Hard News by Russell Brown

Running Rings

I asked earlier this week if someone could shed more light on the controversial tax dodge associated with the production of The Lord of the Rings trilogy. Yes, I realise that much of it was traversed in Gordon Campbell's Listener story, but I didn't have that to hand.

Anyway, someone who ought to know did get back:

New Line didn't get the tax break. New Zealand-domiciled companies such as the BNZ and Westpac sheltered hundreds of millions - and according to Treasury, the net cost to the country was $NZ217million.

Yes, GST, personal taxes, etc, were paid, but they would have been paid regardless of who funded the production.

But would the production actually have been funded without such a tax shelter being available?

Peter Jackson and his team have done a wonderful, fantastic job and their legacy is there for all to see. But if you are going to examine the costs and benefits, then separate out the elements, do the research and then write the story.

Lord Of The Rings was scheduled to go ahead and New Line had agreed to put up $US240 million ($US80 million per picture!). It looked like it was going to cost more. New Line said no more money from them.

The finance wizards came up with the tax scheme - net result, a complete save for New Line. About two years ago, just before Lord Of The Rings 1 was released, New Line said their total exposure on all three films was $US20million as a result of tax deals in New Zealand and Germany.

So yes, it would have gone ahead, and none of the profit comes back here.

Hmmm. It's worth noting that Jackson has consistently held that the film would not have been made here without the tax break, but you can see why Michael Cullen considered strangling the arrangement when he came into office; and equally, why he stayed his hand. At least we got a genuine historic work of cinema for our largesse. The last time tax advantages had a lot to do with movie production decisions here, all we got was Merry Christmas Mr Lawrence.

MediaCow has certainly been prolific since its launch, but typically only half right about most things. It lashes a "tired" Herald column in which Barbara Sumner Burstyn lists the sins of CanWest in relation to its Canadian newspapers, rightly pointing out that there is no evidence the company's policies have endangered editorial freedom at TV3, as Sumner Burstyn implies.

I think this is true. 3 National News can be alarmingly trite at times (compare and contrast with the all-new gravitas which appears to be developing at the opposition - polish up that BBC accent if you fancy a job there) but what it says and does is not being dictated from afar by the Asper family.

But MediaCow tries a bit too hard to dismiss CanWest's behaviour:

The truth is just slightly less hysterical. Yes, there was a stoush in 2001-2002 when CanWest attempted to make all of its newspapers carry the same editorials. CanWest's (perhaps naive) view was that owners should be allowed to contribute material to their own media. But only a few of those editorials ever ran, because of the outcry from (supposedly oppressed) editorial staff.

Yes, some staff were fired - and did a brilliant job of turning their dismissal into a 'freedom of speech' issue. A CanWest editor said at the time: "It's silly to make a freedom of speech issue out of this - this is a labour issue". He was, of course, ignored.

It was quite a lot worse than that. CanWests's attempt to have editorials for its 14 major dailies written at its corporate head office - the plan was for three a week, they settled for one - might have been a turkey, but that was only part of the picture.

From about December 2001, CanWest began to implement a corporate editorial policy - its key planks were support for Israeli government policy, and for the governing Canadian Liberal party, with which CanWest CEO Izzy had been an MP. Let me run that by you again: criticising the government was a breach of corporate policy.

This might not have been so bad had CanWest not acquired the 130-strong Southam newspaper chain from Conrad Black. Many of those titles were the only papers available in the places where they published, and the acquisition meant that CanWest controlled about a quarter of the Canadian media market.

In June last year, Russell Mills, the publisher of the Ottawa Citizen, was sacked for failing to consult with corporate headquarters before running an editorial calling for the resignation of Prime Minister Jean Chrétien. The editorial followed a major story alleging misconduct by Chretien.

Troublingly, the Aspers' policy applied not only to their employees, but to any contributor to their papers, including independent columnists. Mediawatch interviewed Stephen Kimber, a journalism professor who had written a column for his local paper in Halifax since 1985. He refused to write again for any CanWest paper after several of his columns had been altered, without consultation, to remove opinions that did not tally with group policy. Two journalists on the paper resigned after they were forbidden to report on Kimber's departure.

There were quite a number of other unpleasant incidents, some of them documented in a report by Canadian Journalists for Free Expression (whose board of directors includes the president of news at the Aspers' perennial whipping boy, the CBC). There's another story here.

Things do appear to have calmed down recently, but CanWest's change of mind appears to have more to do with the market than any sudden attack of principles (the Ottawa Citizen lost 3000 subscribers in the first week after Mills was fired). Izzy Asper died in October. Good job, frankly.

MediaCow also looks at the Herald's belated statement on the departure of cartoonist Malcolm Evans, and drags out on of its favourite words - "patsy" - in reference to interviews with Evans, including the one on Mediawatch. Bullshit. There was no other account available bar Evans' own at the time. The following week, I noted comments made by the Herald's John Roughan to AUT students, implying that Evans had been a difficult and disrespectful employee (much to the consternation of some AUT staff, who really need to think more like journalists and less about upsetting people), and linked to David Cohen's column suggesting much the same thing. Final call? Fault on both sides. I think Anthony Ellison on Eating Media Lunch made the most sensible judgement: Evans contributed to his own demise through his fondness for stereotypes.

Anyway, that'll do. Thanks very much for all the mail this week. I'll get around to answering some of it in the next few days, and perhaps quote the most interesting stuff on Monday. Till then, more evidence of shameless media management around Bush's Iraq visit (this after the White House admitted it made up the exciting story about Air Force One being sighted by a British Airways pilot), more made-up stuff - contradicted by both eyewitnesses and TV pictures of the injured - about the supposed battle with Iraqi insurgents this week. Editor & Publisher looked at the compliant way US media reported what they were told by the Pentagon. Bizarre, if all too familiar …

PS: The Listener has just posted Gordon Campbell's more recent story about the government film incentive package introduced in response to industry campaigning for some tax accommodation for major movie projects, which appears to offer little - and may even be counterproductive - for local producers. It should be noted there have been a couple of reasonable funding initiatives for the Film Commission since.

Campbell also cites a Variety story indicating that business is booming for digital effects houses such as Weta, suggesting that Anderton has been hoodwinked if he thinks otherwise. But a story in the Los Angeles Times a couple of weeks ago says that "Weta Digital, located in a suburb of Wellington, the nation's capital, is heading into a period of huge uncertainty," and would seem to indicate it's not all boom for Weta.