By KARYN SCHERER
It was a sunny afternoon and the executives gathered at John Hawkesby's home were in high spirits.
The man who, surveys showed, was New Zealand's most popular newsreader had finally made the move many had been predicting for months - he had agreed to go back to TVNZ, after
a highly successful stint at TV3.
The executives were jubilant. Not only had they managed to reunite what was seen by some as television's dream newsreading team, but they had also snared their main competitor's star attraction. With full glasses of chardonnay, they toasted the state-owned broadcaster's seemingly bright future.
Just one year later, the same executives are under siege.
Not only does the Hawkesby decision look like costing TVNZ several million dollars - money that would pay for dozens of local documentaries - but the company's ambitious plans to capitalise on the new digital age are, so to speak, up in the air.
Former TVNZ executive John Barnett is one of many industry veterans who has watched the saga with considerable interest. Mr Barnett is head of South Pacific Pictures, the production company that makes Shortland Street. The company used to be owned by TVNZ, but in 1997 it was sold, along with a swag of other "non-core businesses."
"Emotionally, they've had an enormous body blow," he says of his former colleagues. But he has little sympathy. "Their core business is free-to-air broadcasting. They lost sight of the ball, and they lost sight of it because neither the chairman nor the chief executive knows anything about broadcasting."
If chief executive Rick Ellis is feeling winded, he is not showing it. In what many in the industry believe to be a stunning lack of judgment, Mr Ellis has publicly blamed the whole Hawkesby debacle on another former TVNZ executive, Neil Roberts, who is now dead.
As for TVNZ's plans to enter the pay TV arena, he makes it clear he has not yet given up hope that something will be salvaged from his grand vision.
Although Roberts is not around to defend himself, his own criticisms of TVNZ are on the public record. Documents leaked to Metro magazine last year showed he was deeply unhappy with the direction the broadcaster was taking before his premature departure.
Among his complaints was the amount spent on consultants (a phenomenon he blamed on TVNZ chairwoman Rosanne Meo), what he described as a "mean-spirited and largely ineffective cost-cutting exercise," and a focus on profits rather than good television.
As far as Mr Ellis is concerned, TVNZ's record since Roberts' departure speaks for itself. When Mr Ellis joined the company in February 1998, he promised to bring "a business focus as opposed to a pure television focus." He has, he maintains, been true to his word.
It is certainly true that TVNZ doubled its profits in 1998, despite a fall in revenue. Its profit for the first half of 1999 was also an improvement.
It is also true that Mr Ellis has achieved something no other chief executive has managed since the advent of TV3 - an increase in ratings. Between 1990 and 1997, TVNZ's average share of free-to-air viewers fell from 88 per cent to 69 per cent. In the past two years, it has picked up slightly to 70 per cent.
But while the balance sheet and ratings have improved, TVNZ has nevertheless appeared to blunder on some crucial business decisions.
There was, for instance, its decision last year to sell its 13 per cent stake in Sky TV to media group INL. TVNZ agreed to sell the shares to INL for $127 million, even though another bidder claimed it would pay at least $7 million more. The same shares are now worth $175 million.
At the time, TVNZ said it wanted it to remain on good terms with INL, the major shareholder in Sky. But, within weeks, Sky made such pronouncements look ridiculous by going behind TVNZ's back to give TV3 the free-to-air rights to rugby and rugby league.
Later in the year, TVNZ again lost out to TV3 for the rights to be the official host broadcaster for the millennium celebrations. There was also the decision, announced on Christmas Eve, that it planned to cut the amount of weeknight advertising between 9.30 and 10.30 on One.
TVNZ denied that the experiment had anything to do with the change of Government, but the advertising industry is puzzled why it has taken so long to heed viewer complaints about the highest level of advertising for a state-owned broadcaster in the English-speaking world.
According to Mr Ellis, TVNZ is in much better shape today than when he joined. During its 12 years of operating under the state-owned enterprise (SOE) model, the broadcaster has gone through several major restructurings, he notes.
"As a result of that whole change process, some of the fundamentals have been overlooked."
Not that he is the only executive in the firing line.
Mrs Meo has also refused to take responsibility for the Hawkesby decision. She has privately claimed she was distracted at the time coping with her dying mother. She also blames Roberts, who she claims was furious with her for not giving him the chief executive's job.
Mrs Meo has already indicated that she will not seek another term, and is staying on only until a new chairman is found.
As is usual after a change of Government, Labour is expected to have a cleanout of SOE boards and put its own people in. New faces tipped to join the TVNZ board include former broadcasters Ian Fraser and Brian Edwards.
Unfortunately for Broadcasting Minister Marian Hobbs, there is a certain irony in the fact that another of the dilemmas she faces is sorting out where TVNZ is going to get the money to convert its transmission network to digital.
It was, after all, a Labour Government that, in 1988, turned TVNZ into an SOE, thereby requiring it to make money its main focus.
In its first five years as an SOE, TVNZ contributed just under $60 million to the Government's coffers. Between 1994 and 1998, it handed over $180 million more. In the first six months of last year alone, its political masters extracted an extra $106 million, thanks largely to the sale of several of its last remaining investments.
Over the same period, the amount of public funding available for local television shows has steadily declined.
The broadcasting fee, due to be scrapped at the end of June, has not moved since 1989. A Government decision to give more money to radio last year has meant the amount available for television has had to be cut from $52 million in 1995 to around $42 million this year.
New Zealand On Air has told the new Government it needs another $15 million to $17 million to do the job properly.
Industry commentator and academic Alan Cocker believes the politicians have only themselves to blame. "If you look at the history of public policy towards broadcasting, it's a very sorry tale of ad hoc policy on the run."
Academic and former TVNZ executive Paul Norris says the TVNZ culture that the Prime Minister is complaining about is one successive Governments have themselves engineered.
It is a point Ms Hobbs does not even try to disagree with.
The board, she concedes, "ran a very successful commercially dominant model. When I talk about changing the board, it's not that there is anything wrong with the board. It's that the appointments I might make also fit in with a changing statement of intent and a changing direction."
The minister has made it clear she wants to see TVNZ focus less on ratings, which is perhaps just as well, given that a cloud remains over the health of its biggest star, Paul Holmes.
What she wants to see more of is the type of programmes public broadcasters around the world are known for. As an example, she cites Queer Nation, a "great programme" that focuses on gay issues.
She is well aware that such decisions come at a price, and that the Government will need to work out where it is going to get the extra money to pay for such local content.
It will not, she says, come from taxes, nor from continuing the broadcasting fee. Among the options a taskforce will be asked to consider is a levy on advertising, and possibly a levy across all broadcasters, both private and public.
But she is determined that TVNZ will be a very different beast in five years.
Over at TV3, meanwhile, the troops are loving every minute of it. It seems they may get the last laugh after all.
By KARYN SCHERER
It was a sunny afternoon and the executives gathered at John Hawkesby's home were in high spirits.
The man who, surveys showed, was New Zealand's most popular newsreader had finally made the move many had been predicting for months - he had agreed to go back to TVNZ, after
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