TVNZ has posted an interim net profit of $15.2 million for the six months ended December 31, 2021, down $18.7m on the $33.9m reported during the same period last year.
This drop comes despite the fact that the company has increased its revenue and income to $183.7m from $175m.
The major factor impacting the broadcaster's result was the sharp increase in content expenditure, following last year's dip which saw Covid interrupt production pipelines around the world.
The broadcaster's operational expenses of $154.2m are $34.3m higher than last year. The results show content expenditure rose to $94.9m from $68.2m a year earlier.
There was also a spike of $7.6m in non-content expenditure, with much of this going toward TVNZ's increased investment in staff and digital capabilities.
Outgoing TVNZ chief executive Kevin Kenrick said the company was returning to pre-pandemic levels of spending.
"TVNZ achieved a record financial result in FY21 largely due to a lack of content availability and cost constraints designed to preserve cash," Kenrick said.
"We're now seeing a return to pre-pandemic levels of expenditure, and this is powering double-digit growth in digital audiences and growth in total revenue."
Like other media companies, TVNZ has benefitted from an increase in government advertising as the Ministry of Health relied heavily over the past 24 months on media channels to deliver public service announcements during the pandemic.
Asked whether he was concerned that the business might take a revenue hit as the Government starts to pull back on this spend, Kenrick said that he wasn't concerned given that spend was expected to rise in other sectors that were hit hard by the pandemic.
"Spend in sectors like travel and tourism basically dropped to zero. As we see those industries pick up again, I'm confident things will balance out," Kenrick said.
Kenrick reiterated his ambition to ensure that digital growth outpaces declines in broadcast revenue at a time when consumption habits continue to migrate online.
"This has been achieved again in the last six months and TVNZ's market-leading share of TV combined with accelerating digital audiences and revenues provides confidence this momentum will be sustained," he said.
He told the Herald that digital currently contributes roughly 16 to 17 per cent of TVNZ's overall revenue - and that this share will continue to grow.
Kenrick said TVNZ generated cash flow of $18.5m for the six-month period, giving the broadcaster a decent buffer to weather further volatility over the course of 2022.
The responsibility of managing the business through that turbulence will however lie with Kenrick's successor Simon Power, who will take the reins at the business in March.
Power was most recently at Westpac New Zealand where he had been the acting chief executive before the appointment of Catherine McGrath. He was with Westpac for 10 years and prior to that spent 12 years in Parliament as an MP for the National party.
Kenrick first announced his resignation from TVNZ in September 2021, kicking off the recruitment process.
Changes at TVNZ aren't limited to the leadership structure, with this result also coinciding with progression in the Government's plans to merge TVNZ and RNZ.
It's understood a decision has been made by Cabinet on whether the merger of TVNZ and RNZ into a new public media entity will go ahead.
Sources have told the Herald the Cabinet committee signed off the decision last week with the recommendation for approval by Cabinet - and it is understood Cabinet has gone with this recommendation.
The Government is yet to make an announcement on the decision.
Spokespeople for Broadcasting Minister Kris Faafoi and the Ministry of Culture and Heritage would not confirm any additional details on the matter.
Kenrick said he was yet to be informed by Cabinet on the decision, but added that the Government hadn't made a secret of its intentions.
Kenrick said that what the media sector needs right now is certainty on what the course of action will be and what the proposed restructure of the entities might look like.
Critics have expressed concerns that merging RNZ and TVNZ together could prove complex due to the huge cultural difference between commercially focused TVNZ and ad-free broadcaster RNZ.
Asked whether he was concerned about one culture being sacrificed for the other, Kenrick said it was important that the leadership at both entities collaborate toward the development of a new culture for the combined entity.
Kenrick is set to depart TVNZ in March and told the Herald he currently has no immediate plans to take on a new executive role.
"I'm planning to take a decent break. And I'm quite pleased to see travel restrictions easing up, so I'm looking forward to catching up with my son on the other side of the world."
His departure in March will mark the end of a 10-year tenure that has seen the broadcaster caught in the middle of a giant migration of audiences to digital channels.
So, looking back on that decade, does he have any regrets about any of the decisions that he made along the way?
"There are always things that wish you did differently, but that's part of the learning experience," he says.
"I'm not one to live in the world of regrets. I tend to focus on the present. But If I look back [on the impact of digital], I would have moved faster to migrate our audiences to our digital channels."
That job is still not done - and the onus now rests on Power to keep shepherding Kiwi viewers to TVNZ OnDemand.