Public television for $1 a day

The Babbage Difference Engine - similar to the one at my place

The Babbage Difference Engine - similar to the one at my place

Earlier this week my Unitec colleague Peter Thompson had a very thoughtful response to National’s canning of the TVNZ Charter published on Scoop.

If you haven’t seen it yet, I can recommend it as a good read. Peter makes a very interesting point, New Zealand can afford a decent public service television broadcaster and it would cost around $1 a day per household. I have run his maths through the old EM Difference Engine and, By Jove, I think he’s right.

This good news deserves to get a lot more coverage than it has. It should have been the headline statement in Peter’s piece. So I’m bringing it too you again.

This is a debate we need to have, but the National governmet is so keen on its ludicrous 100 day plan to make Ms Laura Norder the sultry star of its first (and last) term of office that there’s no time for intellectual quibbles or a proper public discussion.

My AUT University colleague, Alan Cocker, also makes some good points in a piece published a couple of days ago in the NZ Herald.

I also want to draw your attention to some correspondence I got a few days ago from Radio New Zealand’s Comms Manger (a threatened species these days) about how we often leave public service radio off our radar in these debates.

As John pointed out to me, progammes like Morning Report and Checkpoint do a good job of irritating everyone and for many Kiwis they are a daily fix. More anon…

But first to our headline: Would you be wiling to pay $1 a day for a quality public broadcasting television service?

We should start by re-visiting Pete’s funding arguments:

Between 2003 and 2008, TVNZ received $95 million in Charter funding but returned $142 million in dividends. (Do the math and ask yourself how much Charter content you’d expect from that.)

That’s a $51 million deficit over five years, or roughly $10 million a year. While not an absolute fortune in television terms, it would make a couple of rather good programmes of real public interest, or another season of Dancing with the stars if you’re that way inclined.

But it is Peter’s comparison between the money-go-round at Sky TV and the parlous state of TVNZ’s coffers that really makes the point:

Of course, with a population of only 4 million people, New Zealand cannot afford to set up a Kiwi version of the BBC and fund it to the tune of $8 billion per year. However, while $15m was never enough to transform a commercial TV schedule into a public service schedule, the amount required to make a substantial and positive difference is not huge. Consider the following figures: If you look at Sky’s annual reports, last year, Sky made around $144m profit ($98m after tax) on $659m operating income. That’s 22% profit (before tax) going to shareholders like Rupert Murdoch, not into programmes (which one reason why public-value-per-dollar is lower when taxpayer funds are distributed to private broadcasters). Sky’s total operating expenses were $470m with $210m of that going into programming. Meanwhile, 88% of Sky’s overall income came from subscriptions which represent roughly 46% of the 1.585 million households in New Zealand. The average subscription is about $66 per month, which over a year is $792 per household. But suppose for a moment that the operating costs of $470m were spread across all those households: That would work out at $297 per year, or roughly $25 per month- just over $6 per week per household. And that’s for a commercial-free service comparable with a full range of Sky’s channels. In fact it works out cheaper than the BBC licence fee in the UK which costs around $350 per household.

Of course, this is not to suggest for a moment that a fully-funded public service broadcaster ought to have all the same channels and content as Sky. In particular, the cost of local production and high quality news and current affairs would be higher than many imported services. But to put that in context, with $470m of revenue per year, one could easily cover TVNZ’s operating costs of around $365m (for 2008), get rid of all the commercials and give it an additional $100m to put into Charter content. This is all for around $6 a week per household, remember. Too much? Okay, if you retain the $339m in annual commercial revenue from TV One and TV2, that leaves around $131m to raise to help fund public service Charter- type programming (whether on TVNZ 6 & 7 or an additional commercial-free public service channel). That works out at $83 per household per year; just $7 per month or less than $2 per week. One can go through other possible models, but the point would be the same: New Zealand could afford public service television.

Now one can debate at length how exactly that revenue might be collected and distributed and there are a dozen funding mechanisms that might be considered (e.g. TVNZ might retain some advertising to lower the net taxpayer contribution but redirect any commercial revenue streams to the Treasury to offset costs and ensure that programming decisions remain insulated from commercial pressure). It would take a much longer discussion to explain all the possibilities, but the point here is that the New Zealand public want and deserve better television broadcasting, and if the quality were to be provided at an affordable cost, the majority of people would probably be willing to pay for it.

So, according to my Difference Engine, Sky makes roughly $577 million from its subscriptions (based on Pete’s $792 per household/per year figure). Leaving to one side for now the argument about Sky’s $98 million in profits, the operating costs for Sky are $470 million a year and this is the figure that Pete seizes on.

TVNZ’s operating costs are around $385 million so what Pete’s suggesting is if the government were to kick in an extra $100 million or so, we could have TVNZ providing a great service advertising free.

According to my reading of the TVNZ half-yearly statement the state broadcaster earned around $340 million last year, most of that from advertising. Government funding contributions were around $50 million, including from NZ On air and other sources and operating costs were around $365 million (Pete’s figure). The net profit was close to $20 million, half of which was returned to the government as a dividend.

Now TVNZ has to shave another $25 million in costs because advertising revenues are down $30 million and, as we all know, that means at least 90 jobs and less public interest broadcasting. Even the Manawatu Standard thinks this stinks.

So Pete’s suggestion is a sensible one. In fact, it would be around 81 cents a day for each Kiwi household. But we wouldn’t have to take it even that high. If TVNZ retained its advertising revenue and other incomes at $300 million (to take into account the drop this year), to reach $470 million would cost around 29 cents a day per household. If the average household is three people that would be 10 cents a day per person.

In a recent post I suggested a TV licencing system might be one sensible way of raising this money, but I hadn’t realised that this had been tried and thrown out in New Zealand before. I wasn’t aware of this – thanks to my students I am now – so I checked the history to find the usual suspects were behind it being abolished in 2000.

I still think we should re-visit this idea, or perhaps put a tithe box outside TVNZ’s headquarters. Everytime you walk past toss your coins in. That will keep public television alive.

I mentioned some correspondence from John Barr, but to be honest I’ve run out of room and it’s beer-o-clock here in the land of the long white cloud (the view from my office). I will return to that issue soon enough, for now a taster:

My concern is that the current debate around the TVNZ Charter, funding for local programming and the future of public service broadcasting, is so focused on television that it completely misses the point that New Zealand does in fact have a very effective, world class, public service broadcaster.
As this country’s only independent and commercial free public service broadcaster Radio New Zealand’s purpose is to serve the public interest, and it is a role that Radio New Zealand performs to the highest international standards within very tight budget constraints.   It has a Charter that has served its stakeholders well for almost fifteen years and a reputation, based on stringent and transparent editorial policies and quality programming, that is widely recognised both within New Zealand and overseas by international broadcasting organisations.
Thanks John for drawing our attention to this and for allowing me to publish the correspondence.
The issue here is really one that both Alan and Peter allude to, TVNZ is caught between market forces and the public interest.

Currently we have a public non-commercial service in radio which is strongly supported and appreciated by the public across the political spectrum. Public funding which has been channelled to New Zealand On Air and to support the now defunct TVNZ Charter would go a long way towards paying for a mainstream non-commercial public television channel…

There has never been a more appropriate time to provide a universal, publicly funded, mainstream media service in this country as purely market media stumble in their duty to attend to not only their needs as viable businesses, but our political, cultural and social needs as citizens in a democracy. [Alan Cocker, 3 April NZH]

That’s right, now I’m off to the Brooklyn for a seminar on martini drinking.

One Response to Public television for $1 a day

  1. […] This is why we need to ensure that public broadcasting in New Zealand is adequately funded; television and radio. My colleague at Unitec Peter Thompson has written on this topic many times and I’ve always supported his very sound analysis. He argues that public broadcasting is being gutted and he’s right. He’s also done the math and we can have great public broadcasting in New Zealand for around one dollar – yep $1.00 – per day. […]

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