Report slates TVNZ star salaries

By LOUISA CLEAVE

The "culture of exorbitance" at the state television broadcaster has been created by its self-styled "stars" and should not exist in a market as small as New Zealand, according to politicians.

Parliament's commerce committee yesterday released its report following last week's annual financial review of TVNZ.

The top salary at TVNZ is between $740,000 and $760,000, believed to be earned by presenter Paul Holmes, and this was in stark contrast to the salaries received by senior managers at other state enterprises.

The closest figure was $610,000 to $620,000 earned by the head of New Zealand Post, Elmar Toime.

TVNZ salaries were "out of kilter" with public expectations and the size of the local television industry, the report said.

"In many respects the market is a duopoly, in which the two main competing companies are TVNZ and CanWest. In these circumstances the need to offer remuneration packages to attract or retain employees is not on the same basis as larger markets."

It recommended a remuneration committee be set up to scrutinise big salaries, although the committee was divided on the issue of cutting presenters' salaries.

National MPs Lockwood Smith, Pansy Wong and Warren Kyd, along with Act's Gerry Eckhoff, said they did not endorse the move to reduce the "excessive remuneration packages."

Chief executive Rick Ellis had publicly expressed regret at the Hawkesby contract, but the committee urged TVNZ to probe further into the deal to find out if someone should be held accountable.

Overall, the blame for huge salaries, the loss of $12.8 million through damages paid to John Hawkesby and the cancellation of TVNZ's digital plans was levelled at inadequate governance by the board. TVNZ invested $14.3 million in its digital plans without any Government approval.

"We believe the governance structures at TVNZ in relation to remuneration and project management need to be strengthened and we consider that scrutiny of remuneration levels and control of expenditure on the company's digital television project was inadequate."

The report said some form of digital television was inevitable, but careful analysis of the options was needed in an area which was rapidly evolving.

TVNZ was in a sound financial position, although the Hawkesby payout and the digital write-off had affected its financial result in the six months to December 1999.

TVNZ told the committee that advertising revenue was on the increase, but was expected to plateau and then fall at some later point.

The report warns that competition from the Internet and other channels may cause advertisers to move gradually away from television. The loss of viewers to pay television could also affect advertising revenue.

"In that environment, if TVNZ is to remain financially successful, it will need to either reduce costs, increase revenue or both."

Mr Cunliffe said the committee's recommendations to improve lines of communication between the board and management, and address the issue of the Hawkesby contract and presenter salaries, would be reviewed at next year's commerce committee hearing.