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Mediawatch: TVNZ’s latest losses signal likely cuts to come. But it’s the slump in income for the broadcaster that dominates free-to-air TV which will worry the entire media industry.
Photo: RNZ / Michelle Tiang
Jo Moore - a spin doctor for Tony Blair’s UK government - earned lasting notoriety in 2001 when she emailed colleagues soon after the 9/11 attacks telling them it would be “a good day to bury bad news”.
But sometimes bad news following other bad news actually amplifies it.
TVNZ’s annual results revealing its latest losses are not as drastic as the ones that prompted global media giant Warner Bros. Discovery this week to propose the complete closure of Newshub to cut their losses.
But they point to the same crisis affecting all commercial media - declines in advertising revenue across the board - and TVNZ cannot absorb losses like this without cutting the services its viewers and online audiences expect.
The state-owned broadcaster had previously forecast a $15.6 million loss for this financial year, citing commercial clients' reduced spending on advertising.
In September last year TVNZ responded with planned cuts to content production, programmes and operational spending.
"There have been some really tough calls to make here, but we need to live within our means,” acting chief executive Brent McAnulty told staff at the time.
Future high-cost projects were all "under review" and pay rises for executives and top-earning staff were scrapped.
Those cuts will not be reflected in results until the following financial year, but today TVNZ reported a net loss of $16.8 million for just the last six months of 2023.
Twelve months earlier, TVNZ made a profit of $4.8m and revenue of $180.3 million in the same period.
But the stand-out stat in TVNZ's interim financial results is total revenue falling 13.5 percent.
That is the sort of year-on-year decline that newspaper publishers have endured in the internet era and which have undercut their business models and prompted compounding rounds of cutbacks and job losses.
Given the fact TVNZ continued to dominate the free-to-air TV market in 2023 - and it attracted a much larger audience than its stricken main TV rival Warner Bros Discovery - that is a worry for the entire media industry.
TVNZ chief executive Jodi O'Donnell said today that TVNZ will have to cut costs further “to navigate through this uncertainty”.
Given that content budgets were reduced for both local and international productions last year, further cuts to programming seem certain in 2024.
O’Donnell was TVNZ’s commercial director before her appointment as CEO earlier this year. She will be well aware of the impact advertisers' sentiment and willingness to spend will have in the foreseeable future.
In a statement she said, "we hope to see some improvement in the advertising sector in late 2024".
But she added: "We anticipate market disruption from global streaming services and social media platforms to continue."
Of primary concern will be the previously floated possibility of Netflix launching a cheaper subscription offer in New Zealand which carries advertising. Sky TV recently added adverts on its streaming service Neon, claiming it would help stave off future price rises for subscribers.
TVNZ continues to pin its hopes on the growth and popularity of its TVNZ+ on-demand streaming platform.
But this has also proved a financial double-edged sword. TVNZ currently has a tender out for a major overhaul of its digital technology and internet infrastructure which it says is essential to the future viability of TVNZ+.
The briefing to the incoming media minister released last month said TVNZ had allocated $100m from savings for this, but that investment will still be a significant burden.
TVNZ’s state ownership makes losses more sustainable, and commercial rivals have long complained that gives TVNZ an unfair advantage.
Former CEO Kevin Kenrick persuaded the government in 2019 to allow TVNZ to effectively forgo dividends to the Crown to allow it to invest in programmes and digital services.
TVNZ has invested heavily in TVNZ+ and recently launched live sport on the platform after securing rights held by the now-defunct Spark Sport.
The demise of Newshub - if it comes to pass in midyear - could also be good news for TVNZ in the short term if TV news viewers default to TVNZ 1 and TVNZ+ and boost the ratings.
But it will not be enough to stave off significant cuts if there are further double-digit falls in revenue.
“I don't think any organisation would say that there are sacred cows anymore,” Jodi O’Donnell told the Herald recently when asked how to respond to "a challenging economic environment".
Those words seem doubly ominous in the light of Newshub's potential extinction, announced just one week later.