A merger between the advertising-free Radio New Zealand and its commercially driven state-owned cousin Television New Zealand should take a mix of both private advertising and government funding, says TVNZ's chief executive, Kevin Kenrick.
"If this is going to be an entity that is reliant on taxpayer funding, I think there's an obligation on those involved to ensure that there's money well spent," said Kenrick, speaking to reporters after appearing at an annual parliamentary select committee review of both broadcasters.
"I think crowding out commercial revenue and replacing it with taxpayer revenue doesn't seem the most efficient way to go about it, as opposed to applying the taxpayer funding to things that wouldn't otherwise show up."
Some $293.2 million of TVNZ's total revenue of $310.7m in the year to June 30 last year came from advertising, with the TV business making just $2.9m in net profit for the year, although Kenrick described "stable revenue as the new growth in media". Reflecting this, the government has agreed that TVNZ will not pay dividends for the foreseeable future while it invests in competing with global streaming behemoths like Netflix and Disney TV.
Government funds contributed $43.4m of RNZ's total revenue of $45.6m for the year to June 30, in which the online and radio broadcaster declared a deficit of $465,000. Unlike TVNZ, RNZ is not constituted as a profit-making business and operates to a charter of public good obligations set by the government.
Ministers have since decided to consider merging its two broadcasting organisations, RNZ and TVNZ, and this week announced that accounting firm PwC would develop a business case to examine the proposal and report back by mid-year.
"This is not my decision," said Kenrick of the funding mix for a merged entity. "MCH (the Ministry of Culture and Heritage) is driving the process, the government's going to make the decision. As a taxpayer, I wouldn't want to see taxpayer money wasted."
Nor should the needs of advertisers be ignored.
"We also have to consider that advertisers use advertising to build brands, promote products and services, and grow their businesses. I don't think we should lose sight of that either."
Asked by National Party broadcasting spokesperson Melissa Lee whether he was concerned about whether the commercial and public service cultures of the two organisations could be successfully merged, Kenrick acknowledged "a lot of commentary on the issue."
"The way we think about it is we see a group of people delivering on the mandate they've got and the mandate of RNZ is completely different from the mandate of TVNZ. If there's a future world with a future entity with a new mandate then you'll attract people who are up for doing that and that will be the culture. So I don't have any fear."
He also doubted that a merger would necessarily play out in the same way as a normal commercial merger where duplicated costs would be stripped out and jobs lost.
"I think that there's an acknowledgement at the heart of this is that journalism is at risk, so how do we not only preserve but enhance journalism in NZ is the purpose here?" Kenrick said.
He pushed back on concerns that the merged entity might crowd out private sector broadcasters seeking the same pool of advertising funds.
"Personally I find it amusing when we talk about massive scale. Massive is the global players that have got US billions of dollars. That's what massive looks like. You could aggregate 100 per cent of all local media in New Zealand and it's a slightly taller David against the world's Goliath.
Appearing before TVNZ, RNZ's chair Jim Mather and chief executive Paul Thompson weathered pointed questioning from both National and Labour MPs over the "miscommunication" they said had led to political embarrassment for the government over the last week on the future of the Concert FM classical music station.
It appears that the confusion arose in a meeting in late January with Broadcasting Minister Kris Faafoi, who thought he had asked RNZ to stop work on all aspects of the plan to shed Concert FM staff and use its FM frequencies for a new youth-oriented music, current affairs and lifestyle station.
RNZ went ahead with consultations with potentially affected staff, provoking an outcry from Concert FM listeners, including Labour heavyweights Helen Clark, the former prime minister and Michael Cullen, her former finance minister.
By early this week, Prime Minister Jacinda Ardern had made clear her displeasure and announced that the government was actively investigating freeing up FM frequencies that had been held aside for youth programming for more than two decades, and which RNZ had been told last year by officials would be difficult to access.
Trying to find positives in a situation that has seen some public calls for his resignation, Thompson said the outcome would allow Concert FM to continue while also allowing RNZ to offer public broadcast products to the younger listeners, where RNZ currently rates poorly.
"Most of our listeners are old," he said. "The outcome is positive and probably the most significant opportunity that's happened in public broadcasting in years. It was certainly not a manipulated situation where we tried to engineer that. It's turned out well, though, which is good."