Television New Zealand Limited and subsidiaries. Statement of Intent. For 4 Years Ending 30 June 2018

Transcription

1 Television New Zealand Limited and subsidiaries Statement of Intent For 4 Years Ending 30 June 2018

2 Table of Contents 1. Introduction 2 2. Who we are and what we do 2 3. Challenges within the operating environment 3 4. What we plan to do: operations and activities 5 5. Statement of service performance 8 6. Capability 8 APPENDIX Consultation, subsidiary and associated companies

3 30 April 2014 Hon Craig Foss Minister of Broadcasting Parliament Buildings WELLINGTON Hon Bill English Minister of Finance Parliament Buildings WELLINGTON Dear Ministers TVNZ is on track to meet its financial goals for the year to June 2014 and produce a result that confirms our position as New Zealand s leading free to air national television and digital media company. This would represent a strong operating result, given the dynamic and extremely competitive market in which we operate. A review of TVNZ s growth strategy was undertaken in late 2013, with refinements made to reflect TVNZ s place and aspirations within the changing media market in New Zealand. The company s core focus remains to engage the hearts and minds of New Zealanders with the most watched content. Despite market challenges, the Board believes TVNZ, through its growth strategy, is well positioned to continue to consolidate its market-leading position, grow the commercial performance of our established properties, and pursue sustainable financial performance improvement through efficiency and improved productivity. The Board has confidence in the Executive team and staff to adapt the business to changing market conditions, increasingly diversified competition and changing behaviours across viewers and advertisers. Yours sincerely Wayne Walden Chair 1

4 Introduction This Statement of Intent outlines TVNZ s strategy for the forthcoming four years. In should be read in conjunction with the Statement of Performance Expectations, which has also been drafted in line with legislative changes. Who we are and what we do TVNZ is a Crown Owned Entity and has a Board of Directors appointed by the Minister of Broadcasting and the Minister of Finance. The Chief Executive has day to day management of the company. The Television New Zealand Act 2003 provides the company editorial independence of which freedom from political influence is a fundamental principle. TVNZ s operations are governed by: Television New Zealand Act Broadcasting Act Companies Act Crown Entities Act Owner s Expectations Manual as published by the Crown Ownership Monitoring Unit. Business Planning Outlook Letter sent to TVNZ in advance of the 1 July start to the financial year. Memorandum of Understanding between TVNZ and the Minister of Broadcasting (for the Pacific Service). Compliance with the current Free-to-Air Code of Broadcasting Practice regulated by the Broadcasting Standards Authority. Compliance with advertising codes promulgated through the Advertising Standards Authority. The policy objectives set out by shareholding Ministers is for TVNZ to continue its transition into a successful national television and digital media company providing a range of content and services on a choice of delivery platforms while maintaining a strong commercial performance. 1 1 Section 12(1), Television New Zealand Act

5 In carrying out its functions, TVNZ must provide high quality content that: (a) is relevant to, and enjoyed and valued by, New Zealand audiences; and (b) encompasses both New Zealand and international content and reflects Māori perspectives. 2 The scope of functions and intended operations of TVNZ are: The commissioning, production, purchasing and archiving of video content, either independently or with others. The provision of television production facilities (field, studio and post production, outside broadcast facilities, design and set construction services). The programming and scheduling of television channels and related marketing services to commercial and non-commercial partners. The provision of advertising and sponsorship services and related marketing activities. The broadcasting and narrowcasting of free to air and pay television channels, programmes and signals on all available platforms and devices. The provision of online services, development and delivery of content for the television, internet and communications industry. The provision of services to the broadcast industry, both domestically and internationally. The provision of audio-visual footage, programming, video and DVD rights, programme listing information, channel packaging and all other content related services and materials. To undertake other media related activities, as determined by the Board. Challenges within the operating environment in FY2015 FY2015 will see a number of long term challenges for the company intensify. They include: Loss of viewers watching linear television Our audience continues to extend and evolve television viewing behaviours (time-shifted viewing, viewing of television content on smart phones and tablets, and online delivery platforms). Viewership of television has declined to pre-gfc levels, as the improving economy has presented viewers with more entertainment options outside the home. 2 Section 12(2), Television New Zealand Act

6 The video content experience is no longer limited to traditional linear television. We therefore must consider the strategic threat, that a growing portion of our audiences shift to over the top or OTT services before we achieve scale in our on-demand services. To mitigate these risks we need to deliver the strongest linear television schedule in the market, drive deeper engagement with our content through social media and integrating on-air and online viewing, further develop TVNZ Ondemand and expand its content beyond catch up TV. Increasing costs of premium international content The cost of television content continues to rise, disproportionately to the return that broadcasters can expect from that content. Local content (including news and current affairs content) is the most expensive to produce, yet remains an integral and differentiating part of the schedules across our channels. Content sourced from overseas returns the greatest yield, yet the price paid for it by New Zealand broadcasters is proportionally higher than broadcasters in other markets pay for the same content. Competing interest for overseas content by local broadcasters increases this further. To mitigate this risk, we are placing greater focus on securing the most compelling content across longer terms and continue to balance our investment across international content investments for optimal yield. Downward pricing pressure on TV advertising NZ has more mass market FTA advertising inventory available than there is demand in the market, and there s increasing global over-supply of static online advertising inventory. Media agencies are keen to use new technologies to standardise online and on-air audience metrics and how they buy that audience. To mitigate this risk we need to maintain our share of TV audiences to deliver reach advantages, invest in content that appeals to higher value audiences, tightly manage our price relative to other media alternatives, and preserve the premium value of online advertising. The risk of an adverse economic event An adverse economic event, whether originating within or outside New Zealand, could negatively impact on the level of advertising spend in this country. To mitigate this risk, TVNZ is accelerating efforts to distinguish its value propositions from those of competitors, both in substance (i.e. content and the accessibility of content) and form (i.e. enhanced advertising propositions driven from differentiating opportunities and integrated media solutions). 4

7 Significant shift in broadcasting policy expectations A significant shift in broadcasting policy or change in shareholder expectations could prove disruptive to TVNZ business momentum and result in weaker operational and/or financial outcomes. What we plan to do: operations and activities TVNZ s focus in the next four years will be on building and maintaining sustainable business growth and delivering a continuous and improved rate of Return on Equity. The TVNZ 5 year growth strategy is our plan for the future of the business, based on our best thinking at the time it was developed. Given the dynamic nature of the media industry we need to regularly review local and international market developments, and adjust our strategic thinking when necessary. Following a strategy refresh in 2013, TVNZ s six strategic priorities are: These are explained in more detail below. Generate the most compelling content Content is what drives our business, and offering the best content is core to our strategy. Includes actions to: 5

8 Develop a deeper understanding of viewers behaviours and preferences to direct our content decisions. Fully leverage significant local content programmes to drive viewer engagement and advertiser integration. Reduce piracy by eliminating the time lag between international and TVNZ transmission of foreign content. Drive flagship TVNZ news and current affairs programmes to increase audience share and advertising revenues. Expand online viewing We recognise that digital has come of age and, therefore, will expand access to video content online. We will expand the reach of TVNZ by extending our portfolio of on-demand video content to more devices and platforms. Includes actions to: Successfully develop and implement a future proofed content management system. Enhance personalisation features and expand content to drive growth in Ondemand. Rebuild and relaunch ONE News online. Extend the reach of TVNZ Ondemand. Deliver Superior Value for Advertisers We will leverage superior reach across TV and online to offer advertisers more opportunities to communicate through the power of video. We will simplify our trading model to more effectively match inventory to client demand and to better demonstrate the value of our products and services, while remaining more cost effective than other media. We will keep pace with industry developments and improve performance measurement as consumer behaviours evolve. Includes actions to: Actively manage TVNZ s relative price to maximise TV advertising revenue growth. Outpace the market growth for online advertising revenue. Accelerate Media Solutions growth. Shape our sales capability to deliver differentiated value to consolidated media trading hubs vs. direct buying clients. 6

9 Champion the value and advantages of TV and online video to media buyers and advertisers. Embrace User-Paid Opportunities We will evaluate options to deliver video content to pay platforms. Includes actions to: Embrace VOD opportunities Optimise the profitability of linear pay channels Focus licencing on sustainable high value opportunities Reduce Operating Costs We will deliver year-on-year reductions in non-programme costs. We will refocus our cost savings achieved on strategic priorities. We will ensure all future investment is aligned to these objectives and, in addition, continue to exit non-core activities. Includes actions to: Complete exit of targeted non-core activities. Exploit building redevelopment opportunities to enable a lower cost future. Reduce non-programming costs. Shape a Sustainable Industry We will assess options to ensure the industry moves at pace, and works with disruptive technologies and trends. Includes actions to: Ensure Freeview s relevance and growth by assessing future technology standards. Preserve and enhance TVNZ Ondemand as a premium advertising environment. Expand TV commercial demographics. Proactively contribute to relevant legislative changes. Engage NZOA to broaden funding for commercial programming. 7

10 Statement of Service Performance TVNZ is granted an exemption under Section 143 of the Crown Entities Act 2004 from including in its Statement of Service Performance outputs which are not directly funded (in whole or part) by the Crown. TVNZ is funded directly to provide one service, namely the Pacific Service, which would otherwise not be provided for on a commercial basis. Due to changes in legislation, further details of this are now included within the separate Statement of Performance Expectations. Capability As part of TVNZ s strategy to engage the hearts and minds of New Zealanders with the most watched content the company continues to strive to ensure it has the right people to deliver on this. This means having an adaptable workforce that isn t afraid of the constantly changing nature of modern broadcasting and digital media companies. As at 31 March 2014 TVNZ employed 822 FTEs in its Auckland, Hamilton, Wellington, Christchurch and Dunedin offices, and its Sydney and London bureaux. In FY2015 TVNZ will continue to: Provide a healthy and safe work environment, and develop its policies in this area in line with new legislation and expectations. Manage change with transparency, respect and support for individuals in order to meet the changing needs of the company. Ensure its recruitment process enables the impartial selection of suitable candidates. Remunerate fairly and consistently in relation to performance, position in salary bands and to the external market. In collective bargaining with the EPMU and PSA, achieve satisfactory outcomes through good faith negotiation. Provide appropriate learning and development opportunities. Demonstrate equal opportunity practices which firmly discourage discrimination. 8

11 Operate a fair, transparent and regular performance management appraisal system that allows employees full participation in their own performance reviews. TVNZ takes seriously its commitment to treating people fairly and with respect, ensuring equality of access to opportunities and understanding, appreciating and realising the benefits of individual differences. 9

12 APPENDIX Consultation, subsidiary and associated companies TVNZ will in relation to any single or connected series of transactions, consult with Shareholding Ministers of TVNZ on substantial matters not contemplated in the business plan including: Any substantial capital investment where the value of the investment exceeds 5% of the book value of equity. Any substantial expansion of activities outside the scope of its core business into new business areas. The subscription for, or sale of, shares in any company or equity interests in any other organisation which are material, involve a significant overseas equity investment, or are outside the scope of its core business. The sale or other disposal of the whole or any substantial part of the business or undertaking of TVNZ. Where TVNZ holds 20 percent or more of the shares in any company or other body corporate (not being a subsidiary of TVNZ), the sale or disposal of any shares in that company. TVNZ will ensure at all times that: Control of the affairs of every subsidiary of TVNZ is exercised by a majority of Directors appointed by TVNZ. A majority of the Directors of every subsidiary of TVNZ are persons who are also Directors or employees of TVNZ, or who have been approved by the Board of TVNZ for appointment as Directors of the subsidiary. In accordance with Section 100 of the Crown Entities Act 2004, TVNZ will ensure that it does not: 1. Acquire shares in a company that gives TVNZ substantial influence in or over that company or 2. Acquire an interest in any partnership, joint venture, or other association of persons, or an interest in a company other than its shares or 3. Settle, or be or appoint a trustee of, a trust, - other than 4. After written notice to its shareholding Ministers and 5. In accordance with the consultation principles stated in the first paragraph above and 6. For the purpose of TVNZ carrying out its functions, and acting consistently with its objectives under any Act and its constitution. 10