TVNZ is confident that its programming deal with Warner Bros will remain commercially viable, after making a $12.4 million provision for future losses on its Disney content contract.

TVNZ paid dearly for Disney rights about two years ago. At the time, it skited that with Disney and Warner, it had secured quality commercial content that would draw audiences and keep advertisers happy.

From Warner, TVNZ gets shows such as Big Bang Theory and Mom, while Disney programmes include Grey's Anatomy and Criminal Minds.

But regardless of the shows' attractions, TV viewing habits have changed. Subscription video on demand services such as Netflix, Lightbox and Amazon are eating into the free to air audience.


When it was in receivership in 2013, MediaWorks abandoned its own expensive studio output deals such as the one with Fox. When buying programming, it has become a trend for networks to pick and choose selected shows, rather than paying high prices for deals that provide a secure supply of programmes, but which include less premium content. Unfortunately, that approach leaves gaps in Three's schedule.

Going back to the 1990s, TVNZ was accused of hoarding TV shows, partly so TV3 could not show them.

Twenty years ago, TVNZ had the revenue and profit to camouflage the losses from hoarding. Today, that aggressive anti-competitive approach is gone.

In the new TV market, even mainstream output arrangements can leave a hole in profits.

TVNZ chief executive Kevin Kenrick is comfortable that coming results won't include writeoffs from other output deals such as the one with Warner Bros.

Largely as a result of the Disney damage, TVNZ's net profit was just $1.4 million for the year to June 30, from $12.7m for the previous year.

And taxpayers have forgiven dividends to allow a $60m refurbishment of TVNZ's network centre in Auckland.

Kenrick says the content deals were struck before subscription video on demand was available, and before piracy was a growing issue.


Labour's plan

Upheavals in the free to air sector will inform Labour's media policy. The question is whether Labour will seek fundamental change to TVNZ's highly commercialised, risk-averse strategy.

Labour's broadcasting spokeswoman, Clare Curran, is expected to announce the new policy next week, with at least one significant initiative.

Over the past nine years, some in the media world will have appreciated National's lack of interest in media policy.

The current broadcasting model, built around NZ on Air as a funding agency, was the creation of the fourth Labour Government.

Under Helen Clark's regime in the early 2000s, there was an attempt to contain TVNZ's commercial culture. But that culture has resisted change and a former Labour Broadcasting Minister, Steve Maharey, says it is now beyond tweaking for public broadcasting needs.

At TVNZ, the National Party and Treasury have been generous in allowing lower profits and dividends to finance not just the refurbishment, but also the development of its digital and on-demand offering.

In the private sector, media companies would be under more pressure to maintain profits while financing the transition to digital.

What's not clear is whether Labour will insist on some payoff to taxpayers for making this generous contribution to the survival of a wholly commercialised brand with no social obligations.

Whatever happens with TVNZ, I expect Labour will offer some stabilisation of funding for Radio NZ.

Feeling nervous?

In my opinion, TVNZ will be nervous about the possibility of a Labour Government taking an interest in media again.

Back during the 1996 campaign, some TVNZ staff were working towards privatisation and the broadcaster's dealings with Helen Clark immediately before an election debate created deep suspicion between Labour and TVNZ's management of the day. In the end, Labour didn't win, but NZ First prevented National from pushing ahead with a sale.

This time round, after TVNZ and Three enjoyed huge audiences for their election coverage, Three appears to have figured out that the election is events programming and focused on the melodramatics. Meanwhile, in my view, TVNZ may be questioning its apparent assumption that nobody cares about politics