North & South editor Viriginia Larson pitched this story to me in September of 2012, and I couldn’t have been happier. For whatever reason, I’m a little obsessed with broadcast funding body NZ On Air. Not because I think it does a particularly bad job – on the contrary, given its remit, and the myriad forces acting on it, they do surprisingly well. But I always think about the opportunity cost – what else the organisation could be doing with that money? Whether it could provide more infrastructure, or work with a broader outlook, across a variety of disciplines. Why no one questions the glaring logical inconsistencies it embodies. And about whether an approach essentially unchanged in 24 years remains relevant today.
For once, they were all in agreement. “An accident of history,” said the economist. “A historical accident,” said the politician. “It probably comes down to historical reasons,” said the lawyer. What they agreed on was this: New Zealand’s central government funds the production of content for broadcasters, and not print media publishers, because we have always done so.
And why not? Doesn’t public radio provide “exciting and independent” programming? And NZ on Air a “colourful range of cost-effective local content”? Each for free, to anyone with a radio or television? Without the $133 million doled out last year, wouldn’t our national voice be lost amongst the foreign cacophony? And besides, can’t print publishers pay their own way?
Well, yes, yes, yes, yes. And, increasingly, no. New Zealand, like most other developed countries, has decided locally produced television and radio are so important to our national identity that they must be publicly funded. But although in many other countries around the world print media benefits from generous direct and indirect subsidies, it has never done so here.
Why would it need them? The market has taken care of that since long before radio and television were invented. The first newspaper printed in New Zealand arrived the same year as the Treaty of Waitangi, our first magazine a decade later. Ever since, they have reproduced with startling frequency – at its height the New Zealand Press Association (NZPA) served 74 newspapers the length of the country. It wasn’t altruism that generated all those publishers, either. As Gavin Ellis, media commentator and former editor of the New Zealand Herald, puts it: “The only thing more profitable than newspapers was heroin trafficking.”
Not any more. In fact, just making a profit from the written word has become a fiendishly difficult exercise. Last year the Herald’s publisher, APN, cut 100 jobs and wrote down the value of its New Zealand mastheads – including iconic titles like the Listener and the New Zealand Woman’s Weekly – by just shy of half a billion dollars.
Its main rival, Fairfax – publisher of the Sunday Star-Times, the Dominion-Post and a raft of smaller regional newspapers – could hardly crow over its rival’s misfortune. It was forced to sell a large stake in its profit machine Trade Me, while writing down the value of its New Zealand publications by an astonishing 80 per cent. And NZPA? That closed in 2012 after 130 years in operation.
(ACP – publisher of this magazine, along with Metro, Next and a slate of other titles in New Zealand and Australia – was sold to privately owned German media conglomerate Bauer in September last year, following five years under the ownership of debt-burdened, cost-cutting private equity firm CVC Capital Partners.)
Which is to say the profitability of print media publishers in this country – as around the world – has gone from heroin trafficker to crack addict in a few short years. It will come as no surprise to anyone that the force behind this industry-shaking realignment is the internet, which has siphoned off many of the revenue streams that used to sustain print media, newspapers especially.
One argument sees it as simply the “creative destruction” inherent in capitalism and the inevitable price we pay for progress. But the extent to which this is a fair fight is being debated internationally, and various moves are being deployed to counteract the new global internet giants’ dominance.
Brazil’s news organisations have combined to opt out of Google’s search results in favour of a communal paywall. France is just this side of declaring war on the search giant.
Many countries are also questioning the murky tax structures which meant that last year Google and Facebook combined paid
less than $130,000 in corporate tax in New Zealand.
While this is a vast, structural battle over which New Zealand has little control, through all this global media chaos one constant remains in our corner of the world: New Zealand On Air, through which we currently fully fund Radio New Zealand, a commercial-free news and culture radio station (and, inexplicably, a classical music sister channel, Radio New Zealand Concert).
Uniquely, though, we also dispense a contestable fund of over $87 million a year to create local content for various television and radio stations – including those owned by multinationals – and to invest in music and digital media. Not only are print publishers excluded from eligibility for this largesse, they are in direct competition with the broadcast media for both advertising revenue and consumer attention.
When there was a broadcasting fee, you could see the justification – it was user pays. That was abolished in 1999. When there was plenty of profit to go around, who was counting? But that finished years ago. When you had to pay to read a publication, it wasn’t accessible to all. But now most newspapers are available free on the internet.
This bias toward certain forms of media is not because anyone in government has studied the issue and decided that radio and television are better, more important mediums of cultural communication than the written word. It’s because the relevant legislation was largely drafted in the 80s.
So now, because of a “historical accident”, the large media companies which entertain and inform us via our television screens and car radios get tens of millions of dollars a year in taxpayer subsidies, while those which perform the same function with the written word get nothing.
This quixotic situation has its roots in the fourth Labour government, 1984-1990. Richard Prebble was only broadcasting minister for little over a year before the Douglas cabal’s ideological divide with Lange grew too vast and he was removed from the portfolio. But in that time he managed to radically alter the foundations of New Zealand’s media.
Prebble today admits to being oblivious to the local broadcasting environment upon being handed the portfolio. He gleefully recalls horrifying the personnel at National Radio by not knowing who they were when they called to request an interview regarding his new post. Not long after his appointment, in order to immerse himself in his new portfolio, he took the recent report of a Royal Commission into Broadcasting on a trip to a “hideaway [he] had in Fiji”.
The Royal Commission’s report – assembled over years, and at a cost of more than $1 million – essentially proposed a continuation of the status quo. That was state-owned and funded television and radio, via the New Zealand Broadcasting Commission, with a limited and highly regulated role for the private sector. The report’s main recommendation was a large rise in the broadcasting fee. Prebble, unsurprisingly, “quickly decided it was rubbish”. He returned to New Zealand and began what he would subsequently call “the most far-reaching restructuring and deregulation of broadcasting, not only in this country but anywhere in the world”.
To judge how you were likely to feel about the reforms, just try saying the words “public broadcasting”.
To broadcasters, a fairly innocuous pair of words have become exceedingly pejorative. Public broadcasting’s advocates, who generally adore the BBC like no other institution, revere the idea as media and programming unencumbered by the destructive populist forces of advertising and ratings.
Those of a more laissez-faire mindset view “public broadcasting” as the state and its organs deciding what “quality” means, both in relation to general programming, and to the news teams at the state-run media organisations. They believe the private sector, ratings, and the public’s eyes and ears are the best determinants of quality.
As they tended to in the late 80s, the free-market advocates won this battle.
Prebble and his gang didn’t want to abandon all broadcasting to market dictates, however – they believed there was merit in arguments about the way national and cultural identity was fed and watered through local productions. They just didn’t believe in bulk funding one state organ, à la the BBC. Instead they proposed a brand-new approach to state funding of broadcasting.
TVNZ would remain under state ownership, but be run on an explicitly commercial basis, and expected to turn a profit. The market for television was to be deregulated, to avoid a repeat of the long-running fiasco whereby the successful bidder for TV3’s “warrant” – the licence to broadcast – bankrupted itself due to the expense involved. Maori and community radio was to be funded separately, while the remainder of the vast available radio spectrum was to be auctioned to the highest bidder – a pioneering innovation since adopted around the world, notes Prebble approvingly.
Instead of funding being given directly to the channels, individual production houses would be funded on a programme-by-programme basis to produce local content, provided they could get a broadcaster to back their idea. It was as audacious a reform as any performed by that boldest of governments, and the arguments it started continue to rage today.
To those who enacted the reforms, and NZ on Air itself, it has been a model of success. Jim Stevenson is a lawyer and former deputy chair of the NZ on Air board who drafted much of the Broadcasting Act, and has been described as “the architect of the reforms”. He’s proud of what the organisation has achieved, and the way he sees NZ on Air as putting the viewer’s preferences front and centre.
“It was based on consumer choice being promoted – what the public wanted to watch was very important. Some quite patronising objectives went out the window.”
Even Prebble, after leading the free-market ideologues at Act, remains an advocate.
NZ on Air chair Miriam Dean notes in its 2012 annual report that “NZ on Air’s vision, forged 20 years ago, has not deviated from an unwavering focus on creating great content.”
Those views aren’t shared by all. A New York University study of 14 publicly funded media models acidly notes, “New Zealand’s recent history in some ways offers a cautionary tale of how not to structure and fund public media.” In 2006, a group of prominent New Zealanders, including Maurice Gee, Margaret Mahy and no fewer than nine knights and dames, signed an open letter seeking some more “radical change” to our broadcast environment.
“We believe,” they wrote, “that everyone who expects public television to make a better contribution to national life (remember Close to Home? McPhail and Gadsby? Gallery? and scores of other New Zealand programmes) will join us in urging that you reinstate a public television system comparable with those which are still the pride of citizens in Australia, Britain and Canada.”
It’s not just the upper crust who are disappointed in the status quo. NZ on Air has weathered a series of media storms over the past few years. There was controversy over the $80,000 released to fund the recording career of Annabel Fay, daughter of Sir Michael, and a subsequent junket to Great Mercury Island. A $50,000 21st birthday party for NZ on Air – with Shihad flown in for the occasion – was judged unseemly. And programming decisions have drawn consistent flak. There was funding for the Jersey Shore-style reality TV drama The GC, which was presented as an exploration of “how tikanga Maori supports [the show’s participants] as they adapt to life in a new country”. And the renewal of pricey, low-rating drama The Almighty Johnsons, despite its earlier cancellation by the show’s network, drew very pointed commentary.
Much of the criticism is perhaps overblown. There is no statute in the Broadcasting Act to assess parental means before making a grant, and, Annabel Fay aside, no real demand for one. The 21st celebration is hard to defend, but NZ on Air’s general operational efficiency is remarkable – it has lower personnel costs than the Film Commission, despite a budget four times as large.
The GC ended up looking very different on screen to the proposal initially presented to NZ on Air, but the funding decisions it makes are very much in line with its mandate, “a sustained commitment by… television and radio broadcasters to programming reflecting New Zealand identity and culture”.
The agency has evolved with the times, in the slightly creaky way that government bodies do. Its ratio of radio to television has leaned heavily in television’s favour, reflecting the costs and popularity of the medium. It has nudged the limits of its remit to fund talent shows, at one end, and pointy-headed political debate at the other. The latter is a bigger change than it might appear on the surface, as news and current affairs were never funded in the past, and were always assumed to be self-sustaining.
“It simply did not seem necessary [to fund news and current affairs], since the broadcasters in the 90s were willing to pay for those genres,” says Roger Horrocks, emeritus professor at Auckland University.
It does seem necessary now. Current affairs is subsidised under the “Platinum Fund” – set up five years ago to “support quality content, which may be currently difficult to find on our screens”, according to a NZ on Air spokesperson. The implication that NZ On Air’s other programming is not “quality content” was surely unintentional. But the agency’s acceptance of the need for subsidy to counter the dwindling public appetite for “hard” current affairs – hello, Seven Sharp – means they are now funding programmes in head-to-head competition with the core business of the print news media.
The other major change in recent years has been NZ on Air’s tentative foray onto the internet. The funding body has spent $11 million on “digital media” over the past five years. The various websites and experimental online shows are an explicit acknowledgment that the broadcast audience has increasingly headed toward the net. In so doing, it should be commended for attempting to keep pace with changing times – they would rightly be damned if they didn’t. But it also tacitly adds the suffix “and Online” to New Zealand On Air – placing the internet alongside free-to-air television and radio as venues which are accessible to all.
Obviously you can’t subsidise your way out of all the internet’s many challenges. But if the “digital media” subsidy makes it clear that the audience is migrating onto the net, then how can NZ on Air continue to justify the vast funding bias toward television and radio’s sound and vision and against publishers of the written word?
One of the internet’s greatest achievements is its bringing all media companies face to face, on a brand new field, for the first time. In early February, for instance, you could read tributes to Sir Paul Holmes on 3news.co.nz, tvnz.co.nz, radionz.co.nz,nzherald.co.nz and stuff.co.nz, to name only the most prominent online media outlets. Increasingly, all are deploying video, words and images to convey both news and what you might politely term “lifestyle” content.
The first three sites mentioned are run by broadcasters, who back them up with hefty, expanding selections of video or audio on demand – that might be termed their competitive advantage against the print publishers’ much bigger newsrooms. Large chunks of that audio and video are, of course, funded by NZ on Air, allowing their audience to meet their product on their own schedule and on a device of their choosing. Every few months, the media companies seem to get closer. TVNZ now describes itself as “New Zealand’s leading television and digital media company”, while Fairfax claims to be an “innovative, integrated multi-media business”.
There’s a name for all this: convergence. Gavin Ellis defines it as “the way in which the digital environment is blurring, if not eliminating the gaps between television, radio and print”. Ellis’ background in print might make you suspect a bias – but a recently released review by the Law Commission puts it in equally stark terms.
“The bright line distinctions between traditional broadcast and print media are becoming increasingly blurred as commercial media companies converge online, producing a rich mix of text and video accessed via a variety of different channels and devices.”
They go on to suggest a single voluntary regulator for all media, to replace the Broadcasting Standards Authority, the Press Council and the just-launched, broadcast-media only Online Media Standards Authority.
There are many positive elements to convergence. Consumer choice explodes, the ability to efficiently serve minority audiences is vastly expanded and shift workers aren’t forced to endure late-night television, to name but three.
The internet has brought the news print media to its knees. But it has also brought it onto screens, where it sits side by side with its long-time competitors for advertising dollars and consumer attention. In the vast majority of cases, newspapers (and a few magazines, but not this one) offer some or all of their content online, for free – and you can bet more would if their content costs were subsidised in an equivalent manner to their broadcast competitors. It all comes down to the unintended consequence of the Broadcasting Act’s far-reaching reforms. Because if we had done as the academics and BBC enthusiasts had suggested and state funded only non-commercial “public broadcasting” stations, one set of directly competing media companies wouldn’t be subsidised at the expense of another.
But we did, and continue to. So, how do we justify funding the production of content – call it storytelling, journalism, cultural criticism or light entertainment – for some media companies and not others, based increasingly on the historical origins of the company?
This is obviously a self-serving question to pose, for both a freelance print journalist, and a magazine like North & South. To see whether there was any substance to it, I spent a few hours putting variations on this question to the broadcasting voices of our three main political parties.
First was Craig Foss – MP for TukiTuki – who inherited the broadcasting portfolio from Jonathan Coleman after the last election. Foss is, like his boss, a former banker whose bio lists “family, friends, rugby and the beach” as his favourite activities, but he says his lack of a prior background in broadcasting hasn’t proved a barrier to his embrace of what he characterises as the “very exciting times” facing media companies.
“They’re all converging on their own, essentially responding to the demands of those who are looking to view or read their product.”
Very true. In light of that, is it fair to be funding content for certain media companies, and not others?
“The world is changing,” says Foss blandly. “On your computer screen, on your laptop or iPad or whatever it may be – you can now watch TV, live or recorded, watch a movie, listen to the radio or read the latest newspaper, or click on video content within that newspaper. Content, content, content is what it’s all about.
“I don’t think it’s a question of fairness or otherwise,” he adds.
The minister is bizarrely enthusiastic about the immense changes to audience behaviour and revenue streams that are devastating media companies large and small in New Zealand, and says he has no plans to reassess the funding philosophies or targets.
“We’ve had about four different governments since 1989, and [the Broadcasting Act is] relatively unchanged, which says that actually no party sees it as a major priority to change the Broadcasting Act or New Zealand on Air.”
That last statement will come as some surprise to Clare Curran and Julie Ann Genter, broadcasting spokespersons for Labour and the Green party respectively. Curran says she sees “this attitude that it’s okay to spend taxpayers’ money on content that is of dubious value, and is providing profits to commercial interests. I think that’s wrong. I think it’s absolutely wrong,” – while Genter believes “probably the whole thing needs to be re-evaluated”.
Foss’ point about the absence of major change to the Broadcasting Act is correct, while glossing the fact that the job losses and real financial turmoil at the major publishers has come since 2008 – an era in which only his party has been in the position to effect change. The need for reassessment of broadcast funding policy is, in fact, an area of common ground in the increasingly fractious relationship between the Greens and Labour.
Genter admits her party lacks concrete policy on the subject but acknowledges, “There is a case for public funding of journalism, no matter what the particular media is. I think there’s a case for that. And I think it’s probably an accident of history that there is a funding for broadcast media, and not for print journalism.”
Labour’s Curran is herself a former print journalist, and mourns what she describes as “the demise of the medium”. It is perhaps unsurprising then that her party has the most sophisticated and nuanced policy toward the current situation.
“I’m not saying, ‘Let’s provide state funding to print media because they’re in a difficult situation,'” she says. “That’s not how I would be approaching it. I would say, ‘What sort of media are you providing, and what’s your business model, and what’s your case for justifying public money being spent on you?'”
It’s not just the Left’s politicians who are pondering the implications of this new era. Right-leaning blogger David Farrar recently wrote, “There is arguably a case that one differentiates media on the basis of their reach, ie number of listeners, readers or subscribers. That’s more logical than the medium used.”
He was writing in support of the Law Commission’s single regulator proposal, but the same elegant argument applies equally well to public funding.
Former Herald editor Gavin Ellis puts it still more bluntly. “Convergence means you can’t legitimately continue to fund only two [mediums]. But in order to fund all of them, you need to fundamentally change the structures under which that funding takes place.”
When I asked Richard Prebble for his thoughts on such an arrangement – how you might fund the production of such content – he laughed it off as impossibly difficult to administer. “That’s like saying the taxpayer should fund the May issue of North & South!”
Only, it’s not. In fact it’s very simple to transpose broadcast funding to publishing. For a broadcaster, like TV One, TV3 or Mai FM, read a publisher, like the New Zealand Herald, interest.co.nz or North & South. The publisher would tally up the costs incurred in producing a feature or running a column – writers, researchers, sub-editors, photographers – and submit them to an NZ On Air-esque body for approval. To ensure its accessibility to all, you could require it to be available on a free, permanent online archive – where it would likely outlive broadcast content, thanks to the written word’s ability to be more easily indexed and searched. It would also begin to undo the medium bias which allows for Bryan Bruce to make a loud, pointed, taxpayer-funded documentary about child poverty, but not for an equally skilled print journalist to file a series on the same subject for, say, stuff.co.nz‘s millions of weekly viewers.
It is, to be sure, a big change. And one print publishers have yet to publicly agitate for – though they have no doubt noted the discrepancy. Perhaps that’s because the print media traditionally kept itself as far away from government as possible, from a desire to avoid regulation, and to be seen as better able to hold power to account. If they took money from the government, how could they be trusted to keep criticising it when it mis-stepped? Ellis suggests such an organisation would need the equivalent of “a thousand Berlin walls” around it to guard against political interference.
But he also points out that we already trust plenty of organisations to operate independently of their funding mechanism. The police and judiciary, for starters. Similarly, state-funded universities employ academics who blaze at government policies, and ministers dutifully front up to maulings on Morning Report and The Nation without threatening to cut the purse strings.
There is, of course, a print precedent,
in the formerly state-owned Listener, which owed its success to an exclusive right
to publish TV and radio listings, and existed in competition with privately owned publications. But apart from that notable example, which the government sold in the early 90s, publishers and the Crown have largely stayed away from one another.
A look around the world, however, suggests that is not necessarily inevitable. In fact, this country is near unique in not offering some state assistance to its print media. Most European nations provide reductions or exemptions from sales tax for newspapers and magazines, while even that bastion of the free market, the United States, provides heavily discounted access to its postal service for the delivery of subscriptions. Hence those jaw-droppingly priced subscription offer cards that fall out of their magazines.
Traditional media companies are only part of the problem though. If New Zealand’s journalistic tradition, written and photographic, is to thrive in the new medium, it needs to encourage the growth of new start-ups – likely entirely web-based – as much as it does support the transition of its old players. Among the dross, some blogs have proven reliable sources of quality journalism and writing, but they’re mostly done for love, not money, and therefore very vulnerable to changing personal circumstances. Hardly a sound foundation upon which to build a culture.
The likes of Public Address and finance site interest.co.nz are proving that a large, engaged audience can be generated in the new environment. But it should be noted that the difficulties interest.co.nz‘s Bernard Hickey faced with his much-anticipated, now-aborted journalism.org.nz site point to how tricky the contemporary environment for new media ventures remains.
Of the three main parties, it is Labour (and Curran) which has put the most thought into the promotion of growth within this new area. An unpublished policy proposal supplied to North & South shows the shape of their thinking.
“Labour will encourage a competitive environment in digital commercial media, and investigate the merits of providing special tax status to low-profit, limited-liability content development companies which are New Zealand-owned and who commit to a defined programme of reinvestment in their business.”
It’s an area Ellis sees as of real merit, and one that’s the subject of increasing attention in the US. To New Zealanders used to commendably simple tax structures, it might sound like leading to the bewildering muddle of loopholes and deductions which makes the US tax code so byzantine. It does, though, have the advantage of not simply adding another media form to the subsidies list – while unfortunately not doing away with the inequalities and anachronisms embedded in the current system.
Given the range of potential solutions to this tangled mess, it seemed pertinent to put them to someone more qualified to judge their advantages. Shamubeel Eaqub is principal economist at the New Zealand Institute of Economic Research, and unsurprisingly says his “starting point would be to not subsidise if possible”.
But given that we already are?
“If you were constructing the perfect system, you’d say that you would be agnostic of mode of delivery. You would pick the mode of delivery that reached the most people.”
As of today, that’s not what we do. We instead pick the modes of delivery which we have always picked. The question is, how much longer will we continue with this course of action, and what will the consequences be?
In its most recent survey, conducted with the 2006 census, the New Zealand Journalists Training Organisation found that a formidable 87 per cent of New Zealand’s journalists were employed in the print media. For all the surveys which suggest trust in journalists as sitting marginally above that for politicians, not many advocate doing away with them altogether – or think a massive, sustained reduction in their number would be positive. And as that percentage suggests, the cliché about print breaking stories which are then followed up by broadcast media would seem to be borne out by the overwhelming strength in numbers.
For Gavin Ellis, the stakes are already high. “We’re not yet at a stage where serious journalism is in peril of vanishing from the face of New Zealand,” he says. “Or private enterprise. But there is absolutely no doubt the resources available to it have been severely eroded. Severely eroded.
“I believe we’re at the stage now, and have been for some time, where we’re below a credible minimum. And this year we may see structural changes that further erode it.”
He is referring there to the potential for a merger between APN and Fairfax, a possibility he pondered recently, tellingly on Radio New Zealand’s Nine to Noon.
“Is it a good thing to have all our newspapers under one foreign owner? Of course not. But beggars can’t be choosers.”
The media is often referred to as the fourth plank of democracy, and right now its largest section is rotting away. Viewed from some angles, it already resembles a vicious circle – newspapers shrinking, leading to lower sales and revenues, leading to further cuts which reduce the quality of the product and drive yet more consumers away from subscribing, or reducing their inclination to venture over a paywall should one arrive.
Many magazine titles have shed staff writers, quietly disappeared or gone to online models only, with particular attrition at the minority-interest end – the very non-mainstream audience for which governments have so often expressed concern.
A doomy Auckland University lecture series in 2011 was titled “The End(s) of Journalism”, and that mordant pun becomes more acutely observed with each round of writedowns and layoffs. But while Foss talks up the “exciting times” in media, its oldest segment is suffering mightily.
Unfortunately for those who enjoy and rely on print journalism – regardless of whether they find it on paper or screen – this government is content for the unfair fight against its broadcast-based competition, and its spiralling consequences, to continue unabated.
– North & South, May 2013