Screen Hub Exclusive: SBS Swallows Up TVNZ
by: David Tiley

Screen Hub
Wednesday 1 April, 2009

On March 11th, 2009, the government of New Zealand secretly sold TVNZ, its public broadcaster, to SBS, the Australian government owned national multicultural broadcasting network.

That was the date on which the New Zealand Broadcasting Minister Jonathan Coleman formally signed the letter of offer from the Board of SBS. The amount is believed to be $NZ212 million. The announcement will not be made until both governments agree on a date, as the deal is considered to be contentious.

Several sources close to the SBS Board have told us the idea emanated from Shawn Brown, the Managing Director of SBS, who previously worked for TVNZ as Managing Editor, News and Current Affairs in 1994, and Head of Television in 2001.

Screen Hub has been shown what we believe to be the draft notes for the press release which are being circulated between both governments, and the respective boards. In it, Brown is quoted as saying, “TVNZ and SBS are an excellent fit for each other. Both broadcasters are able to combine government income with advertising and provide public service broadcasting which takes account of minority audiences. Both brands sit at the quality end of the market and we believe SBS can benefit from TVNZ’s expertise at growing ratings.”

Debate inside the SBS Board has been described as “vigorous but ultimately led to a consensus”.

According to the Closer Economic Relationship arrangements between the two countries programs from New Zealand count as Australian for the purposes of content regulation. SBS is known to be under severe pressure to increase the amount of Australian drama and documentary which it broadcasts in prime time. An increase will almost certainly be a condition of the appropriation for the next triennium, due in the May budget.

TVNZ as a subsidiary of SBS will be able to compete for funds provided by NZ On Air and Te Māngai Pāho. The fact that NZ crews are able to deliver local drama for up to a third less than their Australian counterparts is cited in the draft press material.

Experienced entertainment lawyers on both sides of the Tasman have informally told Screen Hub that the proposal is both surprising and plausible, although legislative changes will be required to bring the deal to a conclusion. The proposal could be subject to competition authority approvals, but this is expected to be a formality.

It was suggested that the New Zealand government would have been eager to complete the deal as TVNZ’s revenue and therefore market value has declined steadily over the last few months. Proposed cuts to TVNZ staff and budgets have also presented the best possible balance sheet for due diligence.

While TVNZ and local commentators have been concerned about a reduction in news and current affairs programs, the draft press release has noted that SBS and TVNZ would run a joint news operation.

Announcements about the acquisition were to have been made in May, which is when Budget announcements are due on both sides of the Tasman. This accounts for the high level of secrecy about the process. Part of the reason for the secrecy may also be that the New Zealand government has repeatedly stated it would not sell any government assets during its first term in office. Just how it will explain away the deal with SBS is unclear. Possibly it envisaged that an announcement in May would become just one of many made around the Budget process. It is known that Canberra also supported an announcement in May.

The boards of TVNZ and SBS will be amalgamated, and chosen jointly between Canberra and Wellington. An unconfirmed rumour has it that both governments have been courting Peter Jackson (amongst whose credits include telemovie Forgotten Silver) to be on the combined Board. Australia’s Minister for the Arts, Peter Garrett, is known to be particularly excited by the idea.

Staff at TVNZ spoken to by Screen Hub were not aware of the proposed takeover and were taken by surprise when approached for comment. Most, struggling to come to terms with recent announcements of job losses, were philosophical. Others suggested it could improve their job prospects in Australia.

Following this discovery, both the Screen Producers Association of Australia and the Screen Production and Development Association of New Zealand are expected to formulate a joint position.

Sources close to office of New Zealand Prime Minister John Key believe that Bruce Gordon, the reclusive billionaire owner of WIN TV has also offered to buy TVNZ. WIN ultimately withdrew because its experience of regional Australian television suggested that TVNZ was worth only a fraction of the asking price.

The Gordon family is now free to pursue its negotiations with the Board of Network Nine.

David Tiley
David Tiley is the editor of Screenhub, and can be contacted at editor@screenhub.com.au. or 03 9690 6893.

editor@screenhub.com.au
http://www.screenhub.com.au

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