Media Watch: Both of CanWest's rival bidders would close TV4

By John Drinnan

Friday 16th August 2002

The cliche goes that every cloud has a silver lining and perhaps it is true about the delay in passing legislation for a less commercial TVNZ.

The early election put on hold the July-scheduled third reading for the TVNZ Bill and it is now expected to be introduced into Parliament in September or October.

Thirteen years ago Labour's broadcasting reforms opened the door to pay-TV and established state television as a profit-oriented state-owned enterprise.

But good intentions have mutated into a somewhat dysfunctional free-to-air television market where two channels - Prime and TV4 - show hardly any local content.

At least this extra time will allow Parliament to reflect on the new emerging media landscape and where TVNZ will fit into an increasingly cross-Tasman media market.

An announcement is expected soon on the successful bidders for TV3, TV4 and CanWest's radio stations.

Most likely, the TV channels will go to either the Australian Ten Network or the Australian-owned Prime New Zealand.

Most headlines this year have been on the snail's-progress implementation of the TVNZ charter (part of the TVNZ Bill) and gripes about election coverage.

But in New Zealand's deregulated broadcasting environments the CanWest sale begs bigger questions about the future of free-to-air commercial television. Not least, might it be permanently limited to just two players - TVNZ and one other?

If Prime buys the CanWest TV assets it may well foster more intense competition by closing the money-losing TV4 and using that channel's VHF frequencies to broadcast Prime.

(TV4 reaches just 75% of the country but its VHF frequencies are preferable to Prime's UHF because people do not need a special aerial to pick up the signal.)

The programming for Prime New Zealand is already run from Sydney by Kerry Packer's Nine Network in a deal that gives Packer an option to take a 50% stake at any time in the next five years.

Nine has been cynical about the TV3 sale process but its role in any Prime-owned TV3 is unclear.

The question will be whether Nine will have any say in the running for TV3 and whether Mr Packer's foothold in New Zealand television through Prime will be transformed into a much bigger launching pad in a subsequent stake in TV3.

Nine's commercial television nous would be welcomed but local programme-makers worry about a pessimistic scenario in which the new owners will adopt the business model used by Prime with low-cost imported programming.

One producer told Media Watch: " I support deregulated television but I still get quite angry when I look at Prime, which is essentially an Australian channel re-broadcasting into New Zealand.

"There is no way the Australians would ever allow a New Zealand company to come in and show no local content."

On the other hand it is hard to argue Prime should be investing heavily in local shows when it is still not yet breaking even.

Prime also shows some good if esoteric programming such as the Sunday afternoon broadcasts of Australian current affairs programmes Sunday and Business Sunday.

Whether Prime or Ten buys the CanWest channels, it seems inevitable TV3 will have closer links with Australia than it does with Canada and it seems likely the money-losing TV4 brand will be closed down and the frequencies sold.

Given CanWest has a 57% economic interest in Ten (though just 15% of voting stock) some believe the most likely scenario is for Ten to buy the channels, allowing CanWest to keep an indirect stake in TV3.

But the main aim of the transaction is to raise cash to pay off CanWest's extensive debt and it seems an elaborate and costly process to raise what would be only a small contribution to its debt-reduction programme.

It is not clear what Ten's approach would be to TV4.

CanWest has been negotiating through much of this year to sell the VHF network to the Crown for use by the Maori Television Service.

But the talks came unstuck, largely it is understood because government officials wanted Maori TV to use less valuable UHF frequencies.

There will be many people who will question the likelihood of Maori television finding an audience, especially given the difficulties of companies like Prime and CanWest in making a profit out of highly commercial programming. Given its non-commercial focus and Maori language programme it will be hard.

One argument is that the VHF network is too valuable for commercial TV to be wasted on a broadcast that will be watched by only a small audience.

The other argument is that by restricting Maori to a UHF network that requires UHF aerials the government is effectively ensuring the channel will always be a basket case and taxpayer-funded Maori programmes will never reach a audience.

Prime (so far) and its forerunner Horizon Pacific have both been unable to make UHF work on a commercial level.

Maori radio station Mai FM has found an attractive commercial formula for Maori broadcasting that works and even among industry cynics there is a feeling that, as one executive put it, " Maori broadcasting's time has come."

But the stance taken by the government officials would ensure that, rightly or wrongly, any failure for Maori TV will be blamed on government intransigence.

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