At TVNZ’s new season launch to the media last week, the four men sitting on stage—chief executive and editor in chief Kevin Kenrick, head of news and current affairs John Gillespie, general manager of acquisitions, commissioning and production Andrew Shaw and director of content Jeff Latch—were oozing confidence. And, judging by the skite reel that showed a 16 percent increase in share for One News and 18 of the year’s top 20 shows on its books (as well as improved profitability in the most recent financial report) that’s probably fair enough. And the stand out performer, says Kenrick, has been the news and current affairs department.
- Check out some of the new shows TVNZ announced last week here.
He admits it is one of the most expensive parts of TVNZ’s business. But it’s also one of the most valuable to viewers, it’s a big audience driver and it also plays an important role in the company culture. But like all parts of the business—which has gone from around 950 employees a few years back to 750 employees this year—and all parts of the media, it hasn’t escaped from today’s commercial reality of doing more with less.
“John Gillespie’s team have led stronger audience delivery, reduced costs, increased the revenue that we get from that audience and have improved yield. I don’t think it’s enough to say, ‘Well, we’re just going to get more audience or we’re just going to manage our costs’, you’ve got to do it all.”
He says seven out of its eight news and current affairs shows grew their audience share year on year, a much-improved online and mobile news experience One News Now has been launched and “powered ahead”, it has put new systems and platforms in place, and it has built automated studios.
“Hell, the guys even had to live in a building which was being refurbished and move from one side to another. What’s most impressive about the performance is they’ve done all that stuff, and they’ve delivered for viewers, they’ve delivered for advertisers, and they’ve delivered for the business.”
To some journalistic purists, the perception seems to be that TVNZ’s completely commercial focus has led to a decrease in the importance placed on news and current affairs and more focus on entertainment and opinion. So is that a fair perception?
“I don’t see it. I really don’t. I think there’s any number of industry commentators that have a view … But let’s start with most-watched TV news, most watched TV current affairs, most watched 7pm show. On that measure, we would say we’re doing more right than we’re doing wrong …”
He says there is now nothing in the TVNZ act that talks about public broadcasting and at a literal level it “doesn’t have a public broadcasting mandate or obligation”.
“But what we do have is an obligation to deliver content that is going to be relevant and compelling to a broad range of New Zealanders. I don’t see those as necessarily being that different. If public broadcasting is about broadcasting something that’s in the public interest, that’s not a disconnect to having compelling content that people want to hear.”
Where the criticism often comes with this model is that commercial interests can cloud editorial judgement; that it might go soft on its paymasters or, like the HSBC saga in The Telegraph, not run certain stories. But he says it has a very clear view on that.
“Our newsroom reports without fear or favour. One of the hardest programmes for the commercial side of the business is the annual Fair Go Ad Awards, where we identify the public’s view of the worst ads. That’s always challenging if you’re working with them on the other side but we think that that’s just an example of something our newsroom should be doing, and so we have a clear separation between the commercial and the editorial. My role as editor in chief is also to provide that demarcation between the board and the shareholders and the newsroom, and we jealously guard that impartiality. That’s our credibility.”
He says this is something the board, and particularly chair Joan Withers, who has a whole heap of media experience, has been particularly strong on. And, as an example of that policy in action, if there is a story that needs to be written about TVNZ by the TVNZ news team, the walls come up and they have to go through the comms department.
“Every now and again I get someone that will approach me and say, ‘Hey, I’ve got this really interesting story that you should cover’ and my answer is always the same, ‘go and talk to the newsroom because if I go in there and say it’s a great story, I can guarantee you it won’t be covered’.”
While he’s not involved in the day to day news operation, if something goes wrong, as it did when Shane Taurima was involved with Labour while working with TVNZ, Kenrick says he might get involved in a call, but his main role is to ask a whole bunch of questions.
“The answers always come from the journalist at the time or from the editorial team making that call and I just check that we’re going about it the right way.”
The sharp end
Posted by Seven Sharp on Sunday, August 2, 2015
One thing he believes is going right is Seven Sharp, despite a “chorus of commentators who told us why it was the wrong thing” when it launched.
Perhaps like the current flag debate, the launch of the show seemed to be a classic example of humans responding negatively to change, before forgetting about it and moving on with their lives. Now the show is just part of the evening furniture and he says its success has proven that it is possible for a news programme to have a mix of light and shade; the journalistic equivalent of a sugar-coated pill.
“If we ignored what the viewer wants, then we’re at risk of talking to ourselves and driving the business into the ground … We were really clear that the audience was looking for something different to what the industry was providing at 7pm. If we looked at what we were doing and what 3 was doing, typically the audiences at 7pm were about half what they were at 6pm. You could say that we were half as relevant in that slot than we were in the preceding one.”
Now, he says a typical night would be about 750,000 viewers for One News and about half a million on Seven Sharp. So you could say it’s now about two thirds as relevant, and he says it’s not unhappy with that, because plenty more are watching Shortland St on TV2 at the same time.
“We’ve broken stories on Seven Sharp. Cannabis oil is a recent example of that. We’ve had some things that have been quite entertaining and un-news like too, but at the heart of it it is still informing people.”
So does he think TVNZ gets a fair crack from the other media?
“I don’t care. What I’m interested in is what the viewers think and what the advertisers think. I’d rather deal with the players on the field than the spectators in the stand.”
And he believes there are some historic views around news from some of those spectators that are limiting and becoming outdated.
“If you believe that anything to do with news and current affairs has to be incredibly serious, and it’s got to be very worthy, you run the risk of a disconnect between what you’re doing and what the viewer wants. If we walked outside, and we stopped the first ten people walking past and said ‘Would you like information to be entertaining or unentertaining?’ I’d bet that nine out of the ten of them would say ‘I’ll take entertaining, thanks.’
But not all information is entertaining. And not all information is best served in the form of opinion, something Mike Hosking has made a career out of.
“If I look at any successful business in any industry what they do is they deliver on what on their customers want. For news or for any other industry to say, ‘Well, we opt out of that, we are going to do what we want to do and we’re going to ignore what our customers or potential customers want’ is futile … You can go and ask people what they want or you can put stuff out there and observe what they watch. Behaviour is always a better indicator of preference than research claiming what people might do in such circumstances.”
Some believe that giving the people what they want is a slippery slope away from journalism and towards clickbait, celebrities and entertainment. And for a company that thinks of itself as a serious news brand, there does seem to be a bit of a disconnect between what it covers on TV and the fluff it tends to post on Facebook.
But like all the other media owners we’ve spoken to for this Future Tense series, Kenrick says it’s about having a mix.
“I think the 6pm news is a summary of the news of the day, and it’s an appointment viewing for a whole lot of people. A lot of it is getting into the story behind the story because a lot of the stories just get announced immediately online. It’s about ‘why did that come about and how does that impact me’? At the same time for us we know that there’s a demand for immediacy, and that’s what One News Now is all about … If I look at our news and current affairs output as a whole, I think that we’ve got a growing range of stories that we’re telling and styles of how we’re telling them. I think Sunday is the definitive classic current affairs show and I think it’s stayed true to that for many, many years and that’s why it continues to attract such a huge audience because we deliver something that people want, and they understand and rely on that.”
He says Sunday has dropped to half an hour based on the scheduling of different programmes in the past, but it is “still pretty much the same number of hours over the season”. And he calls Fair Go a bridge between consumer affairs and current affairs. So, given the success of the news and current affairs department, why did it hand over responsibility for some of its Maori and Pacific programming last year?
“There are three key contributors to that. The first one is saying what do we do disproportionately well versus what can we outsource to others who do things really well; so playing to our strengths. That’s why we kept the production of Te Karere inhouse because we do news gathering and production better than most and, therefore, it was unlikely that anyone could do that better or more efficiently than what we could.”
The second part of it was to help support a vibrant local production community.
“There are too many examples of production companies in New Zealand that might spend six months of the year working on some great content but then they completely disband, and they lose all their staff because they don’t have work for the second half of the year and when the try and regroup they may or may not be available. You’ve also got to be prepared to trust others. I think with our Maori and Pacific programmes, for us we view them as taonga, they are treasures for us. They are some of the longest running programmes we’ve got, so we didn’t just hand them over. We have entrusted them to people that we have huge confidence that they’ll continue to nurture and grow them and a lot of the talent we had inhouse have moved with them.”
TV One’s audience has historically had an older skew, whereas TV2 is more appealing to the young’uns, who are increasingly getting their news through social channels (both channels skew female, so to appeal more to a male audience TVNZ is investing in rights to sports like NFL and AFL to add to its partnership with the Lightbox Sport/Coliseum joint venture for a new Freeview pop-up channel). So is that demographic engaging with news and current affairs content?
He couldn’t put an age on it, but in its last financial year, TVNZ’s mobile video streams grew by 44 percent year on year. Since then it’s relaunched One News Now and mobile streams are up 185 percent.
“There’s a fundamental human need to be informed. If you go right back to Maslow’s hierarchy of needs, what’s right at the bottom of the pyramid is safety and security and a big part of that is knowing what’s happening in my world and being aware of the environment that I’m in. I think the need to be informed is as strong today as it’s ever been. I just think the way that people are choosing to be informed is changing quite dramatically. In years gone by what was presumed to be produced on TV was the news of the day because there weren’t that many other sources of news. I think it’s now part of their whole mosaic of where people get information from.”
Slaughtering sacred cash cows
When you look at the growth of new companies like Snapchat, Waze or Uber, TVNZ is fighting against some of the fastest growing companies the world has ever seen. TVNZ reported a net profit after tax of $28.1 million for the year ending June 2015, up $10 million on the prior year. And he says total online video streams across news and ondemand last year was 97 million, which was up 185 percent. But it was only up 19 percent in online revenue year on year (it has now stopped splitting digital and linear revenue out in its reports, but it was $13 million at the same time last year, so its total online revenue clocked in at around $15.5 million). So is that good enough?
“It’s never enough, is it. I think the day that we think we’ve done enough is the day we need someone else to lead the business.”
But he points out that the time spent viewing content online is still at an early growth stage. According to Nielsen’s multiscreen report, 11 billion minutes of online video were watched in New Zealand last year (this includes watching online and streamed through Smart TVs), but there were 186 billion minutes watched on linear TV. As Clay Christensen wrote, the innovator’s dilemma is deciding whether to go all in on a new emerging business or tinker around the edges with the old one. And Kenrick thinks it has the balance right.
“There’s any number of players and media that are either really heavily stuck in a traditional world or they’re at the forefront of what’s new and what’s happening. And the bulk of the markets are somewhere between the two. The ability to blend both of those is critical to success, particularly in a market the size of New Zealand. It’s hard to have a viable, sustainable business if you’re just operating in a niche here.”
There’s no doubt online is growing, but it’s off a small base, and he says it will continue to grow because “you’ve got more fragmentation, and you’ve got more people accessing stuff on more devices”.
“But on-air dwarfs online and will continue to do so for quite some time. What you get is people who will come out and say ‘here’s the huge growth in online’ and as a percentage increase it sounds really impressive. Then I think you have to stack it up against what are the other options. It’s not diminishing the growth of online, but it’s just saying that in the scheme of things, it’s still a whole lot smaller …”
As Nielsen showed, those in the marcomms bubble are not normal. And they often have a barrow to push.
“Most of the spokespeople for whatever’s new and exciting are going to be early adopters. But I think online viewing of content is just breaking into the early majority now.”
And that seems to stack up when you look at the numbers. Back in 2009, TVNZ’s ad revenue clocked in at $298 million. And now it’s up to $313 million. Given the chatter about the death of everything traditional, a lot of people might be surprised about that.
The overall TV advertising market is decreasing, year on year TVNZ’s advertising revenue has fallen and younger people are watching less TV, so there are plenty of challenges. The last time I interviewed Kenrick he said: “As long as the advertising is relevant to the viewer and to the show, and it’s not shouting at you, it’s fine”. Most would argue that isn’t the case on free-to-air TV. So does he see any signs that advertisers are moving away from the shotgun approach of TV—and that consumers are moving toward an ad-free model offered by the likes of Netflix and Lightbox?
“I think there’s always going to be combination. I think that the viewers understand that you either pay with your data, you pay with your time, or you pay with your wallet. I don’t think there’s a one-size fits all thing. Increasingly we’re going to see combinations of all the above.”
At present, TVNZ has close to 750,0000 registered users on the TVNZ Ondemand service that it relaunched earlier this year, so he says it’s entered the big data fray in a big way. And the next goal is to get to two million.
“We’re on track to achieve that in this new financial year that we’ve just started. That gives us a critical mass that enables us to offer really deep rich insights to our content team and a better understanding of what sort of content we should make available. It will enable us to work with data reach advertisers to have far more targeted relevant ads.”
So will TVNZ start charging for content? It sounds like it. Kenrick believes there will be people who will happily pay to avoid ads (Google is trialling something along those lines now and there are plenty of examples, from Spotify Premium to the New York Times). But as Sky’s John Fellet sagely says, buying the content is the easy bit. Making money from it is the challenge. Sky has done that remarkably well and is still bringing in record profits, despite plenty of braying from the vocal minority. And it even gets to show ads on content that people pay for.
“As part of a mix, if you’ve got mass advertising, if you’ve got targeted advertising, if you’ve got no advertising, they all feel like they’ve got a role play.”
TVNZ has found a few ways to, as Kenrick says, “incinerate cash” in the last few years, particularly with the failures of Igloo and Tivo. And the lack of a multi-million dollar impairment as there was last year with Igloo was a major reason for TVNZ’s increased profitability this year, especially given ad revenue fell. So could there be another financial disaster lurking?
“I think the challenge is to put yourself in the shoes of the people who made the decision at the time with the information that was available to them. If I look at Tivo or Igloo or Channel U, I can absolutely understand the logic of that decision at the time and why it was the right thing to do. I think that the market evolves and moves, competitors evolve, and they change their plans and based on that you have to be prepared to reassess those.”
As commercial director Jeremy O’Brien explained recently, TVNZ is also opening up its OnDemand platform to advertisers to create more short-form content in a non-cluttered environment. And Kenrick believes there’s also an opportunity for TVNZ in ecommerce.
“One of the crazy things we have in the media market is media agencies and buyers have shown that they think everybody dies at 55 years of age. If the media industry places little value on people of that age, we might get a better return by participating in e-commerce and selling products and services to that group.”
Like the incontinence undies from Confitex that were shown recently at NZ Fashion Week?
“That’s probably not the first thing that springs to mind.”
It seems like a sitter. And many mass media companies have tried. But very few seem to have made that ecommerce angle work. So can TVNZ?
“Historic analysis is a great identifier of what you should or shouldn’t do. I think there’s a lot of possibility that we haven’t experienced, and we’ve got to look at what’s in the best interest of viewers and advertisers. If we focus on that, I think that we’re spoilt with opportunity.”
Compare and contrast
One reason TVNZ has done so well is that its major free-to-air competitor MediaWorks has had such a bad run with the Campbell Live sage damaging the brand and its reality-heavy strategy not delivering. Kenrick says “by year end the leadership gap between One News and its nearest competitor was the greatest it has been in ten years” and Prime News has occasionally got more viewers than 3 News. And while many have pinned that on TV3 lost its lead-in Home & Away when TVNZ pounced on it after it went into receivership, that was a couple of years ago now, so some we’ve spoken to feel the problems go deeper into the news and current affairs offering. Last year, O’Brien said it’s good to have a strong competitor in the market. TVNZ is probably asking itself whether that’s true or not at the moment. And while there’s no doubt it will be watching what’s happening up the hill with interest, Kenrick says “it’s not for me to critique the performance of our competitors”.
Come on, yes it is. Even so, he wouldn’t take the bait and just like Fairfax’s Simon Tong, he believes the skirmishes with local players are not what the company should be focusing on.
“What happens is within industries and commentators, it’s really easy to get fixated about something that’s close, and it’s visible and at times it can be quite titillating about who got what share of the pie between a couple of local media players. The risk is that you could win the battle, and you still are only the tallest dwarf. The battle really is about how you compete with these global players who would potentially disrupt and displace us from the market altogether.”
So who—or what—does TVNZ see as its biggest competition?
“Advertisers will follow eyeballs so if you’ve got the attention of viewers then that creates opportunities. We have to start with the viewer and in that context the competitors that we are most focused on would be YouTube, Google, Apple, Amazon. You’re talking about companies that have more cash on hand than the annual GDP of New Zealand. We’re going to have to be fleet to foot, we’re going to have to be really focused on delivering for viewers and advertisers and we’re going to find ways to differentiate to succeed against them and hence why we’re attracted to partnerships because you also need to get a critical mass … You’ve got to look at it and say ‘who else could I partner with that together we would be better than what we would be on our own?’”
He wouldn’t give any specifics on what that might mean, but in a strange way, it has already partnered with Sky, Spark, and MediaWorks against M2 Group over the legality of global mode. That’s probably not the kind of partnership he’s talking about and it led some to criticise the local media players for sticking their finger in the online dyke and trying to protect what they felt were anachronistic geographic rights deals.
“All we wanted was clarity. The disappointing thing is that we didn’t really get what we were after. Either the geographic rights are things that would be protected and enforced, in which case we should carry on buying them. If not, then we should stop buying or pay a whole lot less for them. What we really wanted was some legal precedent and a binding determination. What we got was an outcome that kind of addressed the near term problem but it didn’t give us the certainty that we were seeking.”
So as Netflix and other streaming services continue to expand around the world, companies like HBO offer direct access to consumers and big sports teams experiment with paid-for streaming direct to fans, are those geographic rights deals about to come to an end?
“I’m not sure, and I’m not really that concerned. We won’t set the rules of the game, what we need to do is to play within those rules. The part where it gets messy is when the rules are unclear and from that point of view we’re happy to embrace whatever the rules are. We’re always going to be an advocate for a level playing field and we’d back ourselves to compete on one.”
He says you can’t save your way to prosperity. But it has recently restructured the business to bring digital closer into the heart of things—although, with TV ad revenue holding up, its existential crisis doesn’t seem to be quite as profound as those seen in the multi-platform media mongrels of NZME, MediaWorks and Fairfax. Netflix has a famous slide deck detailing its HR strategy and it’s pretty blunt: to paraphrase, don’t expect to be around here forever because the business will change. On a personal level, he says it’s never easy dealing with departures. But he thinks it’s relatively easy to make the business decision. And out of the ashes often rise big, new exciting roles.
“I looked at this business two or three years ago and felt that our profitability and our financial performance was not strong enough to manage the volatility that we’re likely to see in the industry. I felt that we were exposed, and we didn’t have enough fiscal headroom because our profitability was too low by comparison with what you see for some of the media businesses in Australia for example.”
Kenrick, like Weldon and Tong, had no direct media experience before taking the job at TVNZ, something that many think is a good thing in this era. He seemed to keep his head down for a while and learned the media ropes before making too many big decisions. So does he feel like he understands the business now?
“A leader is only as good as the capability of the people that you’re trying to lead. You can’t be a leader unless people choose to follow. The starting point is, as our parents told us when we were little, you’ve got two ears and one mouth and you use them in that order. From that point of view, I’ve been fortunate enough to have some really, really capable people to learn from. I’ve had a group that have indulged me while I have done the learning, and I continue to be guided by the experts in their field within their business rather than assuming that any one person might have all the answers.”
Kenrick is obviously an ambitious chap and those with a marketing background tend to be fairly restless. So will he crack the bottle of champagne on the swanky new TVNZ building and then move on to, as they say in press releases,’ new challenges’?
“For me in any job you can get three things out of it. You can get learning, you can get earning, and you can get fun. I’ve got to say I’m having a hell lot of fun. I’m learning a hell of a lot, and I didn’t come here because of the money. If I really wanted to, I’d go somewhere else if making more money was the most important thing. The balance for me works pretty well, and we haven’t yet delivered what we set out to achieve three years ago. I think we’re making progress, I think we’re on track, and I still think we’ve got a whole lot to deliver before we put a tick on the box and say that we’re satisfied.”