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The Remaking of Television New Zealand 1984-1992
By Barry Spicer, Michael Powell, David Emanuel
Auckland University PressCopyright © 1996 Barry Spicer, Michael Powell and David Emanuel,
All rights reserved.
In a little over a decade, New Zealand has undertaken major reforms of its economy and the operation of its public sector. As all New Zealanders are aware and most of the rest of the world as well, these reforms have involved very significant restructuring of the economy, the deregulation of markets and industries, and the redesign of the governance structures of a host of government enterprises which dominated a number of domestic industries.
One industry to undergo significant structural change under the New Zealand reform programme was television and radio broadcasting. Since the introduction of television in New Zealand in 1960, television broadcasting has been subject to almost continuous public and political pressure. This is reflected in the fact that almost every election in New Zealand since the introduction of television has brought one change or another to the structure of broadcasting. However, decisions made by the Labour government in the late 1980s broke new ground. These included decisions to deregulate broadcasting and the related telecommunications industry, to establish Television New Zealand as a limited liability company under the State-Owned Enterprises Act 1986, and to set up a Broadcasting Commission which would be funded by a broadcasting licence fee and would promote the government's social objectives in broadcasting. Government enterprises engaged in television broadcasting and related telecommunications industries had their legislative protections removed and their markets opened to competition.
Television broadcasting in New Zealand is important for a number of reasons. First, the structure of the television broadcasting industry is significant for economic reasons. As a major medium for advertising and marketing products and services, television broadcasting plays an important role in New Zealand's market economy.
Second, television influences the social and cultural fabric of the nation. There is a strongly held belief in segments of New Zealand society that television broadcasters have special responsibilities not only to inform, educate, and entertain, but also to promote national identity and culture and to meet the needs of minorities. This raises an important question about the extent to which state-owned, as well as privately owned, broadcasters should have special obligations placed on them to 'to serve the public interest' as they carry out their commercial activities.
Third, the international broadcasting environment has gone through a number of profound changes in recent years which have affected the nature, shape, and economics of the industry. Change was inevitable with the introduction of new and affordable delivery systems and television services and with the convergence of transmission technologies bringing new forms of competition for both broadcasters and traditional telecommunications companies around the world. As technological developments rapidly eroded the New Zealand government's ability to protect its state-owned broadcaster from competition from multi-national media and telecommunications companies, major changes to the structure of New Zealand television broadcasting were not long in coming.
Lastly, the structure of the industry and the organisation of broadcasters in New Zealand is important because New Zealand is a small country with a small, scattered population and with a limited capital and income base to support television broadcasting and programme production. It is also a country with challenging geographical features, which make the transmission of television signals to many areas difficult and costly. Working within these limitations has always been a fact of life in New Zealand television.
The confluence of these technological, economic, geographical, political, and social factors added uncertainty and complexity to the problem of how best to structure the broadcasting industry in New Zealand. It makes the restructuring that did take place both interesting and unique. These factors combined to place considerable pressure on the new board and management of the new state-owned enterprise, Television New Zealand Ltd, as they implemented the change that had been mandated by the New Zealand government.
This study is set in the context of the radical changes made to the structure of television broadcasting in New Zealand over the period 1984 — 1992. Its purpose is to examine the organisational and management process of remaking Television New Zealand, a division of the Broadcasting Corporation of New Zealand (BCNZ), into a commercial state-owned enterprise (SOE) under the State-Owned Enterprises Act 1986. We look at these changes from the perspective of TVNZ's managers and those government officials, ministers, and committees involved in making and implementing new broadcasting policies. We focus primarily on organisational and management change rather than on the cultural or political aspects of these changes. However, in the latter case we do attempt to outline some of the main issues involved.
We first set out to understand and evaluate the corporatisation process as it was applied to the television division of the BCNZ. We then analyse the significant organisational and management changes which resulted as the new corporatised entity, TVNZ Ltd, was forced to compete for programmes, audiences, and advertising dollars in a deregulated market environment. The combined interventions of the New Zealand government in deregulating television broadcasting and related telecommunications industries and in establishing TVNZ as an SOE in December 1988, provided an unusual opportunity to study the processes of strategic, organisational, and cultural change (and their performance outcomes) in a large broadcasting company.
Our study of the remaking of TVNZ was part of a wider analysis of the restructuring of government enterprises in New Zealand which followed the passage of the State-Owned Enterprises Act 1986. The story of TVNZ's transformation, while interesting and important because of the economic, political, and cultural significance of the broadcasting and communications industries, was by no means unique. Rather, it followed a general pattern similar to that experienced by other SOEs.
To collect material for this book we conducted extensive interviews with many people who were intimately involved with the process of restructuring the broadcasting industry, the splitting apart and dissolution of the BCNZ into separate businesses and the establishment of TVNZ as an SOE. They included government officials, appointed members of steering and advisory committees on broadcasting, the last BCNZ board and TVNZ Ltd's permanent board; managers in TVNZ's television and other businesses; programme producers and schedulers; and knowledgeable outsiders. We also interviewed the chief executive and some board members of the Broadcasting Commission.
To conduct the study we were able to gain access to the files of the New Zealand Treasury and confidential company papers, including board papers and company plans relevant to the process of remaking TVNZ as an SOE. We also reviewed numerous public documents including commission reports, media accounts in newspapers and magazines, books and journal articles, internal newsletters, materials about the company and its programmes sent to advertisers, and published annual reports of the BCNZ, TVNZ Ltd, and the Broadcasting Commission.
Throughout several rounds of interviewing and analysis of documents we were careful to compare what we were being told in interviews with the story as it was contained in documents and other written sources. Wherever inconsistencies arose, or our understanding of particular events, decisions, or relationships appeared to be incomplete, we expanded our investigation to resolve the issue, at least in our own minds.
To ensure that our descriptions and interpretations of events were as reliable and complete as possible, the initial drafts of our manuscripts were read and commented on by the chairman of the board, senior managers of TVNZ, Treasury officials, and the executive director of the Broadcasting Commission. In some cases additional interviews took place to flesh out parts of the study.
The resulting comments were carefully considered and weighed when writing the final manuscript. Although a confidentiality agreement signed with TVNZ caused us to exclude commercially sensitive information, the agreement did not affect the analysis or materially affect the form or content of the discussion in the book.
Our approach is descriptive, analytical, and evaluative. We set out a careful description of events, process, and choices as well as an analysis of why certain choices were made. One of our objectives was to learn why things were done in the ways they were. In broadcasting, casting, perhaps more so than in some other industries, there are many perspectives and viewpoints about particular events, processes, choices, and relationships. Wherever possible, therefore, we have tried to provide a balanced presentation of opposing viewpoints. We also present our own analysis and interpretations throughout.
Plan of the Book
To provide the necessary context and background we start in chapter 2 with a brief history of television broadcasting in New Zealand up to the formation of TVNZ as an SOE at the end of 1988. We set out a number of important milestones in the late 1980s which culminated in the decisions to restructure broadcasting in late 1988.
We then discuss a number of stages which were involved in the transformation of TVNZ into an SOE. The first stage is treated in chapter 3. This covers steps in the mid to late eighties to commercialise and revitalise the BCNZ, and focuses most attention on TVNZ as a division of the BCNZ. These steps were taken partly in response to global pressures on the broadcasting industry and partly in response to growing frustration with the rigid nature of the system in place at the time. It was during this period that a number of major reviews of the industry discussed in chapter 2 were conducted from which the Labour government's policy on broadcasting emerged. In chapter 4 we provide an overview of important sections of the State-Owned Enterprises Act 1986. We then examine the short, but crucial, establishment period from the end of August 1988 to the beginning of December 1988 as the BCNZ was prepared for its impending dissolution and TVNZ was prepared for its establishment as an SOE.
The third stage involves the shaping of the new SOE over the three-year period 1989 — 1992. Chapter 5 takes up the formulation and implementation of TVNZ's new competitive strategies as it readied itself for competition and went head to head against a new free-to-air competitor, TV3. The chapter also covers the formation of a number of strategic alliances TVNZ entered in broadcasting and related telecommunications. Chapter 6 describes and analyses how TVNZ's managers aligned TVNZ's organisational structures, incentives, and management processes with its strategies in order to secure a sustainable competitive advantage. The chapter also addresses the central issue of how TVNZ went about getting needed changes in its internal organisational culture.
Chapter 7 discusses a series of relationships within TVNZ and between TVNZ and outside parties. Relationships between the board and senior management, the board and shareholding ministers, and between the company and the new Broadcasting Commission are all examined. The chapter also provides an overview of the political, social, and cultural pressures which confronted the company and which involved programming mix and quality, editorial issues, and questions about privatisation and foreign ownership.
This is followed by an analysis in chapter 8 of TVNZ's financial performance for the four-year period from establishment as an SOE in December 1988 to the end of 1992. We also attempt to compare the financial performance of TVNZ before and after corporatisation, although this analysis is fraught with difficulty due to data limitations.
Our study concludes in chapter 9 with a detailed discussion of the management of change in the television industry, addressing in particular the significant institutional, organisational, and management factors contributing to the transformation of TVNZ from a state monopoly broadcaster into a successful electronic communications business.CHAPTER 2
A Brief History of Television in New Zealand
The Early Days
Although television was introduced in Australia in the early 1950s, it was not until 1960 that the New Zealand government, under pressure from the public, announced the introduction of a nationwide television service for New Zealanders. It was to be a state-owned monopoly operated by the existing New Zealand Broadcasting Service and funded by a combination of commercial advertising and a licence fee. The first broadcasts were made from Auckland in June 1960 for two hours a night, two nights a week.
In 1962 the Broadcasting Act established the New Zealand Broadcasting Corporation (NZBC) as a state-owned (statutory) trading corporation to manage and develop public radio and television. A large development programme by the NZBC combined with individual initiatives to build and operate community television transmitters resulted in the rapid spread of transmission coverage and rapid increases in the number of television sets owned and in the size of the viewing audience.
The seventies ushered in a period of continued growth. Work started on the construction of a major television complex at Avalon just outside Wellington, and NZBC's transmission engineers succeeded in linking the whole country into one television network. Other major developments followed in quick succession. The existing black-and-white channel was converted to colour, a satellite earth station linking New Zealand to the rest of the world was opened, and applications were called for a warrant to operate a second national colour channel. Although the privately funded and operated Independent Television Corporation applied for a warrant, a newly elected Labour government made a political decision to maintain the state's broadcasting monopoly by awarding the second channel to NZBC. This decision to build a two-channel state-owned system was to have a considerable influence on the later development of television in New Zealand.
A tumultuous period for broadcasting followed as the Labour government set about restructuring the entire broadcasting system by splitting the NZBC into a Broadcasting Council, two television corporations, a radio corporation, and an independent engineering body. In 1975 the NZBC's functions passed to Radio New Zealand; to Television One, which inherited the NZBC national network and the Avalon television complex; and to Television Two (South Pacific Television), which inherited little except staff. A brief period of intense competition between the two state-owned channels followed. By August 1976 Television Two had won 51 percent of the Auckland viewing audience.
In 1976, facing what it saw as expensive duplication of services in television news and current affairs and widespread viewer dissatisfaction with the services offered by the two channels, the new National government decided to merge all broadcasting services, including radio, into one corporation. The Broadcasting Act 1976 was passed, by which the Broadcasting Council was abolished, all state-owned broadcasting services were placed under the control of a new organisation called the Broadcasting Corporation of New Zealand (BCNZ), and a quasi-judicial Broadcasting Tribunal was established to regulate the industry. Some of the gains that had resulted from the earlier corporatisation were reversed by these events.
However, pressures to allow private interests to enter broadcasting persisted, and the National Party made a commitment to progressively increase this involvement in New Zealand television. Although sale of Television Two to private interests had often been threatened by the National government, it was not until the government actually instructed the Broadcasting Tribunal to call for applicants for a third channel that the prospect of a privately operated television broadcaster became a real possibility.
Radical Change in the Eighties
The election of a reform-minded Labour government in 1984 ushered in a period of intense debate over the structure of broadcasting in New Zealand. Initially, reforms came slowly, but by the middle of 1988 the government had decided on a radically new broadcasting policy and set about its implementation. We turn now to several important milestones in the development of the government's new broadcasting policy.
Milestone 1: The Royal Commission of Inquiry into Broadcasting and Related Communications
In February 1985 the Labour government appointed a Royal Commission of Inquiry to inquire broadly into 'the institutions, operations, financing and control of New Zealand broadcasting and related communications and to report on what changes are necessary or desirable'. In September 1986 the Commission presented the government with a long rambling report in which it proposed expanding and tightening existing regulations.
Excerpted from The Remaking of Television New Zealand 1984-1992 by Barry Spicer, Michael Powell, David Emanuel. Copyright © 1996 Barry Spicer, Michael Powell and David Emanuel,. Excerpted by permission of Auckland University Press.
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Table of Contents
ContentsList of Figures and Tables,
List of Abbreviations,
2 A Brief History of Television in New Zealand,
3 Commercialisation Prior to Corporatisation,
4 Establishing TVNZ as a State-Owned Enterprise,
5 New Competitive Strategies,
6 New Management Structures and Culture,
7 Relationships and Pressures,
8 Financial Performance,
9 Managing Radical Change in New Zealand Television,