Small on mediaworks

April 22nd, 2011 at 9:06 am by David Farrar

writes in in the Dom Post:

I come to defend , not to bury him. In the fracas over the Government’s decision to let radio companies pay for their licences over five years, rather than pay $96 million up front, he has taken more than his fair share of unfair criticism.

Oh dear. I expect Vernon will now be pilloried on certain left wing blogs.

Suggestions that Mr Joyce, the communications and information technology minister, had some sort of conflict of interest in helping out the Brent Impey-led company (that Mr Joyce established) survives only till you know that Mr Joyce and Mr Impey are . . . errr . . . not close.

Mr Impey, with Canwest, led a successful “unfriendly takeover” of in 2001- that is, one bitterly opposed by Mr Joyce.

I was unaware of this, and not seen this in any other media. It is a good story that adds new facts to an issue.

The minister initially opposed any deal with the commercial radio sector. To protect himself further, he also sought advice from the Cabinet Office and was told he did not have a conflict of interest. It might have been wiser politically for him to step aside anyway, but that is miles away from any wrongdoing.

Those who have never actually worked in business (like most Labour MPs) have no real idea of what does and does not constitute a conflict of interest. They think that any affiliation or association what-so-ever means you must recuse yourself. This is not so. This would see the Minister of Finance unable to own a home, or the Minister of Agriculture unable to be a farmer.

Of course, it fits Labour’s narrative of a Government pandering to the few not the many, feathering the nest of its rich mates and acting as lobby-fodder for business.

But is Labour saying it wants a hands-off approach to business, whether or not that involves job losses?

WE SHALL never know what would have happened had MediaWorks been denied the payment relief and asked to stump up the full $42m at the end of 2009 – as advertising rates were falling, the economic outlook was bleak and banks were ultra-cautious about lending.

If one or more major media companies had failed, more than 1000 jobs could have been on the line. …

Mr Joyce is also blunt about the political fallout if the Government had said “get stuffed” and one of the big companies had collapsed. Once it was known the Government had rejected a deal at commercial interest rates with all the frequencies held as collateral, ministers would have been pilloried as hard-hearted, far-right, hands-off ideologues.

Is there a single person who doesn’t think Labour wouldn’t have done exactly what Vernon writes above, and lashed the Government for destroying jobs if it had refused the deferred payment scheme, and a major broadcaster collapsed?

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10 Responses to “Small on mediaworks”

  1. Lee C (4,516 comments) says:

    I’m a little frightened by the strident interrogation here. It’s a lot to answer.

    “Is there a single person who doesn’t think Labour wouldn’t have done exactly what Vernon writes above, and lashed the Government for destroying jobs if it had refused the deferred payment scheme, and a major broadcaster collapsed?”

    Are we being invited to detect this single person and name he or she? Otherwise my answer would have be a cautious ‘No’.

    Though I might break down under questioning . . .

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  2. alwyn (380 comments) says:

    Do you know, David, how, if at all, the frequencies were paid for prior to the current regime?
    Were they paid annually or, heaven forbid, did the Labour government let the companies have them for nothing?
    The only reason this story ever had any legs was that the average reporter is both poorly educated and very lazy. If they are given a prewritten tale of supposed malfeasance by someone like Mallard they are very likely to simply run it under their own name.
    It makes an easy and cheap way to fill up the non-advertising columns of the paper.

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  3. kino flo (81 comments) says:

    I thought that Treasury presented data to a draft Cabinet paper (October 2009) that said Mediaworks was in no danger of failing. Making the lump sum payment would only impact their profitability, not their long term viability.

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  4. Viking2 (11,128 comments) says:

    Like any debtoor its always good to get their money even if it takes a while. Better every time than no money.

    And lets face it this is the Hurald and TVNZ and RNZ doing a beat up on the competition.
    Sad for the Hurald given it depreciated its mast head against profits when it suited them. A brand that is rapidly declining to its book value of not much.
    Grasping at straws by the Hurald Editors. (that is if they still have one!)

    Small will be in for a smacked hand won’t he.

    Oh and by the way if I remember correctly that depreciation claimed for their masthead was about 760 million dollars that the tax payer will never ever see. Rather different from a deferred payment.

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  5. Nookin (3,034 comments) says:

    I disgree that Labour has no idea of what does or does not consitute a conflict of interest. David Parker, for example, will have a very clear appreciation of the concept.
    The repeated use of the term is part of what I consider to be dishonest strategy of mudslinging. Labour knows absolutely that the deal was good. 11.2% interest? What is concessionary about that? How the hell did Joyce benefit himself or any mates with that? Labour knows that there is no conflict of interest as the term is properly used. It also knows that the term is blurred around the edges and in the minds of many will immediately conjure subliminal notions of sefl-interest and corruption. The Labour attack is crap. Labour knows it is crap. Labour has no shame and proves daily that it has not learned anything from the last election and that it is unfit to govern

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  6. KevinH (1,131 comments) says:

    Media Works are to be congradulated for pulling off this rescue package, approaching Steven Joyce whom according to DPF’s post, was no friend of Mr Impeys’, takes a lot of nerve and guts. Good work Media Works, it is a tough market out there presently. Media Works will now have to adapt to that situation without the fear of falling over during reform.
    The deal apparently is comprised of a deferment with interest with no cash changing hands( loan) so it’s a relatively good deal that saves the day for Media Works.

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  7. Kimble (4,379 comments) says:

    I think it was stupid not to have the deferred payment option in the first place.

    With a market interest rate being charged the government is actually indifferent between payment now, or payment in the future.

    No scandal. This is a standard commercial relationship.

    Labour might as well be whining that MediaWorks didnt pay with physical cash or gold.

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  8. tvb (4,202 comments) says:

    I do not know why the government demanded the payment in full up front. Perhaps they see it as a property right such as land. But the labour party are being silly. They are very much down to their core voters. But I think the labour party is finished. It’s purpose is done and all they are doing is defending their sacred cows.

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  9. GPT1 (2,088 comments) says:

    The most relevant point here is that the govt did what businesses do all the time. Debtor says “I can’t pay this now but how about over time with interest” and the creditor does a cost benefit analysis. Get the money in due course or flatten the debtor and risk getting nothing – no brainer really. In fact the govt got a damn site better deal than many creditors settle for.

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  10. DT (104 comments) says:

    Are you serious DPF? Mediaworks collapse? Mediaworks is a profitable company. The only issue it had with not being able to pay for the frequencies itself upfront was one of liquidity – Mediawork’s parent company had stripped it to the bone through high dividend payments. It could have found liquidity by going to the debt markets (which given its high gearing probably would have been only at very high interest rates) or by its parent returning cash to the company (which it didn’t want to do). But it wouldn’t have collapsed. The government loans were just a convenient way for Mediaworks’ parent company to avoid going to the debt markets and paying more. That is welfare.

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