Why TVNZ should still pay a dividend
NZPA reports:
The Government’s decision to take a dividend from Television New Zealand (TVNZ) “needlessly risks the livelihoods” of the state broadcaster’s workers, unions say.
TVNZ yesterday said it would have a detailed proposal of how it would cut $25 million off its budget by mid-month having last month revealed advertising revenues were 10 percent below budget, which represented an annualised shortfall of income of $30 million.
Quite clearly it is the lack of revenue that is the driver of the job losses, not any dividends. But do they have a point – should the Government not take a dividend, to save jobs?
The answer is no. First of all TVNZ is in a competitive industry. If you remove the requirement to pay dividends, it allows TVNZ to (for example) undercut TV3 in tendering for programmes, and NZ on Air funding. So you may destory more jobs elsewhere if you start playing favourites with one company.
The other reason is the opportunity cost of capital. The unions make profit sound like a dirty word, but it is simply a return on capital. And if that return is not greater than what you can get sticking the money in the bank, then you are effectively losing money on that investment. TVNZ’s return on equity in 2008 was 8.3% which is hardly huge, and I suspect it will be much reduced this year.
March 6th, 2009 at 12:10 pm
Well put.
Of course it raises the issue as to why the state owns the dominant commercial broadcaster. There is no good reason to own shares in a competitive high risk industry, except of course if you think it is a useful instrument of social policy. That, of course, is one reason why the left loves “public broadcasting”, as it always is slightly centre-left at best, as the very existence of state owned broadcasters means it is ok for the state to have some control over what information and entertainment people can see.
March 6th, 2009 at 12:16 pm
I know of one SOE – Transpower – that doesn’t have to pay a dividend. Perhaps being a monopoly is excuses them from that competition test. Of course that raises the question of why they are, when there is no shortage of capability to build transmission lines – that’s an area ripe for opening to Vector, Powerco etc and infrastructure funds.
March 6th, 2009 at 12:17 pm
libertyscott – you beat me to the punch. Though if we sold the mangy, flea-bitten TVNZ off we’d probably see a (God forbid) future Labour government re-nationalise it at 10x the true value.
March 6th, 2009 at 1:10 pm
Only reason Transpower doesnt pay a dividend is due to the capex requirements it has – http://www.ccmau.govt.nz/pdfs/TPL-SCI-2008.pdf – it’s not a philosphical thing, just an issue of funding.
March 6th, 2009 at 1:17 pm
So all that stuff at the summit about 9 day fortnights and saving jobs doesn’t count .
yet again we are seeing hot air instead of a proper stimulus package, and probably in the next month a billion dollar ‘rescue’ of the commercial property sector will be announced ( like the have in Australia).
Will that too be all about ‘saving jobs’, and Im sure DPF will get in line and spout all the pre approved talking points
March 6th, 2009 at 1:19 pm
Ways to save TVNZ (and the taxpayer) money:
1. Cut the glossy self-congratulatory adverts for themselves. We know what channel we are watching.
2. In place of the frequent (and increasingly intrusive) weather bulletins, tell viewers to look out the window.
3. Get rid of meaningless live crosses.
4. Instead of highly paid “personality” newsreaders, use Joe Blow (just so long as he can string two words together) to read the autocue. I don’t care if the face changes every night so long as it is cheap.
(and that’s just the News).
March 6th, 2009 at 1:22 pm
Frankly I could not give a damn how many jobs were lost at TVNZ or TV3. Since when have those bastards ever cared about other people’s jobs. At the forefront of the global warming scam, pumping out one sided alarmist propaganda for all they’re worth, they threaten millions of jobs in the coal industry.
If there was ever any dopey left wing idea out there that bogged down industry and commerce, these losers couldn’t wait to promote it.
They run flagship current affairs programs that are hosted by extreme left wing turkeys who have done their best over the years in subtly attacking capitalism at every opportunity.
Let them both go broke. They’re not needed. What’s needed are news outlets that bring truth, not left wing propaganda.
March 6th, 2009 at 1:22 pm
If you remove the requirement to pay dividends, it allows TVNZ to (for example) undercut TV3 in tendering for programmes, and NZ on Air funding
Dividends are paid according to profits, not some preordained figure you think should be levied to keep them “competetive”..
Companies defer, or not pay dividends, all the time.
Take of your blinkered view and look at reality.
JVH has it in ONE. The jobs summit was a wankfest. Where are the results? this is urgent, but I guess a lot less urgent than passing the fire at will bill.
March 6th, 2009 at 1:30 pm
MyNameIsJack does have a good point. Normal, privately owned companies pay dividends according to their profits, with high dividends when times are good, and low or no dividends when times are tough.
March 6th, 2009 at 1:36 pm
I don’t know how I missed this gem from DPF on first reading Quite clearly it is the lack of revenue that is the driver of the job losses, not any dividends.
Just where do these right wing fruit loops think dividends come from? The tooth fairy?
I seem to recall enormous outrage form right wing fruit lops when labour instructed its electricity SOEs to borrow in order to pay a dividend. Given we know how averse to borrowing to fund super the right wing fruit loops are, do they expect TVNZ to borrow to pay a dividend to prop up national’s failing budget?
March 6th, 2009 at 1:42 pm
“What’s needed are news outlets that bring truth, not left wing propaganda.”
Hear, hear.
TVNZ should be sold to the highest bidder. The state should not be in the commercial broadcasting business, in the first place.
March 6th, 2009 at 1:43 pm
I gotta agree with s.russell.
Being a centrist, I support retaining some measure of interest in TVNZ especially where the health of the local film and TV industry is concerned and public broadcasting (just look at Te Karere – when the subtitles are on, I think its a good wee programme).
But does the Gummint need a divvie right now? Can’t they wait a couple of years?
Jacob. Please stop sucking lemons. Your sourness pervades your writing and sulking isn’t very becoming.
MyNameIsJack. As above, I agree with you on the deferment of divvie’s but as for ranting about the job summit, don’t let yourself be deluded by the old “them and us attitudes” that many left wingers have (but apparently not Laila Harre, eh?). Given the scale of the worldwide crisis (i.e. one so huge as to have never been seen before) it’s time to try new things and while perhaps things won’t happen overnight, why don’t you give it a bit of time before judging.
March 6th, 2009 at 1:59 pm
So now we have the answer from the Left Bank. Government MUST retain all its services no matter the cost and the fact that many were put in place at a time when the accounts were in surplus; Government must forgo income so it can provide for those services (slight problem in that one folks); spend today and forget about tomorrow and prudent management is only something to be discussed after the second bottle of chardoney.
Guys and gals … there is fat in TVNZ. There is also low quality programming and off the wall salaries paid.
But I still don’t have my head around why the need fror a state run TV channel.
March 6th, 2009 at 2:10 pm
Sky is cutting their lunch; people are voting with there wallets; arguments about “the need to own TVNZ to protect local culture” are crap – you can still fun local production (it would just be a more level field where the other broadcasters could play as well), although I dont see why you should. The state owns TVNZ because it always has there is no rational commercial or cultural justification for continued ownership and yet the Nats campaigned on not selling one single state asset.
March 6th, 2009 at 2:13 pm
“But I still don’t have my head around why the need fror a state run TV channel.”
The left have their head around it. Same old arrogant disregard for the fact that it is other people’s money they are spending. (yeah yeah I know its an SOE but if it wasn’t for taxpayer funded “public good” commercials and politically corect or racist programs taxpayer funded through NZ On Air, it would never break even.)
There has hardly ever been an election in recent times in NZ where the public broadcasters have not colluded with the left to release damaging material close to an election in an attempt to swing votes away from National. For these frequent attempts to pervert our democracy TVNZ deserve nothing but contempt.
At the very least, TVNZ should be subscription funded. Let those who want to watch it pay for it. What the hell is wrong with that? (and same goes for Radio New Zealand, another disgusting commie rip off of hard working Nzers)
March 6th, 2009 at 2:20 pm
Of course TVNZ has to return a dividend. As a taxpayer I would rather not be competing with private channels and risking my capital (taxes) but since it seems I have no choice at this time I at least want a return on the investment even if it is a poxy little one. The alternative is for TVNZ to admit that the whole organisation is essentially a big govt make-work scheme- similar to paying a bunch of people to dig holes and paying another bunch of people to follow them filling the holes in.
March 6th, 2009 at 2:20 pm
And I bet there’s still commies under your bed, eh red?
March 6th, 2009 at 2:28 pm
“What’s needed are news outlets that bring truth, not left wing propaganda.”
Utter rubbish, what’s needed is a filthy big FOR SALE sign to be hung outside TVNZ and the Radio Network, the new owners can be as biased as they like, they can be out and out pinko’s like John Campbell or bastions of the truth like Fox news, either way I don’t give a shit because I will not be paying for it.
Any privately owned TV network can and should choose to be neutral, left or right, that is the right of private ownership.
March 6th, 2009 at 2:33 pm
I love it when the fucking world wide right wing conspiracy morons come out to play.
Hey big bruv, care to tell us who owns The Radio Network and why they should sell?
March 6th, 2009 at 2:34 pm
If TVNZ wasn’t spending $A15 million on buying the TiVo rights for NZ they might just be able to pay a dividend without firing 150 people to cut costs.
It would appear that they’re all out of good ideas over at TVNZ.
March 6th, 2009 at 2:46 pm
kiwigreg
you are correct re transpower’s capex, however the point was that if they were in a competitive market that excuse couldn;t be used, as per DPF’s post.
March 6th, 2009 at 2:50 pm
Colonel Masters has it in one. Cut the fat… television program making isn’t brain surgery (it can’t be, because I do it and you wouldn’t let me anywhere near your skull, would you?).
So anyone being paid more than, say, $80,000 a year to do it is being overpaid. But let’s be generous and say $100,000. So, slash the salaries of anyone earning over $100,000 – which would be the executives and the the empty headed autocue readers, mainly.
Good riddance to those who flounce out… let them see if any overseas network will reward them as highly for their “talent”. Fill the gaps by promoting those who’ve been kept in the shadows waiting for the favoured few to move aside (which of course they never will, knowing full well they’d never be as well remunerated elsewhere) and bring in some new blood.
Then cut the other wastage such as the Colonel highlights. Having sourced programming for a community TV channel with an annual budget about the size of a TVNZ newsreader’s salary I can also attest that there’s a wealth of interesting, quality programming out there that doesn’t cost a fortune. Sure it’s not the big name stuff, but how many derivations of “CSI” and “Law and Order” do we really need? And I’m not talking obscure docos in Farsi on camel footcare – Canada and the UK have a lot of material at a reasonable cost for a start.
Then sell TV2, reinvest the proceeds in TV1, remove or restrict advertising (e.g. to between programmes rather than shattering their flow)…
Oh, and hire a few people who can come up with one original idea every now and again. “Q & A” is just another lift from Australian TV, as was the original “Holmes” (a rip of “Hinch”). How much do the programmers get paid for Google searching “TV shows” and stealing everything down to the title?
March 6th, 2009 at 2:59 pm
I agree with libertyscott(which is highly unusual). Why does the government need to own this broadcaster anyway? TVNZ is politically centre left or very left anyway so why not allow competitive businesses to broadcast (hopefully) a range of views.
For every John Campbell (who is normally and reliably to the left of Helen Clark), we might get on a competing channel someone who thinks free markets are OK for example?
March 6th, 2009 at 2:59 pm
Given National’s stated policy of **not** wanting to sell TVNZ, this dividend requirement is clearly idiocy, and DPF’s defensive PR maneuvers are not persuasive. Taking his two defenses in turn:
1. There are many sets of shareholders not insisting on dividends in highly competitive sectors right now, for the simple reason that they understand that the best way to make sure the corporation survives and retains market share in a down market is to keep the capital within the company. That way the capital can work for the company. Unlike this government, most shareholders understand that the way to maximize their long term dividends is to keep the company healthy through downturns. Sometimes foregoing short term income is the best way to ensure long term income. All this means that DPF’s cries about the fundamental unfairness of not insisting on dividends are silly – many private sector shareholders are doing exactly the same thing.
2. Many many people are making less than bank interest on their investments right now. Just ask anyone invested in any mutual fund. As a proponent of free market capitalism, DPF should know that any industry that comes the potential for higher than bank returns also comes with the risk of lower than bank returns. This is one of those low return times across the board. Insisting on bank interest-level returns through the down times in a higher risk, higher return industry is poor business practice because it progressively runs down the company, preventing it from competing effectively.
I agree with critics of this decision, but not for the reason that they often state, namely the adverse effects on real people’s lives. I appreciate that sometimes the government, like any corporate owner, has to make hard decisions that hurt some people for the benefit of some others. Instead, I oppose this decision because it is bad business practice. The effect of insisting on a dividend during a period where firms are declaring losses all over the show is to prevent TVNZ from competing effectively in its sector. Why? Because the decisions of the company’s owners are not based solely on concern for the health of the company – rather for reasons of ideological dogma.
[DPF: Rob is still arguing that John Key is some sort of dogmatic ideologue!! I would say Rob is 10 times more ideological than Key]
March 6th, 2009 at 3:02 pm
Jack
Are you telling me that the government does not own a radio network?, if so I will withdraw my remarks, however I suspect that you are talking through a hole in your spotty arse once again.
Now, how about telling me why it is so vital for the Gummint to own ANY media outlets?
Come on Jack, tell us why, then we can all point and laugh at you and your mind numbingly stupid political ideology.
March 6th, 2009 at 3:10 pm
big bruv (2859) 2 1 Says:
March 6th, 2009 at 2:28 pm
“What’s needed are news outlets that bring truth, not left wing propaganda.”
Utter rubbish, what’s needed is a filthy big FOR SALE sign to be hung outside TVNZ and the Radio Network
http://www.radionetwork.co.nz/
looks like its privately owned to me.
March 6th, 2009 at 3:15 pm
If I recall correctly, Hilary Muir-Clark used to get something like $9 a night to read the regional news in Dunedin. And there was nothing wrong with her presentation. I bet half of these fame junkies would do it for free (or pay TVNZ for the privilege of appearing).
March 6th, 2009 at 3:16 pm
Rob Salmond
First of all the government are not the owners of TVNZ, the bloody tax payers own it and they have a right to demand a dividend.
For nine years we tax payers have subsidised public service and public sector jobs, now is exactly the time when we the owners should be demanding a dividend.
You talk about keeping the company “healthy”, a healthy company does not pay $75,000 to obtain the rights to a BeeGees song for a show that will rate highly irrespective of the bloody theme tune.
TVNZ is representative of the arrogance and waste common in government departments, as one of the owners of TVNZ I want to see cut backs and I want to see costs reigned in, most of all I demand a bloody dividend!.
March 6th, 2009 at 3:19 pm
Jack
Yes I am aware there is “A” radio network, however you and I both know that it not what I was referring too.
Now, care to answer the question?
March 6th, 2009 at 3:21 pm
Why does the STATE (taxpayer )need to own a TV or radio station I mean get over it Its 2009 not the middle of the 20th Century which is where this idea belongs.
If the STATE wants to spew its propoganda it can buy time on any private outlet.
O dont want my taxes wasted on the crapola STATE TV and radio. I happily pay for SKY unlike the buldgers and wankers who all want a free lunch with me paying the cost.
Sell or close down the bloody thing Its a joke as are the Board CEO and the lame duck ‘presenters”
March 6th, 2009 at 3:24 pm
Big bruv, there are many radio networks.
There is one, however, only ONE called The Radio Network.
You suggested selling The radio Network, not A radio network, or even the government owned radio network.
If you are incapable of clearly stating your position why should I, or anyone, take you seriously. You don’t know shit.
March 6th, 2009 at 4:00 pm
My God – I agree with MNIJ – dividends are not a god given right – they vary according to the circumstances of the company. Several listed organisations have already indicated that they are better off commercially to retain earnings for reasons of risk reduction, or for capital investment requirements or paying off debt etc What matters is the return over a period of time. The government should be determing a profit level TVNZ needs to hit and then decide whether to take dividends based on potential capital investment needs etc.
As a pseudo government organisation I see why the pressure is put on TVNZ to behave under commercial pressures otherwise like many government organisations we will see them spending every $ they have and then asking for more. I have never dealt with them as an organisation but the 2nd hand information I received indicates that their biggest issue is their management culture (especially middle) and to be blunt getting middle management to cut costs rarely gets rid of sufficient management. This normally has to be imposed from the very top.
If I trusted TVNZ to behave like a commercial company I would be expecting them to cut costs in relation to their reduced revenue and taking the opportunity to remove the poor quality spending that creeps in to organisations when not under sufficient competitive or management pressure. I don’t trust them to do that. Once again based on limited exposure.
Some listed organisations decide to have “consistent” dividends for market confidence or investment reasons. That does not apply here.
There should be a profit target and the issue of dividends treated as whether the funds are best left with TVNZ or taken out.
March 6th, 2009 at 4:04 pm
Jack
You should take me seriously because I am your elder and (considerably) better, I am also employed which I very much doubt could be said about you.
Now stop being a pratt and debate the issue if you possibly can because I love beating up on left wing lickspittles who have never had an original thought in their life.
March 6th, 2009 at 4:07 pm
The State should own a TV channel so it can create some objectively “good” programming that may edify the general population – something that’s sorely missing as I scan the channels.
TVNZ is some kind of hopeless hybrid that is neither privately owned and 100% focussed on commercial outcomes nor 100% publicly owned and focussed simply on “good” programming.
March 6th, 2009 at 4:43 pm
DPF wrote: “[DPF: Rob is still arguing that John Key is some sort of dogmatic ideologue!! I would say Rob is 10 times more ideological than Key]”
Hahaha – I wrote a long comment attempting to refute the two central claims in DPF’s post. I closed with a brief rhetorical flourish about “ideological dogma.” DPF did bother to write a response to my comment, yet in it he completely ignored the substance of the comment, choosing only to focus on the two word rhetorical flourish (and mischaracterizing it as being personally directed at Key to boot). I think this says a lot about the strength or otherwise of DPF’s main arguments.
March 6th, 2009 at 4:54 pm
So what do you suggest, Jack? A PBS-style show that has all the commercial appeal of a slab of slightly moldy porridge? One that is funded entirely by the state? Oh, I forgot. New Zealand doesn’t have anymore money.
Fernando: That is exactly what is needed. Economies of scale mean we can’t afford the niche-market style PBS from the US so we need a hybrid to ensure that local content is used and some of the wonderful talents in the local TV industry are kept employed.
XChequer
http://thenzhomeoffice.blogspot.com/
March 6th, 2009 at 5:01 pm
Also, can someone please explain to me why the payment of dividend which is from profit (profit that is, not from the cost of running the business in it’s current form) automatically means job losses are imminent??
XChequer
http://thenzhomeoffice.blogspot.com/
March 6th, 2009 at 5:13 pm
XChequer – with you
job losses relate to the ability of the business to support those jobs.
Dividends relate to the success of the business.
I would suggest in this envrionment of reduced advertising income (TVNZ’s main income source I believe) then they need to lose some jobs.
If, and only if, they then make a profit should the owners expect a profit.
Mind you, as they are pseudo government and have crap management I’m guessing the imposition of a dividend is an attempt to enforce commercial strictures on what is by 2nd hand accounts a disfunctional organisation. It seems unlikely to solve the real issues but at least reduce the taxpayers’ exposure.
March 6th, 2009 at 5:21 pm
XChequer
One would hope there’s no link between the job losses and the dividend payment. They’re separate decisions driven by different considerations. Running the two together simply makes for a good story.
Don’t agree that the TVNZ model is exactly what’s needed. I think you go one way or the other – profit or quality programming. Trying to achieve the two is bound to fail on one if not both fronts.
The fact we’ve adopted this hybrid approach suggests to me we don’t value quality programming in this country – hence the fudge.
March 6th, 2009 at 5:54 pm
Fernando
What other sort of model could we adopt? As I blogged above, we can’t afford a fully funded enterprise so what does that leave?
And I don’t agree with your last assertion. Just because we have this Hybrid system doesn’t necessarily preclude quality programming and it certainly doesn’t say anything about our value of such
XChequer
http://thenzhomeoffice.blogspot.com/
March 6th, 2009 at 6:01 pm
slijmbal
But that’s exactly my point. The government is not asking for money from it’s capital investment back, it’s asking for the the payoff. How can that be detrimental? Say the profit is $10m. The govt takes $7m and $3 is reinvested into the company. That still means that no-one has touched the operating budget.
XChequer
http://thenzhomeoffice.blogspot.com/
March 6th, 2009 at 8:33 pm
If TCNZ didn’t concentrate on employing empty-headed but high-paid morons who do nothing but deploy pap both in front of and behind the scenes then I’d agree with those who allege it has some public service value.
However it does both these things. All the time.
So fuck em.
Let the market decide. Sometimes the purist perspective is right, often it’s not. This is one of those times when it absolutely is.
Public broadcasters overseas make some excellent niche programs: The Prize and Commanding Heights being two outstanding examples. However NZ’s population can’t offer the budget, Wild South notwithstanding, which could have been made from intelligent private spending.
Apart from that, wot has public broadcasting ever achieved here? Pap, pap, pap, more pap, pap, pap, pap, pap.
TVNZ’s “achievements” on balance, are susceptible to Cromwell’s line:
You have sat too long for any good you have been doing lately … Depart, I say; and let us have done with you. In the name of God, go!
———
You’ve brought it on yourself you idiots. You have only yourself to blame for declining revenues. Try some intelligent quality, (bzzzzzzt – don’t mean highbrow – idiots) and see what happens.
March 7th, 2009 at 2:34 am
Many here have expressed what I despise the most about TVNZ (TV3 is hardly any different, but it is privately owned), its complete banality. Years ago I wrote about the dumbing down of news and was told it is about “making the news relevant to our audience”.
The truth is TVNZ has brought the worst of local TV news from US commercial channels (which focus on crime, scandal, cute stories and other infotainment pap) with the almost universal centre-left tint of the so called journalists that work there, which are more concerned about style than substance. TV, after all, being primarily an entertainment medium.
TV news is for those who don’t read newspapers, it is about images (so political stories are seen as boring, whereas natural disasters are the best stories), sounds and emoting the news – which Judy Bailey was taught to do back in the 1990s.
Perhaps my favourite braindead TVNZ moment was the first time then South Korean President Kim Dae Jung visited North Korea, and the reporter said something along the lines of “the people of Pyongyang took a day off work to greet the South Korean President and were thrilled to see him on the way from the airport”, when the truth is that people were organised en masse to line the road from the airport and to act for the cameras they knew were on them. TVNZ didn’t for a moment provide any background as to the Kim Jong Il personality cult, the gulags or any of the Orwellian conditions in the country.
By contrast, TVNZ positively lights up when it is about sport, it is the TVNZ comfort zone, it has people who know about that and are enthused, it’s like the news is designed for Joe Beergut who begrudgingly watches the news with Sharlene Shitseasy who say “you gotta watch tha nooose Joe so you noes wots happnin with da stars”.
TVNZ has for too long corrupted NZ’s culture with its own culture of mediocre star worshipping and dumbing down science, politics and history – it is the worst of commercial TV combined with state ownership. If it at least tried to be scrupulously even handed and objective, it could be called that, but it is lazy on that as well.
March 7th, 2009 at 9:05 am