More from the TV Wars

The NZ Herald, and the HoS, have run articles recently on the attempts, ongoing, by TVNZ to pressure the Government taking yet more steps to deprive companies of benefits lawfully obtained. Notably through requesting Government to deprive Sky shareholders of market value through drastically altering the business landscape in favour of TVNZ.

Adam has noted these efforts by TVNZ in other posts, but he would draw attention to these more recent articles in the Herald, including an editorial in today’s edition.

Having a questioning frame of mind Adam cannot help wondering if the number of articles, in particular the editorial, reflect a suspicion by the Herald that the politicians are likely to yield to the entreaties of TVNZ and/or a desire to warn the politicians off more politically motivated market interference.

The recent articles include Brian Gaynor whose article last Saturday began:-

TVNZ’s attacks on Sky TV are a sad indictment of the free-to-air broadcaster.

It clearly demonstrates that the state-owned operator has been completely outfoxed by the listed company and TVNZ is desperately trying to regain lost ground by attempting to convince the Government to regulate the Rupert Murdoch-controlled company.

The conflict is a classic example of the tortoise and the hare story. Sky TV has a slow but consistent strategy that has been extremely successful whereas TVNZ has been constantly chopping and changing and has no clear corporate strategy.

Gaynor discusses the respective history of the players, then he notes:-

The Sky TV shares sold by TVNZ for $127 million in 1999 are now worth $264 million, after taking into account the 2005 amalgamation scheme with Independent Newspapers.

The pay television operator has gone from strength to strength since TVNZ sold out whereas the state broadcaster has experienced one crisis after another.

The big difference between the two companies is their long-term strategy and its execution. Sky TV has clear long-term goals, which it implements effectively, whereas TVNZ seems to change from year to year.

He discusses the difference in management and strategy, for example Sky has had only 2 CEOs, whilst TVNZ seems to have had changes all the time and a lack of consistency.

TVNZ is another example of a government investment where value has been left on the table over time, see Air New Zealand for a major example.

Gaynor concludes:-

TVNZ’s problems are three-fold: there is a huge conflict between its commercial and charter obligations; the company’s politically appointed board is constantly changing; and there seems to be a revolving door policy as far as the chief executive is concerned, particularly compared with Sky TV.

New Zealand badly needs more companies with clear long-term strategies that are effectively implemented. It would be a tragedy if investors in these organisations are penalised because their industry peers have inconsistent strategies and cannot compete.

Yet this is exactly what we are seeing here with a state owned company bleating because it cannot hack it in the marketplace, partly because successive governments have not been able to sort out what they want TVNZ to be, resulting in the ludicrous charter, which they do not seem able to comply with anyway – witness Trevor Mallard changing their funding access this week.

On that note are we sure that TVNZ is spending the tens of millions of $ handed out by the government for Freeview appropriately?

After all Freeview is a government subsidy to attack a private enterprise.

Incidentally is it really a good look for Labour to have such a partisan bully boy Minister as Mallard responsible for broadcasting in an election year, especially when TVNZ wants money.

This week Sky TV showed Scott Dixon winning the Indy 500 and the Black Caps failing in Manchester whereas TVNZ would not have shown either event live.

We need to encourage well-run companies that meet consumer demands instead of dragging them back to the pack when their competitors cry foul.

Gaynor is absolutely right in what he says.

Then on Saturday also we had this article, again in the Herald, this included the following:-

On one level, the free-to-air campaign is a blatant me-too: give struggling Freeview access to live sport – either by “unbundling” or anti-siphoning rules requiring sports events important to the national psyche to be shown free-to-air – and Freeview would take off.

But the bigger picture is more complicated – what rules should be in place for digital television. What happens with sports rights could point the way.

The gloves came off last week when the review submissions were posted on the internet and debate quickly spilled on to ever-expanding media “platforms” – from newsprint to TVNZ’s Media 7 programme on Freeview.

Adam notes that TVNZ used it’s own media programme on Channel 7 on Freeview to take the campaign further,which rather smacks of editorial interference.

In that show according to the Herald article:-

On Media 7, TVNZ head of corporate affairs Peter Parussini plucked more emotive heart-strings: “There’s a generation of New Zealand kids who have never seen a [rugby] test match live on television.”

Well so what. We are talking about sport not life and death. Who the hell cares. In fact given health problems we should be asking why the children are watching TV instead of out playing games.

Parussini seems to spend his time seeking to demonstrate that the government is somehow failing the country if certain sports events are not on TVNZ. See an earlier post by Adam here.

Sport is not the be all and end all Mr Parussini.

Sky fought back:-

Sky gave as good as it got, claiming Prime’s hands are tied in bidding for premium programmes such as Lost, Bones or House because TVNZ and Mediaworks have tied up exclusive studio deals with major players Warners, Disney and Granada (TVNZ) and Fox, NBC and CBS Paramount (TV3).

It also rounded on TVNZ’s access to Government funds and ability to cross-subsidise with little scrutiny.

One thing needs to be noted, and that is really important, until Sky came along there was very little choice in viewing. Consumers who did not want to watch sport often had no choice as the networks, especially TVNZ filled the schedule with it.

With Sky, and Adam has had this since the first Gulf War, you have a choice and quality reception in the main. There is a wide variety of channels including documentaries, films, news etc.

Indeed it was the lack of news coverage on Free to Air at the time of the first Gulf War that caused Adam to get Sky.

Sky came into the market, risked private capital, developed the market and provided a service to viewers. Consequently we now have much broader sports coverage than previously, in addition we have a wider range of other programmes.

On TVNZ we have an ever increasing amount of dross and dreck; plus all the appalling reality shows.

As the article notes:-

And few sports fans are complaining – with up to six channels, fans of the major codes see hundreds more hours than they ever could and a wide range of minor sports are gaining exposure for sponsors and fans. Largely on the back of its sports coverage, Sky now beams into more than 650,000 homes, reaching 47 per cent of the viewing audience.

Yes overseas there is anti-siphoning legislation but those markets are typically much bigger.

The Herald quotes a commentator, from Unitec:-

For Peter Thompson, a senior lecturer at Unitec’s School of Communications Studies, the crux of the sports rights debate is whether we see access to live sport as a public good.

“Signal encryption and conditional access systems, such as Sky’s set top box decoder, create artificial scarcity and transform what might otherwise be a public good into a private good,” says Thompson. “There is certainly a public value argument that public access to events [important to] the national psyche should not be restricted.”

Yes there is an argument, but that does not mean it should be yielded to. given the small size of the market, Adam thinks that giving in to the argument will in the medium run lead to fewer events being covered and that consumers will after an initial burst of coverage actually be worse off.

Further, Adam suspects that in the medium to longer term where and how we watch will change dramatically- as he thinks more and more people will watch on line. He has noted also how many go to bars to watch major sporting events as if you cannot get to the game, such locations are often more fun than being at home on your own.

Thompson says it would be far cheaper for the Government to compensate sports for any loss of broadcasting revenue for particular events than forcing viewers to subscribe to Sky TV to watch these events.

Typical academic nonsense. Why should taxpayer money prop up sporting codes, sport is not a public service.

The NZRU has joined in the free for all as this extract from another article on Saturday notes:-

Wresting live coverage of key rugby matches away from pay television would have dire consequences for the sport, the New Zealand Rugby Union has warned.

The union has joined Sky TV in fighting moves to “unbundle” sports coverage – preventing television companies negotiating exclusive contracts with the major sporting codes. Unbundling would mean competitions such as provincial championships, Super 14 and test matches could not be sold as a package and would be subjected to separate bidding.

The whole affair is hotting up.

One thing Adam is sure will be the case, is that it is highly probable we will land up with a worse situation than we have now, with consumer choice suffering.

So now let us turn to the latest chapter, the Herald editorial.

In today’s Herald editorial it begins:-

Would the Labour Party nationalise rugby? The question arises because that is effectively what it is being asked to do by broadcast television companies.

Laying down the gauntlet from the start. Then a few lines later:-

The possibility cannot be dismissed that a Labour Government probably going out of office might be persuaded to make popular sports telecasts a public property. Australia has some such rule, and there are rugby followers in this country who still resent having to subscribe to Sky to see a game they regard as their own.

Indeed, in a desperate bid to retain power a resort to ‘bread and circuses’ might well be entertained.

But as the editorial goes on to argue:-

But the fact is sports are not public property; they are independent organisations that have every right to sell their events to the highest bidder, or to make them available for free-to-air broadcast if they judge that exposure to be in the better interests of their game.

Yes that is the case. but this government has not shirked abrogating property rights to itself. Given the significant bias that exists in NZ towards business and the unhealthy focus on sport as opposed to business, no doubt the case could be made that sport and broadcasting rights are ‘sensitive and strategic’ or some such similar hocus pocus to justify lowering the asset values of private enterprises and committing the taxpayer to propping up the sport and free to air broadcaster.

Thus the reach of the state is further extended, the rights of private organisations further eroded and the long term future of the country as a whole set on a downward path.

The editorial concludes:-

Both Sky and TV3 have had to struggle at times against the might of the state broadcaster. They did not call for tougher regulation and a compulsory carve-up of TVNZ’s business. They took their losses, regrouped and competed.

At one time TVNZ was Sky’s largest shareholder. After it sold in 1999, the subscriber channel strengthened and TVNZ’s troubles began. Since then the state broadcaster’s commercial performance has been as dismal as its content. A change of Government will probably end its charter confusion and force it to stand on its own competitive two feet. That is what it needs.

Precisely. TVNZ needs to grow up, get a life and stop bleating. If it cannot, close it down and start a new company run properly.

And by the way TVNZ is benefiting from a huge government subsidy to start Freeview, which is in fact a subsidy to assist TVNZ to undermine a lawful and successful private enterprise.

No doubt Sky will fight it’s corner, but Adam cannot help thinking that the government has another motive here. A dislike of successful media businesses perhaps?