I'm not sure how many people watch the web-only portion of Q&A on Sundays, but yesterday's video is worth viewing for the comments from former Labour Broadcasting minister Steve Maharey. Asked by Greg Boyed whether the problem was that the original business model for the new digital channels was wrong, Maharey said:
No, I think the business model was just fine -- but of course the business model has been changed dramatically. There was supposed to be one option of having Sky provide funding for this through a must-carry-must-pay clause in the relationship with [TVNZ], where in fact they got all the material from Heartland and so on for free. So that's been taken away. There were a number of arrangements with TVNZ as well to look at how they would use their dividend going forward. That's been put aside as well. So I think all the options that were in the original business model have gone."
Those options, said Maharey:
... were put in there because the idea was to try out TVNZ 6 and 7. This was an attempt to try and give us some public broadcasting. That had to be trialled and then ther idea was to look at it in six years time and see how we go from there. So there were options put in to the model to say, if it worked this is how it had ongoing funding. But all of those as I say have been removed now so the option really boils down to whether the government wants to sit down with TVNZ about its dividend or in fact just allocate some money to these channels ongoing.
Maharey's comments are, I think, the first confirmation from Labour that "must carry must pay" was ever in the mix for the new channels. This would have meant that Sky (and any other pay TV operator) would have been required to carry public channels and pay a regulated price for doing so. My understanding is that it wasn't in there for long: it was part of the business plan presented to ministers and officials by TVNZ executives, but not of later discussions. It's not clear why it came out.
It may be that Labour could afford to be relaxed about this detail because "must carry must pay" (or its less coercive sibling "must offer must pay") may well have emerged as a policy option from the Digital Broadcasting Review of Regulation, where it was specifically canvassed in introductory papers. But after the new National government took office, the review was killed off and the world changed.
Sky Television, which had a great deal to lose from the review, was now a friend to TVNZ, not an enemy. Former TVNZ chief executive Rick Ellis's insistence at the press launch for the Sky-TVNZ joint venture Igloo that he had no memory of signing off a submission warning of the damage Sky's dominance was causing to the local broadcast sector -- even after the Herald's John Drinnan read him back the actual words -- was one of the more farcical things I have seen at such an event.
Maharey is not quite correct to say that Sky gets the taxpayer-funded content on the Heartland channel for free. Heartland receives a share of overall Sky revenue, based on audience. But thanks to National's TVNZ Amendment Act (the same piece of legislation that abolished the Charter), TVNZ does have the ability to use archive programming, most of it taxpayer-funded but owned by independent producers, very cheaply. In these circumstances, Heartland was an entirely rational way for the TVNZ board to respond to the new government's order that it behave so as to maximise commercial revenue.
So National effectively discounted any option to fund the channels after the five-year $89 million appropriation expired, other than doing so directly. Former Broadcasting minister Jonathan Coleman did actually advocate such an action to Cabinet in the case of TVNZ 7 (6 had already morphed into U) and the Prime Minister was sympathetic -- but was overruled by Steven Joyce.
It seems fair to say that the de-funding of TVNZ 7 was driven by an active animus towards the idea of public service broadcasting. In Joyce's case, you could also say it was entirely characteristic of someone from a commercial radio background. Even though some of them made a killing out of gaming public policy around spectrum allocation, those guys hate anything the government has to do with broadcasting.
It also seems fair to say that the Labour goverment's approach was unnecessarily complex. Well, let's just say weird. As I understand it, the original $89 million was raised as a loan by TVNZ, handed to the government, then drip-fed back to TVNZ as digital funding. So it really came off the dividend. (To be fair, TVNZ recouped a proportion of that through facilities hire.)
There was an odd atmosphere about the arrangements. At the executive level, TVNZ was desperate to curry favour with Labour ministers and the then all-powerful Ministry of Culture and Heritage. And the government seemed unwilling to undertake a more straightforward funding scheme. When National arrived, TVNZ's obligation, and thus its strategy, changed.
There was another, important, purpose to TVNZ 6 and 7. Taking a cue from the British experience with the BBC, they were intended to provide content to woo viewers to Freeview, ahead of the digital switchover, which would free up a bounty in spectrum released from analog broadcasting. And they did. Or perhaps it's more correct to say that Freeview did. The establishment of a branded technical spec that allowed consumers to buy DTV sets and boxes with confidence was a crucial step. And Freeview could not have achieved that without TVNZ's lead.
Whatever some pundits would have you believe -- and Paul Little's incoherent argument to the contrary in the Herald on Sunday requires more critiquing than I have energy -- people did watch TVNZ 7. Nielsen's audience measurement is necessarily imprecise, but it is the industry standard -- and according to that standard, a million and a half New Zealanders were watching TVNZ 7 every month by the end. It absolutely exceeded expectations.
There are a couple of reasons the viewers took a while to roll up. One was programming. Foreign programming improved markedly over time, but initially lacked for BBC content, which is what its target viewers actually wanted. BBC Worldwide was very difficult to acquire from when the original schedules were drawn up -- and I think there was a resistance to it from one or two executives. When, long before Media7 was conceived, I suggested that back-catalogue episodes of Horizon (which remain very popular on the torrents) would be cheap and effective programming, one executive looked at me as if I was mad. Ironically, science programming eventually became a stellar part of the lineup.
Those of us making the local programming found our own ways. The same executive who recoiled at the idea of Horizon later told me that "we don't really see a place for humour" in Media7. Apparently The Daily Show didn't exist. We ignored that, and I really want to emphasise how supportive the people we dealt with directly at TVNZ were -- most notably, Philippa Mossman, Oliver Seely, Juliet Jensen and Paul Fairless. They're good people.
The other, much more important, impediment to 6 and 7 was the lack of external promotion. APN's insistence on being paid to carry the listings (or, more precisely, to receive a discount on the fee they currently pay to publish forward listings for One and 2) meant that the channels were effectively blacklisted by the Herald and The Listener; the readers be damned. I thought it was a situation that screamed for a bold experiment with open-sourcing the listings, but that wasn't my department.
And, of course, 6 and 7 were never promoted on One and 2 -- highlighting the key flaw in the structure. Every viewer captured by non-commercial TV is a viewer lost to commercial TV. In promoting public service television, TVNZ would have been flouting its commercial mandate.
Establishing the digital channels under their own structure would have been much more expensive, of course -- something more like what Maori Television costs. The later proposal to merge TVNZ 7 with Radio New Zealand, as a full-service public broadcaster, would also have been expensive -- and Radio New Zealand management and journalists, struggling under a frozen budget, could be forgiven for seeing it as something they really didn't need.
Other options were considered at TVNZ, including reinventing 7 as a Pacific channel, with the support of the Ministry of Foreign Affairs and Trade, were considered, but came to nothing. Another option -- proposed at last year's Spada conference by Brent Impey -- is for Maori Television to launch a mainstream public service channel itself. That has been seriously considered by the Maori Television board, but its advent is some way off if it ever comes.
Meanwhile, our show, Media7, has had its last, and will re-emerge in August as Media3, as part of the Saturday morning lineup on TV3, with the support of NZ On Air. Our budget for the remainder of the year is very, very tight -- we'll be doubling up on jobs and taking pay cuts and will probably have to construct and break down our set ourselves -- but I'm delighted that we can keep on making our programme and very happy to be working with TV3. Given that NZ On Air, too, has its budget frozen, I think we're extremely fortunate in this.
I look forward to the Save TVNZ 7 campaign morphing into a lobby for a new public service broadcaster. It was laudable, but I avoided being a face of the campaign because we didn't want to be seen to use our platform to advocate in our own interest; because TVNZ 7 was irrevocably dead even when the campaign began; and because I don't think that inside TVNZ is actually the right place for a public service channel to dwell. I also found the funeral theme a bit distasteful.
But one element of the campaign has been vital. The old people who got behind it. Commercial television hates old people. Target demographics for advertisers top out at 54, and the programming reflects that. Older New Zealanders watched TVNZ 7 in large numbers, to the extent that (I am informed) I achieved a status as the thinking grandmother's crumpet. I'm surprised that more was not made, in a political sense, of the fact that the scrapping of the channel was a slap in the face for older New Zealanders who paid their taxes.
Steven Joyce's standard response when questions are raised is that TVNZ 7 offered nothing that wasn't available elsewhere. Yet there is no ready substitute for Backbenches, The Court Report or The Good Word. And when Media7's Sam Mulgrew totted up the number of (genuine) documentaries on free-to-air TV this year, he found that 15 aired in a week. Ten of those aired on TVNZ 7.
The coming of the global financial crisis is another factor here. We have plenty of infrastructure -- and much more to come as the fibre lights up -- but the major broadcasters can afford to do no more with their Freeview channels than broadcast the same thing an hour later. Sky's ability to act anti-competitively further precludes the prospect of new entrants. While infrastructure expands, and while we watch more TV than ever, choice in the media sector shrinks. These are tough times.