Taking on MySky and DVD box sets

No doubt Broadcasting Minister Jonathan Coleman wants to see TVNZ improve profitability.

But his personal viewing habits highlight the big challenge the broadcaster has ahead of it.

In his interview with John Drinnan Coleman reveals himself to be on the cutting edge of TV viewership.

He is one of a growing number or people who need never watch television ads.

He records shows on his MySky box (which can be watched later ad free) and like millions of viewers around the world he watches the best shows on DVD.

One of his favourites, The Wire - a gritty cops and politics show set on the mean streets of Baltimore - failed to make a ratings splash anywhere in the world when it aired on network TV.

Its global success on DVD and digital download has been interpreted by many commentators as a sign that the networks are losing touch with those most committed to spending time in front of a television screen.

To be fair, local viewing figures on the big networks have been strong this year. The recession might have pummelled ad revenues but it has also kept people at home on the couch.

And to be fair to TVNZ in particular the company has been proactive in developing web content and digital channels. But as newspaper companies have been well aware for the past decade, having a great product online is only half the battle.

The easier half. Making a decent return on the investment required to deliver that product is hard work.

For those who love a challenge the new media environment is an exciting and dynamic place to be. But that does raise the question of whether it is an appropriate place for the state to be playing with taxpayer money.

In business folklore media companies tend to get grouped with airlines and sports clubs as the kind of high risk investments best left for billionaires who want to spice up their lives. The Government just needs to nationalise the All Blacks to complete the set.

Air New Zealand - which is 80 per cent state owned - is a risky business but more easily justified as being of national interest.

Coleman offers two reasons for not selling TVNZ - both typical of this pragmatic government. There is no one to buy it, he says.

That's possibly true this year but eventually the buyers will return and there is scope for plenty of merger and acquisition activity in the Australasian media market.

It is also true that TVNZ is unlikely to ever get the kind of price it might have commanded back in the 1990s before the spectre of the net loomed large over all media companies.

Secondly, and more importantly, Coleman notes that the public is comfortable owning TVNZ.

That is true but odd. In a country that can barely afford to adequately fund schools and hospitals most voters still see it as vital that the nation keeps hundreds of millions of dollars tied up in a television company.

State funding of public good programming has long since been outsourced to NZ on Air. And it often seems like foreign-owned TV3 and TV4 put more effort into local programming as part of a strategy to give their brands a Kiwi flavour.

Still for now National is happy with the status quo with regard to ownership. They will not be happy with the status quo with regard to profits. TVNZ has done pretty well to negotiate the financial crisis thus far.

But even as the advertising market picks up, the broadcaster will find itself in an increasingly volatile media world. The risks are greater than ever and the rewards uncertain.