Drop it like it’s hot: Paul Thompson on why RNZ is selling its Auckland building

In a recent staff email, the RNZ executive team announced that it was looking for potential buyers to take over ownership of its Auckland building.

The statement explained that building ownership detracted from the focus on content production by diverting resources to the obligations that come with owning and managing property.

RNZ chief executive Paul Thompson confirms the state broadcaster is looking to sell its asset on Albert Street, but says the deal is far from complete.

“We’re only going to sell if we get the right kind of offer, both in terms of price and ongoing tenancy,” Thompson says. “We need a really good landlord. And if that doesn’t come, we’ll continue to be the owner of the building.”

Thompson says the decision to sell the building isn’t being made in a bid to cover organisational costs, but rather to shift focus to what RNZ is actually under mandate to do. 

“It’s not our core business,” the RNZ boss says.

“We’ve done okay at it, but we’re much better at being a media company than a landlord in central Auckland … I’d much rather be able to invest our capital into new services for New Zealand rather than looking after a building.”

This news does, of course, come shortly after the $60 million refurbishment of the TVNZ building, which is just located down the road from RNZ, but Thompson veers away from comparing the two businesses.

“We’re a no-frills organisation,” he says. “We just kind of get in there and do the work. The last thing we need are glittering premises. I’d hate to be in a position where our premises would be more valuable than the work we do for New Zealanders, so I feel very comfortable in our humble, but professional environment.”

The non-commercial structure of RNZ also plays a role, with Thompson saying RNZ doesn’t need to impress commercial partners with flash facilities for ad dollars.   

“We don’t have to hobnob in that sense,” he says. 

Traditionally, media companies have been located where all the action is: the inner city. And while a new office can do wonders for morale, it comes at a big cost. Bauer moved into the trendy Cityworks area a few years ago, NZME moved into a state of its art office last year, MediaWorks renovated its newsroom on the city fringes after the creation of its multiplatform Newshub brand and Fairfax is set to move into a new space in Ponsonby in June 2016. But, conversely, Sky has been happily ensconced in Mt Wellington for many years and, in an effort to save money, Maori TV is moving to East Tamaki after 12 years in Newmarket. 

The GV of the property is $9.7 million, but it is expected to fetch much more. So that will be a welcome boost to the coffers. But by relinquishing its ownership, RNZ obviously has to enter the rental market, which has become notorious for unexpected increases, particularly in the Auckland CBD.

Competition for business premises has increased significantly over the last few years, and this has led to a steady rise in rental prices, forcing some business owners to move their stores.

Thompson says he isn’t concerned about this risk, because it’s one RNZ is already exposed to throughout the country, including Wellington.

On the flip side, he also points out that RNZ is the type of tenant landlords want to work with.

“We’re a blue chip client and we’ll always pay our bills,” he says.

“From a landlord’s perspective, we’re a really good, stable, long-term tenant. And because of the investment we put in with studios, we do tend to stay for longer.”

Signing a long-term lease is also a good way of mitigating the risk of significant rent increases, because it gives RNZ the ability to negotiate a fair deal before anything is finalised.

Funding freeze

The intended sale of the building takes on greater significance when viewed in the context of RNZ facing a funding freeze for the last eight years.

While most media organisations today would love to have the budgets they had access in 2008, $35 million doesn’t buy quite as much as it did back then.  

“It gets tougher every year,” admits Thompson.  

“Even though we’re in a low inflation period, costs do still go up, even though they’re going up slower than before. We’ve had to do things like have a much smaller back office team. We’ve had to really ruthlessly prioritise our resources into roles that create content and support the curation and commissioning of our content.”

This process has led to a reduction in staff of around 20 RNZ staff over the last year. 

“Our staff a year ago was roughly around 285 people, full-time, permanent, and we’re now at about 265,” says Thompson.  

“It’s been really painful, confronting and challenging for us all.”

This week, the Coalition for Better Broadcasting sent out a release linking the decision by the potential sale of the RNZ building to the funding freeze, but Thompson distances himself from this rhetoric.

“It kind of shows a naivety on how these things work, and I would hate for someone to put too much weight on these arguments,” Thompson says.

“It’s just a bit frustrating when people who should be there to support RNZ are telling quite a different story than how I see things.”

Thompson says he would welcome additional funding, but believes the arguments for this should rather be focused on the value RNZ adds to New Zealand. 

Thompson says that RNZ’s radio audiences are market leading and that its digital channels continue to grow. Some staff members at RNZ have been moved into growth areas, such as podcasting (Guyon Espiner is currently away for a few weeks interviewing ex-prime ministers for a new series), and Thompson says this is already generating decent results.

“We’re well ahead of our targets,” he says. 

“We set the goal to be as expert and respected in digital as we are on radio and I think we’ve achieved that goal. What is means is that for the money that New Zealanders invest through their taxes into RNZ, we are rapidly growing the number of people who receive our content.”

Thompson admits that things are far from easy in the current media climate, and that RNZ, like all other major media companies, will have to make more changes in the future. 

“Ultimately, we’ll define priorities and stop doing things that we deem less important. We’re not quite at that point now, but every month we’re thinking about these things.”

However, one thing he’s adamant about preserving is RNZ’s status as a trusted news source.  

“It’s tumultuous times and everyone is under pressure. But for us, it’s about making sure we stay open to new opportunities and deal with them, but that we don’t, at any point, sacrifice our credibility.”   

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