The Government’s generosity to private broadcasters

Interesting to see that the Cabinet Minister most closely aligned with Media Works, Stephen Joyce, has apparently approved a generous deferral of payments worth $43 million to Media Works to enable it to renew its license fee for the next twenty years.

Mr Joyce was the founder and owner for 18 years of Radio Works which merged to become Media Works. He retired as Managing Director of Radio Works in 2001 when Can West purchased it.

One has to wonder, is this the same government which has stripped the public service functions from TVNZ, arguing that the country can’t afford to prop up public service broadcasting?

The government appears to have a double standard when it comes to its dealings with broadcasters: a get-tough attitude towards publicly owned TVNZ, and a lenient one for private broadcasters. A big stick for public service broadcasters and a carrot for privately owned ones.

This story shows just how cash-strapped the private equity company which owns TV3, and half our commercial radio stations, is. And how vulnerable broadcasters become when they are reliant on finance from private equity companies, and the likes of Goldman Sachs and the Royal Bank of Scotland.

The incident also highlights why we need at least one publicly owned television channel in New Zealand –a channel that is not owned by overseas companies like Goldman Sachs.

Whatever one’s reservations about TVNZ and the government’s decision to strip it of all of its public service functions, so that it is now virtually indistinguishable from commercial television, at least it isn’t reliant on a cash strapped private equity company.

The incident also highlights that TV3 –and Radio Works—could go broke. What would happen then? I can’t imagine too many buyers lining up to buy TV3 in the present climate.

35 thoughts on “The Government’s generosity to private broadcasters

  1. You omit to say that
    a/ the money goes straight back to govt.
    b/ it’s interest rate is over 11%
    c/ it saves media works from going bust and defaulting on millions of dollars of tax owed.
    d/ it saves hundreds of jobs

    Would you rather media works
    – goes bust
    – defaults on tax owed
    – puts hundreds of people out of work
    – and NZ lose two main tv channels
    – NZ loses dozens of radio stations?
    – NZ pays out the doles to hundreds more poeple
    – NZ loses paye tax from hundreds of people
    – NZ loses on $43 million in licence fees
    – NZ loses 11% interest on $43 million i.e over $4m per year

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  2. According to the figures in the NZHerald, Media Works is already broke – It can’t afford it’s financing. If we really were running a free-market business model economy the government would have refused the loan that they just gave them.

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  3. So Photonz1, the govt is a banker now? What about every other struggling business? They deserve 11% loans from the bank too? Won’t that undermine our Aussie banks? What about the joooobs?

    Govt-involvement seems OK when it’s needed to rescue big business. But they should stay well out of small business affairs eh? Is that what SMEs should aspire to? To get big enough to qualify for a govt bailout? What happened to capitalism’s live by the sword die by the sword?

    You’re telling me Media Works is another that’s “too big to fail”? It’s OK to be a huge and hugely leveraged company, run poorly, because the Govt will save the day? What if this was the standard way to run businesses? Or even our home accounts? Oh that’s right, that did happen and caused a GFC.

    The Govt is going to great lengths to prop-up failed economic models ensuring big business hangs in there for the length of their term in power all the while passing on the costs to this and future generations.

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  4. This is part of the broadcasting licence scheme, where braoddcasters have the option of paying off a 20 year licence over four or five years (with interest), instead of paying up front for 20 years in a lump sum.

    Nine broadcasters took the payment option.

    And we have Greens trying to slander people to try and say it’s some kind of dodgy loan.

    Get out of the gutter – you’re covering yourself in muck.

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  5. If we really were running a free-market business model economy the government would have refused the loan that they just gave them.

    They’re hardly trying to be Friedmanites though, are they.

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  6. Having seen the media updates, unless this story has since just been politically massaged to read differently, I’ll take back some of my comments relating to this matter in particular, but not the overall gist.

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  7. I see that the government has clarified that it is a deferral of a $43 million payment, not a direct loan. So the NZ Herald apparently got it wrong this morning. But it still raises the issue, will the government demand that TVNZ makes a full year dividend to the Crown this year, while at the same time allowing Media Works to defer payment to the Crown of $43 million?

    And how many other businesses are able to defer payments on debts to the Crown such as taxes?

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  8. Sue asks “And how many other businesses are able to defer payments on debts to the Crown such as taxes?”

    For the same years as broadcasting licence (2011 to 2031) – ALL businesses

    There wouldn’t be a sinlge business in NZ who are currently paying their 2031 tax, let alone their 2013 tax.

    This is nothing more than a beat-up out of nothing.

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  9. To be honest, it is things like this that make people like me vote for parties such as the ACT Party. The government should have let Media Works go into receivership instead of lending them $43 million of yours and my dollars.

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  10. john-ston – IT’S NOT A LOAN. – that’s just a beat-up.

    They are simply paying off their licence instead of paying 20 years at once.

    EXACTLY THE SAME as broadcasters have done FOR THE LAST 20 YEARS.

    Back as far as 1989 they had the option of paying a lump sum for 20 years or paying an annual fee.

    It’s a complete beat-up.

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  11. john-ston – IT’S NOT A LOAN. – that’s just a beat-up.

    it’s interest rate is over 11%

    If it isn’t a loan, then why the 11% rate of interest? The last time I checked, interest was only incurred through lending money.

    They are simply paying off their licence instead of paying 20 years at once.

    EXACTLY THE SAME as broadcasters have done FOR THE LAST 20 YEARS.

    Back as far as 1989 they had the option of paying a lump sum for 20 years or paying an annual fee.

    It’s a complete beat-up.

    Photonz, a deferral of payment acts in the same way as a loan – it is tying up money that the New Zealand Government could instead be using in other ways. It might not have the name loan, but it acts in the same way.

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  12. john-ston says “Photonz, a deferral of payment acts in the same way as a loan”

    Nonsense – you can lease a building for 20 years – you don’t pay the whole 20 years up front.

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  13. Nonsense – you can lease a building for 20 years – you don’t pay the whole 20 years up front.

    Strangely enough Photonz, leases can be treated as liabilities depending on the situation.

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  14. john-ston – Broadcasters have always been able to pay for their licence annually.

    Now they’re paying 20 years in just over 4 years.

    And there’s a big beat-up and mis0information campaign about it, false claims and insinuation of corruption of by the minister etc.

    It’s gutter politics at it worst – nothing more.

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  15. Ahhh NZ Herald, that trusty source of news. Not the first time they’ve screwed everyone over.

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  16. Contributors are, unfortunately, wasting their time trying to explain the facts to MPs from the Greens.
    This is an opportunity to smear the Government and to hell with the facts.
    Never waste an opportunity to throw muck around is, I fear, the new Green party motto. I wonder if Mike Williams is advising them? If so they should bear in mind that it didn’t work to well for him did it?

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  17. Photonz1

    The NZ Herald article was written after looking at Mediaworks’ financial statement. Therefore I believe that the way in which the accounting was undertaken means that it is essentially a loan and not a deferred payment. That’s why there’s interest of 11%. In either case that’s $43 million dollars taxpayers don’t have to spend on other things.

    As usual National will say anything to cover their asses.

    You state that nine other broadcasters took that payment option, could you let us know exactly who those nine broadcasters are please?

    Broadcasters have always been able to pay for their licence annually.

    If that is the case, the Government should not have “loaned” Mediaworks anything.

    Alwyn

    This is an opportunity to smear the Government and to hell with the facts.

    I think the facts smear the Government all over the place. Clean up on aisle nine.

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  18. Todd – you proved repeatedly you haven’t even got the slightest idea of how licences are paid for, and have been in the past.

    Yet despite total ignorance of what’s going on, you’re happy to talk of bribery and loans and corruption.

    It is crystal clear who has the really dodgy ethics.

    And who is happy to try to turn a non-issue into a smear campaign.

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  19. I used to help run a radio station so have a reasonable idea of how the licensing process works.

    You’re completely wrong photonz1, I’m not happy about it at all. It completely sux! The fact that Steven Joyce who used to own Radio Works now known as Mediaworks, is now the Telecommunications Minister and “loaned” Mediaworks $43.3 of taxpayer money makes me very unhappy indeed.

    Loan or deferment, it’s still $43 million dollars less that taxpayers have to spend on things like rebuilding Christchurch. You and Joyce are just mincing words to try and cover Nationals arse.

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  20. Photonz1-Deferral will still means a large sum of money will not be coming in to Government coffers as expected. It is obviously fine to effectively fund private media companies yet cut support to early childhood education.

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  21. Todd – just because you repeat your nonsense over and over, it doesn’t change it from being nonsense.

    With four years of installments, Mediaworks will have paid off a 20 year licence 16 years before it expires.

    Previously they could be paid of in annual installments over the whole 20 year period.

    So Mediaworks and all the other broadcasters are paying for a 20 year licence 16 years SOONER that they would have had to previously.

    Under the old system we would have had to wait another 20 years to get the money in annual licence fees.

    Now we get 20 years worth of fees in just the first four years.

    But you carry on with your ignorant nonsense.

    Why let the truth get in the way of Green gutter politics or a smear campaign.

    The term “pig in muck” comes to mind.

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  22. You state that nine other broadcasters took that payment option, could you let us know exactly who those nine broadcasters are please?

    I’m not a green photonz1, haven’t I made that clear to you previously? I think you’re the one who keeps repeating yourself, now that it’s not working you’re resorting to juvenile insults… Which is utterly predictable.

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  23. Now sprout is getting into the muck.

    Previously licences were paid in 20 yearly installments – not in just the first four years.

    So the govt is receiving licnece fees MUCH FASTER than it used to.

    Why don’t you bother to actually do some research and find out some facts before you open your mouth and let the shi… er,.. muck …fall out.

    You can’t even get basic facts about the braodcasting licence right.

    And you repeat lies about early childhood finding over and over, that you’ve probably forgotten that you’re not telling the truth.

    At $1400 million for this year, ECE gets $100 million MORE than ever before.

    That’s $7600 per child per year – over $500 per child INCREASE on last year.

    That’s over $2000 MORE than a primary school child ($5528 per child per year) and nearly $900 more than a secondary school child.

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  24. Todd ask “You state that nine other broadcasters took that payment option, could you let us know exactly who those nine broadcasters are please?”

    Can you not be bothered finding out even the most basic facts of the situation before foaming at the mouth and spitting out rabid allegations of bribery and corruption?

    It says a lot that you are prepared to make such allegations without even bothering to find out the most basic facts of the situation
    http://www.stuff.co.nz/marlborough-express/business/4747311/Government-denies-MediaWorks-loan

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  25. Photonz1

    The article you linked to does not tell me who the nine broadcasting companies are. It just says that Nine broadcasters have made use of the deferred payment scheme since it was introduced in October 2009. Stop being a dickhead!

    Steven Joyce says:

    “I’ve had no dealings with the company in the eight years since”

    Ha! Is that like the “no dealings” with the Exclusive Brethren pre their horribly negative campaign on behalf of National or the “no dealings” like meeting Crosby/Texter to receive advice?

    http://tumeke.blogspot.com/2011/03/is-steven-joyce-corrupt.html

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  26. Todd – you’ve showed repeatedly you have no interest in facts when they get in the way of your preconceived prejudices.

    You don’t even to bother to find out the most basic of facts on mainstream media.

    All you are interested in is making up false defamatory allegations.

    You have shown over and over your ethics are in the gutter.

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  27. Photonz1

    I clearly asked you who exactly the other nine broadcasters were, if you didn’t know, why not just say so? I have read the facts as they’re presented… Not that I have to justify myself to the likes of you. It would appear that it is Steven’s ethics that are in the gutter, and yours for defending another National party con job. If there is nothing further to your argument other than personal insults, there’s not much point carrying on this debate.

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  28. Todd – with gutter ethics like yours, false statements, and slander, and a complete ignorance of the facts of how the licences are paid, and how they have always been paid, my comments about you had all DUE respect.

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  29. Although this arrangement works the same way as a loan, it’s not, because at no time does the government (as the organisation to whom the “repayments” will be paid to) actually have to put up any money, or any tangible property equivalent. There is no cost to the government.

    Its a lot more like a hire purchase agreement. And it works the same way as every other hire purchase agreement, which means:

    a) It eases the need for the purchaser to come up with the money in one lump sum, and

    b) the purchaser pays more in total than they would have had they paid the lump some, and

    c) The seller gets more money in total than he would have had he not offered easy payment terms, and

    d) When you do the math over a 20 year licence term, and accept that governments are permanent institutions with a lot of cashflow, everybody wins, there are no losers.

    Now that last point is important because if this $43m was the only money the government had, then not having it now would be bad. But its a drop sloshing around in a big ocean, so having more money coming in albeit over a longer time is a better outcome for our coffers.

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  30. Then dbuckley we should apply the same conditions and interest rate to other sectors of the community that are having a hard time like all those businesses in Christchurch. I wouldn’t mind deferring a few payments myself. Let’s also get the government to purchase us all new cars because the group purchasing power is just so fantastic! Now that there’s an Earthquake let’s build lots of state houses so there are good places for people to live. Let’s defer payments on the money beneficiaries owe until they can afford to pay it. When socialism is the saving grace of capitalism huh! You say that we don’t need that money while National has spent the last two years justifying all their cuts that impact the poor the most by saying we don’t have any money. Those businesses are working under the free market and $43.3 million dollars is a shit load of money in anybodies books, if they cannot meet their obligations then they fail. That’s commercialism for you. Live by the sword and die by the sword, isn’t that what the dog eat dog world of the free market is all about?

    Your still a dickhead photonz1.

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  31. Nice rant Toad, but not a single one of your examples, or wishes or whatever is a comparable situation. And I’ve no idea where you get socialism or capitalism from.

    You also misquote me when you say “You say that we don’t need that money”, we do need that money, and we’ll get it all, and more. And over the timefreames of governments, more is better.

    You’ve even played the earthquake card, it’ll take a decade or two or maybe more for my region to rebuild after this tradgedy, but that is still a tiny timeframe compared to how long we’ve had a government that collects taxes, and how long it’ll still be here for.

    You need to step back and apply perspective.

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  32. Tood says “Your still a dickhead photonz1.”

    Adds hugely to your arguement Todd.

    You keep going on about beneficiaries owing money to winz.

    The normal situation is the money flow is the other way around.

    Not that that has any parallel with broadcasters paying for licences 16 years BEFORE they are going to use them.

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