KEY POINTS:
Most TV3 rugby viewers slumped into a trough of silent despondency immediately following Sunday's broadcast of the All Blacks' World Cup demise in Cardiff.
Unhindered by misery, it was observed on TV One's Agenda that the outcome was also a body blow to TV3's expectations of a financial
fillip as host broadcaster of the Rugby World Cup.
It is also true that some in the TVNZ/Sky camp later attempted to glean some consolation from the debacle in the belief that TV3's aspirations had also been ankle-tapped by the collapse of the All Blacks' campaign. In fact the damage may be more perceived than real.
The architect of the TV3 success story, CEO Brent Impey, seems to have approached the exercise more strategically than was the case previously. Apparently buoyed by the success of what, in the broadcasting game, is inevitably a gamble, Impey is convinced the investment in the hosting rights was money well spent.
"We hoped there would be a further spin-off as the team progressed to the final in Paris but, c'est la vie, we're very pleased with what we have achieved."
In this case TV3 appears to have learned from the financial experience of others while adding an audience cross-over dynamic that has proved its worth.
Impey is adamant that TV3 has gained a "huge advertising advantage" but perhaps more importantly, attracted a catchment of new viewers that previously have not been inclined to switch to TV3.
He is confident most of these converts will stay with the channel as the Cup continues and emerge as a new and perhaps more mature factor in the rating demographics once rugby has faded from our bruised consciousness.
Certainly the ratings from the Cup games have been a significant gain for TV3. It is an open question now whether that audience will continue to watch the remaining games.
But, from a commercial perspective, Impey points out that sponsorship and advertising package sales more than covered the cost of the bid for the host broadcaster rights.
He says "unlike others in the past" (read TVNZ) TV3 is not faced with the necessity to make multimillion-dollar writeoffs as a consequence of the company's involvement with the Cup.
This is a valid point. In a fit of what must be regarded as a reflection of what the Prime Minister once referred to as "the climate of excess" at TVNZ, negotiators bid US$10 million apiece to secure the hosting rights for the 1999 and 2003 RWCs.
The consequences of what subsequent CEO Ian Fraser described as "a completely dopey deal" was a write-down of some $5 million in 2004 and an erosion of the return to the shareholder.
TVNZ was burned and, as a consequence, a great deal more cautious when it came to bidding for the host broadcast rights for 2007.
A short-term alliance with Sky TV saw the "pay" and "free to air" broadcasters putting $7 million on the negotiating table as their joint bottom line. Caution was not rewarded and TV3 gazumped the competition with a bid that was probably between $8 and $9 million, but also took account of not just the TV rights but the needs of the substantial CanWest radio holdings.
A gamble nevertheless when it is generally acknowledged that there is only a slim bonus margin in advertising rates around the World Cup, but one that gives a resonance to the Impey contention that the rugby broadcasts attracted a significant slice of new viewers.
The wild card in the equation was New Zealand's Sunday TV advertising regime and there seems to be some confusion over whether that was factored into the TV3 thinking at the time.
As far as the ever-vigilant eye of the Ministry of Culture and Heritage is concerned it should have been. Within half an hour of the final whistle CEO Martin Matthews, perhaps mindful that his minister, Helen Clark, was gamely attempting to hide her chagrin in the face of an ebullient and jubilant French Prime Minister, Nicolas Sarkozy, was demanding by email a "please explain".
The ministry had made it clear they wanted consultation on this issue and without it they regard the inclusion of advertising in the morning broadcast as a breach of the existing legislation.
Out of place in a secular society these regulations may be, but few politicians are likely to challenge them without being pushed. A breach can earn a fine of up to $100,000. The relevant argument pivots on the act's determination that exemption may be granted if the signal originates outside New Zealand and is directed to a wider audience than the New Zealand catchment.
TV3 had taken account of the requirement and configured the TV3 signal directly out of Paris, while ensuring the signal also reached a potential audience of millions of viewers across the wider Pacific region.
There is perhaps a certain irony in the fact that it was Sky that originally negotiated amendments to the act that allows for the exemption.
The amendment at the time took account of sporting fixtures, such as the US Open golf Tournament, beaming live into homes on a Sunday morning complete with overseas devised advertising. It is also true that TVNZ also received exemptions during the 1984 Los Angeles Olympic Games broadcasts. But the act has been rewritten since then. It may be it was a matter of "it's easier to apologise later than ask for permission first". Apologies from Impey seem unlikely.
The smart money would be on TV3 challenging the "please explain" and advising the ministry they will be taking the issue to the courts, possibly on the back of the Bill of Rights and "freedom of speech".
Throw a prominent QC into a mix where the so-called new media seems free of any stricture, and the legal and political implications could be explosive.
This premise may also be a source of contention on another media front. Newly independent MP, Gordon Copeland, is proposing a supplementary order paper to Parliament that would allow Sky TV to access and transmit Freeview channels without infringing copyright as a supplement to their pay TV programmes.
The free-to-air broadcasters are incensed and the politically hapless Copeland is in danger of being labelled a solitary running dog for the Sky network.
However, the cavalry may be coming to his rescue in the shape of the chair of Parliament's commerce select committee and front bench National MP, Gerry Brownlee.
His committee has been hearing submissions on the Copyright Technology Bill, now in its second reading.
In that context Brownlee has expressed reservations about the opposition to the Sky proposals from free-to-air broadcasters who developed and are broadcasting the Freeview channels.
The issue pivots around the repeal or otherwise of section 88 of the act, but the niceties of legislation will go out the window if it develops into a battle between political parties, the advertising industry and the broadcasters.
Always grist to a media mill.
* John Drinnan's Media column returns on November 9.
* An earlier version of this story incorrectly stated that Herald columnist Fran O'Sullivan was "perhaps the first to suggest the fortunes of TV3 would be adversely affected by" the All Blacks loss. Fairfax executive Bernard Hickey was the Agenda panellist who raised the TV3 issue. Hickey said it would "struggle to make any money out of the rights that it paid."
