The TVNZ/RNZ merger is cancelled: What’s next?

The cancellation of the proposed TVNZ/RNZ merger has been met with mixed reactions, but for many, it provided much-needed clarity and brought to light serious challenges within the local media landscape. 

As with many agencies, global media agency brand Spark Foundry New Zealand followed the plans for the merger between television network TVNZ and public-service radio broadcaster RNZ with interest, particularly when on February 8^th, Prime Minister Chris Hipkins announced the merger was to no longer go ahead.

Rob Thomas, Head of Digital and Data at Spark Foundry, says this news did not have a huge impact on the agency or its clients simply because plans for working within a landscape with the merger had not been made.

“That’s not because we were cynical, and didn’t think it was going to happen, but it was more because the operating model hadn’t yet been made public or made available to us,” he says.

“We received from the government documentation which outlined that they wanted a part commercially and part publicly funded model. Beyond that, we didn’t know what commercial opportunities would exist because that is the process TVNZ and RNZ were going through. We always knew that this process would have taken time and that consultation would have taken place with us, however it didn’t get to that stage.”

The cancellation now means TVNZ have the clarity it needs to move forward and plan what the next months and years will look like for the business, he adds, and at TVNZ’s upfront at the end of 2022 the broadcaster expressed a desire to move forward with the digitisation of the business.

“[The cancelled merger announcement] will give them the opportunity to focus purely on that business strategy, which is to continue moving from a model based around linear TV, to this more fluid model of trying to reach consumers based on where they are at any given point of time. And that’s why they’ve invested so much money into TVNZ+ and the rebrand of that platform.

“They have moved into a digital transformed world fuelled by data. And they’ve openly said very recently that the change in the government’s policy means they get to focus on that more,” Thomas says.

Although Spark Foundry have less contact with RNZ, being a publicly funded media entity, Thomas believes that it will be going on a similar journey to TVNZ.

“They’ve been open that their future is about how they diversify their content and how they digitise their content. They’re moving to podcasting and the way audio is going, which is less about purely radio stations and frequency and more about how you can be on iHeartRadio, Spotify, podcasts, and having news being shared online as well as through radio. There is a lot of fragmentation for them as well. But their focus is how they continue moving into that world to give people the content they want, when they want to read it or listen to it.”

The announcement that RNZ will receive $ 10 million of funding now the merger plans have been called off, can only be a good thing for advertisers, says Thomas.

“With increased investment that means more content, more opportunities, more investment in the technology needed in this market, RNZ should not just survive but also to thrive. The way that business models need to change now to evolve with the digitisation of media, takes time and it costs money.

“RNZ and public entities getting that funding is really, really important because they can’t just operate as was, and that’s been the case because our industry is changing so much. To evolve, it costs time and money so it is important they get that funding. What I feel is really positive, is the fact that the government has acknowledged that and has offered that opportunity to RNZ in particular.”

This creates an opportunity for media partners who are ready to move with this and continue to evolve.

“That’s where we see opportunity and that’s where we see growth. So the likes of what TVNZ are doing with the digitisation of the business is something we fully support and we are really, really excited by that. Because we see a lot of opportunities and there’s a lot of synergies with the way that we want to operate as a business, as well. 

“Audiences are attracted to great content, as we have seen recently from the huge success of the Women’s Rugby World Cup. It’s great to see local broadcasters investing in content, both through developing local productions and the increased investment in New Zealand sport in free-to-air environments. These have been entertainment pillars for Kiwis for decades, so we are excited to see this type or programming be made more accessible,” Thomas adds.

As for whether the merger will ever get put on the table again, he doesn’t think it will be for a long time.

“If they were to go down that avenue again, the government would have to be in a position where they’re able to afford that and it be in the interest of the public. I think the difficulties that we have now is that there are too many bigger macro problems that our country faces, and every country around the world, because of what’s happened with the knock-on effects of Covid, because of the cost-of-living crisis, and now even as recently as the awful natural disasters that have happened. Those will recovering from that will be the priority of our government for a significant time. I think we need that to stabilise and settle and the economy to go on track before I think they will reconsider what public media looks like in this country.”

What the cancellation has made clear to Thomas, however, is that the way agencies such as Spark Foundry deal with media businesses needs to change.

“What some of the issues have raised from that, which are really important for us, is thinking about things like commercial models and the way we trade with those businesses. 

“It’s no longer looking at live TV as one thing and then [TVNZ+] as something completely separate. The way those businesses are moving is that they will treat those entities as one, because ultimately what we are looking for is to trade on an audience rather than on a platform. The next step is for the broadcasters to provide solutions for how we can measure those audiences across those platforms to ensure clients’ are getting the best value for their spend. We are already discussing these developments with the likes of TVNZ and Warner Bros. Discovery which is extremely positive.

The audience is the most important thing for us because our job is to connect our brands to those audiences in the best way possible for the best price.”

Dr Greg Treadwell, Senior Lecturer and the Head of Department for Journalism at Auckland University of Technology says the defining issue for the new public media entity was the timing and other events “that made it seem financially unwise to continue with it”.

“That said, the proposal itself hardly had everyone jumping for joy. Mainstream private media like Stuff, struggling through dark times for almost any business, faced losing in advertising terms, from a large organisation that also had government backing to help it. The distinction between public and private media was being blurred, when the aim originally was to strengthen the former.”

Treadwell says he believes the need to improve the resourcing and execution of public media remains.

“It offers something important the private sector cannot and it has a non-negotiable mission to represent all of us. Why would we not want that to be as good as possible?”

He also believes there was not enough clarity around this proposal from at the start and by the time it was pulled off the agenda, it was too unpopular.

“Labour took the chance to deflate a problem politically but the issues public media faces remain.”

Treadwell’s own view is that a mixed-model with advertising and taxpayer funding is “what muddies the waters and creates damaging tensions”. 

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