maintaining its commercial performance”.7 Hence rather than seeking to reduce the
influence of commercialism on TVNZ, the 2003 Act instead placed its ‘commercialism’ and new
‘public service’ obligations in a binary relationship. Accordingly, the 2003 Act set TVNZ up to fail in
two ways: first by failing to make provision for the charter’s many non-commercial implications and
second, by requiring it to deliver the charter without compromising the profitability it had
demonstrated through the 1990s. While the first ensured that a chartered TVNZ would never be able to
fully deliver on the intended expectations, the second left it little choice but to prioritise commercialism
over ‘public service’ when direct conflicts between these objectives arose.
Although neither was explicit in the 2003 Act, two provisions accompanied its release. Whilst
both were designed as a flexible mechanism through which additional public funding for the charter
could be given to TVNZ, these provisions were but a partial recognition by the Government and
Treasury of the funding challenges that the charter imposed. One was for TVNZ to be given an annual
injection of direct public funding for ‘charter-oriented’ programming. Although the government was
slow to reveal how much,8 this funding was given in bulk to the network, augmented by the continuing
eligibility of TVNZ’s producers to compete for contestable NZoA funding. The other, was to reduce
TVNZ’s obligation to maximise its dividend return to the government by changing its public status
from State-Owned Enterprise (SOE) to Crown-Owned Company (CROC), a move that was expected to
7
Ibid. Section 12, (2), p.5.
8
The first charter funding to TVNZ, a sum of NZ$12 million, was announced in a guest lecture that Marian
Hobbs gave to this author’s own Media Studies class, Media in Aotearoa New Zealand, at Victoria University of
Wellington, 8 May 2002.
4allow the network to retain more of its profits.9 Although it took until 2005 for the impacts to be fully
revealed, neither provision was able to provide the means to adequately resource the charter’s PSTV
outcomes, with both of them colluding instead to limit the pool of funding available for this. The
flawed assumption on which both provisions were founded was that TVNZ would be able to deliver its
charter via public subsidy rather than full public funding and that this would still be possible even if a
large majority of this money came from the network’s commercial revenues.
Commercial Profitability or Public Service: the Charter’s Conflicting Objectives
This paper has argued that, albeit a well-intentioned, highly appropriate attempt to return a public role
to TVNZ, the charter set the network on course to fail in its charter delivery because of the expectation
that TVNZ achieve an ambitious set of ‘public service’ outcomes despite the commercial priorities that
its continuing reliance on advertising revenue entailed. When outlining the charter’s rationale in June
2001, Marian Hobbs registered government acceptance that “without subsidising programmes specific
to our history, peoples, and culture, such programmes will not be produced to the extent desired”.10
Although this assertion was keyed to flag a return to direct public funding for TVNZ,11 its wording also
signalled that, despite the high ambition of charter requirements, the government intended to meet only
some of the production costs. While the charter expected TVNZ to provide a volume of programmes
which were unlikely to be advertiser-friendly, the government assumed that these would be cross-
subsidised by TVNZ’s advertising revenue.
Although the use of commercial revenues to subsidise PSB outcomes had been an ongoing
practice for TVNZ in the monopoly era, its prospects in the commercialised, competitive market in
which TVNZ operated after 2000, were contrastingly limited. Whilst survival in such a market also
made it perilous to place the charter’s non-commercial programmes in high-earning primetime slots,
TVNZ’s commissioning and scheduling of these was further undermined in ‘public service’ terms by
the paucity of public funding that it was given to support its charter activities – NZ$12 million in the
first year (2002-03) rising to an average of around $15 million per year (2004-08) thereafter.12 At this
level, the potential influence of charter funding on the network’s commissioning and schedules could
9
Another important provision of the 2003 Act was the full separation from TVNZ of its transmission company
Broadcast Communications Limited (BCL). Operating as an increasingly lucrative ‘golden goose’ for TVNZ
after the advent of competition, BCL contained the bulk of the country’s transmission services, hence its removal
brought reduced leverage over TVNZ’s rivals as well as a significant reduction to its income. BCL’s current
name is Kordia.
10
Hobbs, Marion (2001) Minister of Broadcasting, “A New TVNZ”, June.
http://www.executive.govt.nz/minister/hobbs/television/news.htm, Retrieved 29 July 2001.
11
TVNZ had not received any direct public funding since 1988.
12
TVNZ did receive additional public funding during these years from NZoA and TMP. However because this
funding was ‘won’ by network producers, as the result of a contestable process whose funds also supported
programmes for private networks TV3 and Prime, it did not constitute direct funding to the network nor could it
necessarily be factored into the planning of commissioning and production expenditure in any given year.
5only be minimal. NZ$15 million represented just 3 per cent of TVNZ’s total annual operating revenue
(NZ$492 million in 2003) and was equally dwarfed by its annual advertising revenue which averaged
NZ$319 million per year between 2002 and 2008.13 Accordingly, while the charter expected TVNZ to
provide a new supply of non-commercial programming and assumed that this would screen in high-
profile primetime slots, at such a low level of direct public funding, these aims were a pipe dream.
TVNZ was simply not resourced to prioritise charter outcomes over the economic necessity for it to
serve advertisers. Any attempt that TVNZ made to subvert this revenue-derived hierarchy of priorities
could only occur at the expense of the commercial profitability that the 2003 Act also required it to
maintain.
A second main obstacle to the success of the charter was the continuation of the dividend
obligation. As incoming TVNZ Chief Executive in early 2002, 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”.14 Fraser’s assumption was that – having given TVNZ a charter and then required
it to cross-subsidise ‘public service’ outcomes with commercial revenues – the government would
remove the dividend requirement so as to maximise charter outcomes and their potential to provide a
cultural dividend. However in 2004, TVNZ was asked to pay a dividend of NZ$37.6 million, this
revealing that its status change (from SOE to CROC) had made little difference to its dividend
position.15 What emerged instead was what Ian Fraser termed a “money-go-round” system,16 whereby
the potential benefits of the annual charter funding flowing into TVNZ were negated by the annual
dividend flowing from it: more specifically, TVNZ would receive its direct funding from one
government source (the Ministry of Culture and Heritage) but was obliged to return a dividend to
another (the Treasury).17
Although dividend payments varied markedly from year to year, the negative impact of the
TVNZ ‘money-go-round’ was fully apparent after six years of its operation. Reconciling the balance
sheet for the period 2003-2008, Peter Thompson found that whereas TVNZ received a total of NZ$95
million in charter funding, its dividend returns totalled NZ$142 million.18 Hence, whilst TVNZ was left
without sufficient public funding to deliver its charter and exposed to public criticism of its charter
performance, the country’s general budget was wealthier by NZ$47 million. Notwithstanding the
13
See “Financial Statements” sections of TVNZ Annual Reports 2002-2008, http://tvnz.co.nz/content/845012,
Retrieved 22 July 2010.
14
Cleave, Louisa (2002) “TVNZ Welcomes $10m, Wanted More”, NZ Herald, 9 March,
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1844234, Retrieved 28 July 2010.
15
Trevett, Claire and Perrott, Alan (2004) “TVNZ Wants to Keep Its Millions”, New Zealand Herald, 13 October.
http://www.herald.co.nz/news/article.cfm? 3600068. Retrieved 20 July 2010.
16
The ‘money-go-round’ label was coined by Ian Fraser in Claire Trevett and Alan Perrot (2004).
17
Thompson, Peter (2009) “The Demise of the Charter: The Arguments the Government Wants Us to Ignore”,
Scoop, http://www.scoop.co.nz/stories/HL0903/S00356, 3 February.
18
Ibid.
6charter’s good intentions, this ‘money-go-round’ was at least partly a product of the “commercial
performance” clause in the 2003 Act. By requiring TVNZ to maintain this, the same Act that created
the charter also refreshed the significance of its dividend return.
Unrealistic Expectations: Misunderstanding the Charter
The problems outlined above demonstrate that the TVNZ charter was much too ambitious for the neo-
liberally transformed political and bureaucratic context onto which it was grafted. Joining these,
another problem – this ensuring that the charter would become a politically-charged stick with which
National politicians could regularly beat their Labour opponents – was the extent to which the mere act
of giving TVNZ a charter, a decision which received extensive coverage in the press, inflated public
expectations of what TVNZ might suddenly become. Inspired by the charter’s aspirational content, the
expectations of different groups as to what TVNZ might become after its implementation, soared.
However, a striking facet of what became a very large volume of media discourse about the
implications of the charter, was that the direct conflict in the 2003 Act between the ‘public service’ and
commercial elements of TVNZ’s new remit, attracted surprisingly little attention.
In addition to the other hindrances to TVNZ charter’s delivery were problems in the
implementation time frame. The charter document was released to the public in 2002, the same year
that TVNZ began to implement it. Yet it was not until 2003, the same year that the Act was passed, that
direct charter funding (the injection for that year being just NZ$12 million) could be factored into
TVNZ’s commissioning budget. Despite the necessity for a lengthy lead-in period for charter
implementation, public discourse about the charter pointed to the general perception that the mere
imposition of a charter would itself be enough to transform TVNZ schedules and would do so
immediately, even before sufficient time had elapsed for charter-oriented programmes to be produced
or for direct charter funding to even inflect TVNZ commissioning. In other words, neither the
journalists reporting on TVNZ’s charter performance nor the general public whose own opinions stood
to be influenced by this reportage, understood that delivering on the charter would take several years
(with two years being the average length of time between commissioning and airing a given
production) after the funding and formal requirements were in place. Testifying to this gap in
understanding, scathing criticism of TVNZ’s charter performance was a remarkably early feature of its
life as a chartered network. Implying the failure of the charter just two months after the 2003 Act was
passed and cynically citing one of its more aspirational assertions, one journalist news wrote, “It was
heralded as the dawn of a new age of television when one could turn on the box and experience a
‘deeper sense of what it means to be a New Zealander’.”19
19
Daniell, Sarah (2003) “Watching the Charter”, The Dominion Post, 3 May.
7Public criticism of TVNZ’s charter performance was reflected most strongly in successive
newspaper articles, editorial columns, and individual letters-to-the-editor, a popular refrain being
TVNZ’s failure to deliver charter-oriented programmes, including ‘minority’ and non-commercial
examples, in primetime slots where they were most obvious to viewers. Indicative of the way in which
charter criticisms remained focussed on programming and either overlooked or underestimated the
impacts of the significant resourcing problems, the following extract (from the editorial column of New
Zealand’s largest newspaper) was one of the many examples:
The Television New Zealand charter was meant to usher in programmes that reflect our identity and
culture, our history and heritage, as well as the arts and Maori and minority interests. Instead it has
delivered Headliners, Piha Rescue, Taking Off and much other lightweight fodder. The charter was meant
to contribute to a sense of national purpose and a pride in the country’s diversity. Instead it has produced
an alarming dumbing down of TV One’s content, and a barrage of complaints from disgruntled
viewers…it has provided a pretext for a lamentable brand of television, and a cavalier disregard for those
who want better.20
A significant feature of the media’s response to a chartered TVNZ, not helped by its tendency to
emphasise programming outcomes as the above example did, was widespread confusion about how
much public funding TVNZ was receiving and what proportion of its income still came from
advertising revenue. This was illustrated in 2004 when a scandal erupted over a media revelation that
TV One’s news anchor Judy Bailey had negotiated a pay rise to NZ$800,000. The media response was
one of seething indignation, as if the money was being paid from the public purse.21 Even though the
commercial revenues being earned by One News, the channel’s leading flagship programme, had been
instrumental in Bailey’s successful negotiation of this salary, that this even became the scandal that it
did exemplified Peter Thompson’s contention that the network’s “receipt of even a small ratio of public
funding effectively earmarked all its revenues as public funding, with commensurate normative
expectations about how it ought to be used.”22 With New Zealand’s leading newspapers in competition
with TVNZ and TV3 for their slice of advertising revenue, it seems significant that this incident and
the funding scandals that followed it began as ‘breaking news’ in these same newspapers. Whether or
not the commercial rivalry between the press and TVNZ was an additional motive, print journalists
reporting on TVNZ’s charter delivery seemed remarkably under-informed about such relevant political
20
“Charter No Excuse for Shoddy TV” (2004) Editorial, New Zealand Herald, 14 April, A16.
21
Spratt, Amanda (2004) “Judy Bailey: I’m on a Hiding to Nothing” Herald on Sunday, 19 December.
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=9003893. Retrieved 28 July 2010.
22
Thompson, Peter (2007) “Funding, Framing and Fumbling: The Politics and Cultural Economy of Public
Revenue Streams in New Zealand Television”, Paper presented to the MEDIANZ Conference, Victoria
University of Wellington, February, p.15.
8economic issues as the costs of TV production and what ratings and production cost thresholds
separated ‘commercial’ from ‘non-commercial’ programmes and time-slots.
Describing his own role as to “deliver the charter but don’t screw the business”,23 Ian Fraser
proceeded to implement the charter on the assumption that public funding to TVNZ would soon
increase and dividend payments would cease. Key strategies in the Fraser years (2002-05) included
efforts to increase TVNZ’s local content from 36 to a desired 50 per cent along with the production of
a wide range of charter-oriented programmes, a number of which did air in primetime slots.24 Yet, as
Fraser found, attempts to prioritise charter objectives in strategic areas of TVNZ’s primetime schedule
were apt to reduce the advertising revenues these earned with major repercussions for TVNZ’s overall
profitability. Partly because of TV One’s position as TVNZ’s oldest channel and natural home for the
charter’s news programming, it bore the brunt of the expected conflicts between ‘public service’ and
commercial objectives in primetime hours. The pressure on charter-oriented shows in mid-primetime
slots was illustrated by the impact of poor ratings for TV One’s daily current affairs show Headliners,
which preceded the channel’s news flagship One News. Underlining how the commercial weakness of
Headliners was able to reduce TVNZ’s primetime revenue on a daily basis and to the benefit of its
rival TV3, independent producer Julie Christie noted that “One News is being adversely affected by the
lack of a 5.30pm lead-in show. Home and Away at 5.30pm on TV3 is delivering them up to 65 per cent
of the 18-49-year audience.”25
Such a large volume of criticism of TVNZ’s charter performance was also instrumental in
reviving its historic role as a political football. Precisely because the TVNZ charter was the initiative of
a Labour government, the general perception that it was failing offered opportunities for political
capital that Labour’s opponents in the National and Act benches of parliament could not resist. When
overall TVNZ revenue was seen to fall, even if the loss could be directly linked to the pursuit of charter
objectives, the responses it received from the political right indicated that, whichever set of priorities
the network opted to pursue in a given financial year (commercial or public service), there would be
disappointment and criticism somewhere. In 2003, for example, TVNZ’s annual report registered a
lower overall revenue figure than that of previous years, the significant consequence of which was that
TVNZ charter funding injection was larger than its dividend payment for that year. At this, a senior
23
Cleave, Louisa (2003) “State TV’s Brave New World”, NZ Herald, 4 January
http://www.nzherald.co.nz/lifestyle/news/article.cfm?c_id=3049864.Retrieved 28 July 2010.
24
Whilst charter programmes included a number of news, information and studio-shot discussion formats, some
of which have continued screening, the most ambitious single production was Frontier of Dreams: the Story of
New Zealand, a 13-episode documentary series which took five years to produce.
25
Black, Joanne (2005) “What a Glorious Mess”, NZ Listener, 19-25 November.
http://www.listener.co.nz/issue/3419/features/5050. Retrieved 30 October 2009.
9National politician claimed that TVNZ was losing its prowess as a ‘cash cow’ and accused it of
“running at a deficit to the taxpayer”.26
Problems with Profitability and the Addition of TVNZ6 and TVNZ7
Even though it played out against the government’s efforts to strengthen public broadcasting, as
outlined in the Programme of Action it released early that year,27 the charter’s nadir arrived in late
2005, when the internal conflicts and contradictions it was causing came to dominate news headlines.
In a memo intended for the TVNZ Board but leaked to the media, Ian Fraser admitted that there was a
“major commercial problem with TV One” and that the planned local content push was being
abandoned due to insufficient funding to sustain it. He registered that instead of pursuing charter
initiatives TVNZ was now endeavouring to protect its “channel shares from competitive erosion”, one
consequence of which was that poorly performing charter programmes were either being axed or
moved to time-slots where the revenue loss was less devastating.28 The memo included the important
assertion that “the texture of our schedule is profoundly incompatible with any recognisable model of
public broadcasting”, Fraser’s personal admission that the charter could not succeed.29
This acceptance that the charter was unworkable in present form was the prelude for Fraser’s
proposing of three alternatives, all of which would avoid placing ‘public service’ aims in direct
competition with commercialism. Whilst two of these involved focussing charter objectives on TV One
and either reducing or eliminating commercial influences on the channel, the third idea – of creating
two new digital channels, both of which would operate non-commercially – was the most viable from
the perspectives of the government and Treasury. This third suggestion formed the background to the
Labour government’s 2006 decision to create the non-commercial channels for TVNZ, a development
that was facilitated by a large injection of public funding (NZ$79 million over six years) and the launch
of Freeview, a free-to-air digital platform.
As has been argued, TVNZ’s problems in delivering on charter expectations were derived from
the impossible compromise that the 2003 legislation created in placing a set of ‘public service’
objectives alongside its continuing obligations to commercialism. While the addition of TVNZ6 and 7
26
Alley, Oscar (2003) “TVNZ Goes from Cash Cow to Milking Taxpayers for Millions”, Sunday Star-Times, 12
October, A7.
27
The full title of this document was “Building a Strong and Sustainable Public Broadcasting Environment for
New Zealand: A Programme of Action”, Ministry for Culture and Heritage (2005) February.
28
Sent to the Board in October and published in December, the Ian Fraser memo was entitled ‘A More Public
Broadcaster’ and was published as “Fraser Bombshell Shows TVNZ Giving Lip Service to Charter”
http://www.scoop.co.nz/stories/PA0512/S00185. Retrieved 27 July 2010.
29
Ian Fraser resigned from TVNZ in October 2005 soon after the memo was written. Yet, as Fraser later
explained, his departure was initiated not by the memo (which was leaked after his resignation) but because he
felt unable to continue as CEO amidst direct interference in operational decisions by the TVNZ Board. See
Anthony Hubbard (2007) “The Smart Alec Sings”, Sunday Star-Times, 6 May, C1-2.
10could not resolve the charter’s problems, their non-commercial schedules did offer a way to reconcile
the conflicting imperatives that the charter imposed on TVNZ’s most profitable channels, TV One and
TV2. Accordingly, TVNZ6 and 7 were developed as ‘public service’ channels whose existence would
better position TVNZ to deliver on its charter by extending, as Rick Ellis, TVNZ’s current Chief
Executive, put it, “the quality and range of programmes available to New Zealanders while still
meeting commercial obligations via TV One and TV2”.30 Becoming a vehicle for TVNZ’s charter
delivery in non-commercial areas, TVNZ6 and 7 also learned from the success and cost-conscious
approaches of Maori TV which had been introduced in 2004. The Freeview platform contributed vital
infrastructure by providing a free-to-air platform from which to launch new digital channels. Within
two years of its launch as a platform, three new non-commercial digital channels were created, TVNZ6
and 7 being joined by Te Reo, a second channel for Maori TV devoted to programming in Maori
language.
The creation of TVNZ6 and 7 was important in allowing TVNZ to move a little further toward
‘public service’ than was possible whilst its channels were confined to TV One and TV2. Whilst
TVNZ6 and 7 gave TVNZ its first non-commercial schedules, the well-established identities of TV
One and TV2, which today hold a combined share of 50 per cent of all viewers, provide further insight
into the risks to TVNZ’s profitability if it had prioritised non-commercial programmes in the
primetime schedules of either channel. TV One and TV2 have operated as commercially-focussed
channels for decades and the advertising revenue they earn comprises the vast majority of TVNZ’s
commercial income. Aside from the popularity of their New Zealand programmes, an important
contributor to their commercial strength of TV One and TV2, has been the complementary
programming and core audiences that define their relationship. Whereas TV One targets the 25-54s and
a key brand signifier is its factual programming, TV2 targets the 18-39s with entertainment
programming being pivotal to its brand.
TVNZ6 and 7 were clearly differentiated from inception onward, their brands designed to
complement those of TV One and TV2. Aside from TVNZ6 and 7’s reliance on public funding, their
most significant distinction (and a characteristic they shared with Maori TV) was their emphasis on
New Zealand-produced programmes. Whereas TVNZ6 combines education with entertainment
programming, devoting significant parts of its schedule to preschoolers and families, TVNZ7 caters for
the general audience, offering news, factual and arts programming. Yet NZ$79 million was a relatively
lean budget through which to facilitate two new non-commercial channels for TVNZ, hence an
important feature of TVNZ6 and 7 was that, rather than being designed to operate independently, their
30
Ellis, Rick (2007) “Local Programmes Key to New Channels”, NZ Herald, 28 September, A17.
11activities and productions would be subsidised from TVNZ’s commercial revenues,31 with additional
TVNZ funding paying for their staffing and infrastructure. Given their slender budgets (the annual
operating budget for both channels is NZ$17 million),32 TVNZ6 and 7 are considered to deliver
significant public value.33 Critical to their sustainability, however, is whether or not the public funding
on which they have relied for the first six years will be renewed in 2011, a decision that is currently
being considered by the government.
Reassessing the Charter
In 2007, the government initiated a review of the TVNZ charter, a process completed in May 2008.
Whilst this review was not mandated to consider the issue of insufficient public funding, it did provide
a welcome opportunity to revise the charter’s requirements. Prepared by the Commerce Committee, the
review report defined TVNZ’s charter obligations in relation to seven broad purposes:
• to maintain an informed society;
• to reflect the broad range of cultures and interests in New Zealand;
• to reflect Maori values;
• to serve the interests and needs of the diverse audiences within New Zealand;
• to meet high standards of quality and editorial integrity;
• to display creative risk-taking and experimentation; and
• to support the creative talents of New Zealanders.34
With the above providing the framework for the more detailed set of charter objectives that the report
contained, the review yielded a clearer, more contemporary set of ‘public service’ objectives than those
the original charter offered. Moreover, and as indicated by the above extract, it could take account of
the two main additions to New Zealand’s public television since 2003 in its reconsideration of TVNZ’s
own role. One was the addition of TVNZ6 and 7 and the other, was the successful addition of Maori
TV as a second public network dedicated to Maori language and culture.
31
Outlining the profile and aims of TVNZ6 and 7 in the above feature, TVNZ CEO Rick Ellis noted that this
TVNZ subsidy for TVNZ6 and 7 would be $32 million over the same six-year period. Ibid.
32
Kearley, Eric (2010) interview with Trisha Dunleavy, 14 June.
33
Since inception their programmes and ‘public service’ contribution has been favourably received, as indicated
by their rising monthly ‘cume’ figures and audience appreciation surveys.. AGB Nielsen Media Research (2010)
“Channel Audience: Four Week Cumes”. Retrieved 29 July 2010. Testifying to their audience impact Ministry of
Culture and Heritage research revealed that over 60 per cent per cent of New Zealanders had watched TVNZ6
and/or TVNZ 7. http://www.nch.govt.nz/publications/funded-broadcasting-outcomes/index.html. Retrieved 4
August 2010.
34
Review of the Television New Zealand Charter, Report of the Commerce Committee (2008) 16 May.
http://www.parliament.nz/en-NZ/PB/SC/Documents/Reports/e/1/c/48DBSCH_SCR4065_1-Review-of-the-
Television-New-Zealand-Charter.htm, Retrieved 20 August 2010.
12This review process did suggest that the TVNZ charter could have been made to work given
greater clarity of expectation, a longer time frame, and the necessary resources. However, this did not
eventuate for three main reasons. First, public confidence in the charter, TVNZ’s delivery of which had
drawn more criticism than praise since 2003, had declined, this increasing the political sensitivity that
already surrounded it and, making matters ever more delicate, 2008 was a an election year. While
TVNZ had been delivering as much ‘public service’ as NZ$15 million per year realistically permitted,
this was never enough to meet inflated public expectations. Second, the release of the review report, in
May 2008, was a case of bad timing with the election campaign was now in progress. A few months
later Labour was defeated at the polls and replaced by a National regime. Because of this change, the
report was released into a distinctly less sympathetic political context than that in which the charter
review was initiated. Finally, support for the charter had been reduced by successive attacks on
TVNZ’s spending decisions. Orchestrated by a vitriolic press, these overstated the influence of
taxpayer funding on operational expenses or production investments paid for from TVNZ’s
commercial revenues.35 Continuing their earlier pattern, the attacks exploited public confusion about
how much charter programming NZ$15 million a year could purchase and ignored the necessity for
TVNZ to invest in commercial outcomes.
The first step toward the removal of the charter occurred in May 2008, when questions arose
about TVNZ’s spending of charter money. Working within the terms of the charter, TVNZ had
allocated some of its charter funding toward the production costs of its coverage of the Beijing
Olympics. However, in a direct reversal of the tendency for TVNZ’s commercial spending to be
represented as public expenditure, this decision was misunderstood and misreported, producing the
accusation that TVNZ had spent charter funding on the ‘commercial’ activity of securing sports rights.
Although TVNZ moved quickly to refute this, front-page newspaper coverage of this issue had already
endowed it with sufficient potential to seriously embarrass the Labour government in an election year.
In an act of damage control, Broadcasting Minister Trevor Mallard transferred TVNZ’s NZ$15 million
charter funding to NZoA. The intention of this vivid example of direct political inference was to
increase the transparency around the spending of charter funding by allowing NZoA to disburse it for
charter-oriented productions on a project-by project basis.
The Political Right Turn and Demise of the Charter
In November 2008 another swing of the political pendulum brought a National government into power,
under Prime Minister John Key, this initiating an abrupt change of direction for broadcasting policy.
The ideological differences informing the broadcasting agendas of Labour and National parties are
important to underline here. Although the charter experiment had clearly failed by this point, it was
35
See for example Bennett, Adam (2010) “Minister Calls for TV Boss’s Card Details”, NZ Herald, 9 August, A4.
13part of a raft of more successful efforts by the Labour government to strengthen a public television
sector which had been starved of public investment and strategic planning in the 1990s. While the Key
government would continue implementing Labour plans for digital switchover, National’s approach to
broadcasting was contrastingly non-interventionist and commercially-oriented. More interested in
TVNZ’s profitability and asset value than in its ‘public service’ potentials, National politicians opposed
the charter precisely because of its capacity to reduce these.
For these reasons, the arrival of a new National government sealed the charter’s fate and an early
announcement from John Key was that it would be removed.36 The 2008 transfer of charter funding
from TVNZ to NZoA had made the next step in this process easier to take than it might otherwise have
been because it allowed National to argue that even the Labour government whose initiative the charter
had been, had been unable to resolve its problems. In November 2008, incoming Broadcasting
Minister, Jonathan Coleman, instructed NZoA to make the NZ$15 million charter fully contestable.
Because this decision allowed NZoA to allocate this money as it wished, it signalled that the final step
in the charter saga, the removal of its obligations in 2003 Television New Zealand Act, would follow.
The demise of the charter went hand in hand with a second change of direction for broadcasting policy,
the 2009 decision to abandon a review of broadcasting regulation that Labour had initiated in 2007.
Although the television industry saw this regulation review as an important opportunity to re-assess the
case for regulation in light of the many changes to the sector since the 1990, National’s preference was
to allow market forces to prevail in television. Even though the decision to abandon the regulatory
review had no obvious impact on National’s intentions for the charter, the two decisions were subtly
connected. The combination of a minimally regulated television market and a de-chartered TVNZ
offers the government a desirable flexibility in terms of its future plans for TVNZ which are yet to be
revealed. While removing the charter makes it possible to sell TVNZ at some later point, retaining
television’s lax regulatory status quo is geared to make the network more attractive to prospective
buyers.
Conclusions
Albeit a well-intentioned effort to return TVNZ to the kind of dual mandate that had characterised it
before its 1988 restructuring, the charter given to it under the Television New Zealand Act was a
failure. Seriously flawed by its requirement that TVNZ deliver ‘public service’ at the same time as
maintaining its commercial profitability, the charter proved impossible to implement successfully
because of these conflicting and irreconcilable objectives.
36
Hubbard, Anthony (2009) “Key Confirms TVNZ Charter for the Chop”, Sunday Star-Times, 22 March, A.5.
14When TVNZ failed to manage this conflict, it was exposed to the most vitriolic and sustained criticism
of its history. One manifestation was that TVNZ’s receipt of even a tiny injection of public funding
opened its commercial activities to scrutiny as if these were publicly-funded. Another was that this
conflict brought incompatible expectations neither of which TVNZ was resourced to meet. When
TVNZ prioritised profitability, it faced a vitriolic press and disappointed viewers. When TVNZ did
place non-commercial programmes in primetime slots and its profitability was seen to fall, the political
right accused it of failing in its financial responsibilities to the Crown. These conflicting objectives
these were augmented by two financial obstacles to a successful charter implementation: first, a
hopelessly insufficient supply of direct public funding through which to meet the production costs of
delivering the charter’s ambitious range of programmes; and second, a bizarre ‘money-go-round’
system which left TVNZ receiving returning far more money in dividend payments than the public
funding it received.
The charter was grafted onto the restructured and deregulated environment created for and around
TVNZ from 1988-91. Although this neo-liberal ‘experiment’ occurred 20 years ago, its repercussions
have continued to resonate, underlining its impact as a major turning point for New Zealand television
from which it has been almost impossible to withdraw. Three of these repercussions made additional
contributions to the charter’s failure. First, is the spectacular success of NZoA, the broadcasting agency
created as an alternative way to fund and deliver specified ‘public service’ outcomes on television. As
the lonely success of New Zealand’s experiment in television NZoA’s model was designed to
maximise transparency, accountability, contestability, and flexibility, as virtues existing in striking
contrast to the murkiness of TVNZ’s trade-off between ‘public service’ and ‘commercialism’. For the
reasons outlined, it was difficult, if not impossible, for a chartered TVNZ to out-perform NZoA on any
of these measures. Second, the neo-liberal values which informed the restructuring of New Zealand’s
public companies permanently changed the Crown’s expectations of them, a chartered TVNZ being no
exception. Even though it should have been sufficient for a chartered TVNZ to deliver a cultural
dividend, neo-liberalism’s legacy was that the only kind of dividend sufficient to justify continued
Crown public ownership of a public company was financial. Although the Labour government
imagined it could remove the dividend expectation to maximise TVNZ’s charter delivery, it could not.
Third, the chartered TVNZ inherited the same deregulated environment that New Zealand’s experiment
in television created. This was one in which Sky could expand at will and within which TVNZ through
the 1990s was free to “react, attack, and diversify” as instructed.37 But whilst the charter re-regulated
TVNZ, other components of television’s deregulated environment remained unaltered. The gradual and
strategic expansion of Sky, which gained new impetus after 2000, necessitated an aggressive
37
The Restructuring of the Broadcasting Corporation of New Zealand on State-Owned Enterprise Principles
(1988) Report of the Steering Committee, July. Executive Summary, IV.
15competitive and commercial response from TVNZ. Yet in these same years, TVNZ was expected, not
only to deliver the charter’s outcomes via a tiny proportion of direct public funding but also to use
commercial revenue for pay for charter outcomes rather than investing these in competing with Sky.
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