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TRANSCRIPT
Inspiring New Zealanders on Every ScreenTVNZ ANNUAL REPORT FY2007
�Environmentally responsible paper manufactured using Elemental Chlorine Free (ECF) pulp sourced from sustainable, well managed forests
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contents4 Chairman’s Review
5 Chief Executive’s Overview
7 Financial Performance
8 Summary of Statistical Information
9 Two shows total 50 years on air
11 Local Content
14 Achievements against Statement of Intent
17 TVNZ’s Digital transformation
21 Funeral of Te Arikinui
23 Charter Performance Measurements
26 TVNZ in Society
27 ‘Hands-on’ careers visits a hit with kids
31 Financial Statements
66 Corporate Governance
68 Directors’ Profiles
70 Management Structure
71 Main Locations
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CHAIRMAN’S REVIEW
Television New Zealand has experienced a journey of significant change during the past 12 months, which now positions the Company to take an important leadership position as New Zealand’s largest public broadcaster in the digital and broadband environment of the future.
The Company’s strategy for building sustainable public value in this environment was concluded late last year and titled ’Inspiring New Zealanders on Every Screen’.
Essentially the focus has been on investing in the infrastructure and partnering with our many key stakeholders, to build upon our leadership in local content and increase its accessibility to New Zealanders through screen devices connected to platforms other than just traditional television.
The Government approved the Freeview digital free-to-air television platforms for satellite and digital terrestrial in June 2006, and subsequently demonstrated material support for our new strategy by approving funding for two new digital channels to be launched in September 2007 and March 2008. These new digital channels will dramatically enhance our public broadcasting delivery of local programmes in an advertising-free environment.
The launch of the TVNZ ondemand service in March 2007 was an industry first, and has already gained tens of thousands of new programme viewers ‘on-line’.
The Board has approved the infrastructure investments required to support the digital transformation at TVNZ, and the executive leads a comprehensive organisation redesign to ensure we are properly resourced and organised for the digital future.
Contemporary to the organisational design, TVNZ has a new leadership team in place with the skills and experience to give confidence for the future in delivering our current goals and strategies.
Against a backdrop of a soft advertising market resulting in advertising revenue declines year-on-year, the Company began to see pleasing improvements in the performance of TV ONE towards the end of the financial year.
Whilst the Company did not achieve its budget, an operating profit of $9.3 million was satisfactory in the circumstances.
Transformation costs incurred in repositioning the Company for a return to profitable growth resulted in a net bottom-line loss of $4.5 million.
I give my own, and the Board’s, thanks to all staff for their effort and loyalty in what has been a very challenging year of change.
Sir John Anderson Chairman
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CHIEF EXECUTIVE’S OVERVIEW
Tena koutou katoa.
The foundation for all Company activity this year was the development of TVNZ’s five-year strategy ‘Inspiring New Zealanders on Every Screen’. During the second quarter we began the process of organisational design required to reposition the Company to deliver against that strategy in the years ahead.
The key elements of the strategy focus on TVNZ delivering significant and enduring public value through local content leadership, and broadening the accessibility of that content to all New Zealanders through whatever screen device attached to whatever platform they choose – on a PC, on a mobile device, or via the TVNZ website or partner websites.
In November 2006, the Company announced that it would launch TVNZ ondemand, and this was done in March 2007. The Government confirmed investment in the Freeview platform in June 2006, and subsequently approved funding for TVNZ to launch two new digital channels on the Freeview platform.
The first of these, TVNZ 6, to be launched on 30 September 2007, delivers unique local content through its three services, TVNZ Kidzone, TVNZ Family and TVNZ Showcase. A second information-based digital channel, TVNZ 7, is to be launched on 30 March 2008. Through these two channels, TVNZ aims to deliver an advertising-free service that will permit shared family viewing and meet a clearly-expressed demand for high-quality news, factual, arts and children’s programmes.
During the year, we concluded news and current affairs distribution partnerships with Yahoo!Xtra and stuff.co.nz, expanding our accessibility of news and current affairs content to New Zealanders. And, in a first for Australasia, we signed a deal with Google to make our local content available globally through YouTube.
Following the Board’s approval of the digital technology required to dramatically improve our agility as an organisation in the future media and broadcasting landscape, the Company began a significant infrastructure transformation to facilitate the delivery of the five-year strategy.
In addition, the Company embarked on an extensive organisation redesign to ensure our organisation is fit for purpose and affordable. The redesign was led by up to 50 staff and involved wide consultation with employees, unions and some external stakeholders.
Regrettably, an outcome of this project was the disestablishment of over 100 positions. Transformation costs are recognised in FY2007.
The core of our business remains TV ONE and TV2. TV ONE improved its performance during the last six months of FY2007 following the re-branding of the channel, along with programme and schedule changes. While creating consistency in time slots and programme offerings was an important factor in the re-branding, local content was key. Event programming such as This Is Your Life, Dancing with the Stars and Intrepid Journeys captured outstanding audiences and re-established their belief that TV ONE is ‘the heart of New Zealand’.
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CHIEF EXECUTIVE’S OVERVIEW (continued)
All TVNZ current affairs programmes performed strongly in the second half of the fiscal year, in particular Sunday, Fair Go and Close Up on TV ONE and 20/20 on TV2.
On TV2, some of the overseas hit shows like Desperate Housewives, Lost and Grey’s Anatomy did not achieve their record ratings of FY2006, but nevertheless continued to be the top performing international programmes in New Zealand, while Shortland Street was once again the country’s favourite local drama.
During the year we celebrated some significant milestones: the 30th year of Fair Go, the 20th year of Tagata Pasifika, the 15th year of Shortland Street, the 10th year of Breakfast and the 100th episode of Eye to Eye with Willie Jackson, demonstrating again New Zealanders’ appreciation of New Zealand programmes on New Zealand’s largest public broadcaster.
TVNZ’s local content leadership would not be possible without the creative ideas and talents of the independent production sector, on whom we depend for a wide range of quality programmes of all genres. Additionally, continued Government funding for local content both directly and indirectly through the Ministry for Culture and Heritage, NZ On Air and Te Mangai Paho is critical to maintaining local content hours on TV. Excluding independent productions funded through NZ On Air and Te Mangai Paho, nearly 80% of our investment in local content comes from our commercial revenues; consequently, as our revenues have declined the importance of continued public funding has increased.
The performance and behaviour of the TVNZ leadership over the months and years ahead will be an important factor in driving the cultural change needed for TVNZ to thrive in the future and to deliver the public and commercial value that we aspire to.
Whilst the necessary restructuring of the past few months has been difficult and painful for some staff, the Company is now repositioned for profitable growth and has in place a leadership team committed to striving for the outcomes that New Zealanders expect of us as their public broadcaster.
I know that TVNZ staff and leadership face the future with confidence and are committed to ‘Inspiring New Zealanders on Every Screen’.
Ma to tatou whakaiwituna i a tatou e kore te taura here i a tatou e motu.
Rick Ellis Chief Executive Officer
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FINANCIAL PERFORMANCE
TVNZ has reported an operating surplus (before non-recurring items, interest, expenses and income tax) of $9.3 million. This represents a decrease of $10.7 million on the prior year result of $20.0 million.
The decline in this operating surplus was due to a reduction in operating revenue of $34.6 million to $375.2 million. This decline in revenue was predominantly due to lower advertising revenue ($21.9 million), lower satellite sub-lease revenue ($9.3 million) and lower trading revenues ($5.8 million).
The television advertising market declined 3.0% in the year ended 30 June 2007, while TVNZ’s decline in advertising revenues was 6.5%. The decline in revenue resulted from reduction in audience share for TV ONE and TV2 and reduction in people watching television due to the fragmenting viewing audiences.
The decline in satellite sub-lease revenue was matched by a decline in satellite operating lease costs.
The decline in operating revenues of $34.6 million was partially offset by a decline in operating expenditure of $23.9 million. Reductions were made in operating lease costs ($11.6 million) and programme utilisation costs ($5.0 million) along with other operational and administrative costs.
As a consequence of the declining revenues, rapidly changing audience and advertising needs, and the acceptance of a five-year strategy for TVNZ by the Shareholding Ministers, the Company embarked on a comprehensive reorganisation programme. The objective of the reorganisation was to align the Company with its five-year strategic plan and to reduce the operating cost structure.
A one-off charge of $11.1 million has been recognised this year for costs associated with this reorganisation, including redundancy, outplacement, consultancy and other costs associated with the reorganisation.
The result of this one-off non-recurring charge is that TVNZ has reported a net loss for the year of $ 4.5 million. No dividend will be paid to the Shareholder from this year’s trading results.
FY2007 FY2006
Measurement Actual Target Actual
Profitability Return on Average equity -2.3% 9.0% 5.7% EBITDA*/Core Television revenue 7.7% 13.0% 10.5%
Gearing Net interest bearing debt/Net interest bearing debt plus equity 18.0% Less than 40% 19.8%
FinancialStability
Total equity/Total assets 62.0% More than 50% 63.7%
InterestCover
EBITDA*/Interest expense 6 times More than 4 times 387 times
* Excludes non recurring items
FINANCIALMEASURES In the Statement of Intent for FY2007, TVNZ undertook to report against the following measures:
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SUMMARY OF STATISTICAL INFORMATION
Channel share is the proportion of the available television viewing audience in a particular demographic that is watching each channel. The graphs below are not directly comparable with one another – each is specific to a channel’s target demographic (age range).
TOP PROgRAmmEs F Y2007 - ALL chANNELs,
5+ dEmOgRAPhic
Channel 000’s
Dancing with the Stars TV ONE 791.3
Fair Go Awards 2006 TV ONE 775.9
Auction House TV ONE 737.1
Animal House TV ONE 674.5
F&P Netball NZL v AUS T3 TV ONE 654.8
Fair Go TV ONE 644.6
Tri Nations AB v RSA Sky Sport 1 613.7
This Is Your Life TV ONE 605.0
Going Going Gone TV ONE 596.9
Mucking In TV ONE 585.8
National Bank Country Calendar TV ONE 585.2
NZ Idol Grand Final TV2 582.4
The Vicar of Dibley Specials TV ONE 573.9
Desperate Housewives TV2 573.7
National Bank Cup Netball Final TV ONE 567.2
Tri Nations AB V AUS Sky Sport 1 558.7
The World’s Fastest Indian TV ONE 556.7
One News TV ONE 548.7
Location Location Location TV ONE 547.1
The Rich List TV ONE 543.4
* Results in thousands of viewers 5+ (averaged)
PEAK shARE (6Pm-10.30Pm)
0 10 20 30 40 50 60 70
TVNZ (5+)
TV ONE (25-54)
TV2 (18-39)
TV3 (18-49)
PRIME (25-54)
CHANNEL SHARE
FY2007FY2006
ALL dAY shARE (6Am-midNighT)
CHANNEL SHARE
0 10 20 30 40 50 60 70
TVNZ (5+)
TV ONE (25-54)
TV2 (18-39)
TV3 (18-49)
PRIME (25-54)
FY2007FY2006
Two of Television New Zealand’s longest-running shows achieved significant milestones during FY2007, with Fair Go celebrating 30 years on air and Tagata Pasifika 20 years.
Fair Go’s mixture of tenacious investigative reporting and light-hearted stories on behalf of consumers who have been ripped off, short changed or given the run-around has made the show consistently one of TVNZ’s best-rating programmes.
Fair Go began in 1977, the creation of presenter Brian Edwards and producer Peter Morritt.
Over the years, Fair Go presenters have been household names. Following in Brian Edwards’ footsteps, the show’s high-profile reporters have included Judith Fyfe, Hugo Manson, Kim Hill, Sean Plunket, Kerre Woodham, Carol Hirschfeld, Rosalie Nelson and Liane Clarke.
Kevin Milne, who joined Fair Go in 1984 and has been presenting it since 1993, was made an Officer of the New Zealand Order of Merit in the 2007 Queen’s Birthday Honours for his services to broadcasting and the community.
Tagata Pasifika began in 1987 as a niche market show targeted at Pacific Islanders but today has wide cross-over appeal, with 70% of its 100,000 viewers a week being non-Maori or Pacific Island.
It is screened twice a week on TV ONE, repeated on Maori Television, and beamed around the Pacific. For homesick Pacific people overseas, the show is available on tvnz.co.nz, and now regularly reaches over 30,000 online viewers a month.
Tagata Pasifika’s presenters, film and television actor Robbie Magasiva and athlete Beatrice Faumuina, are instantly recognisable to all New Zealanders and – as two highly successful young people of Samoan descent – inspirational for the show’s audience, says producer Stephen Stehlin.
“Seventy per cent of Pacific people are under the age of 30, so Robbie and Beatrice are iconic Pacific Islanders of the younger generation.”
TWO SHOWS TOTAL 50 YEARS ON AIR
▲ The Fair Go team, left to right, is: Hannah Wallis, Sandra Kailahi, Kevin Milne, Simon Mercep, Greg Boyed, Erica Wood
▲ Tagata Pasifika presenters Robbie Magasiva and Beatrice Faumuina
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LOCAL CONTENT (NEW ZEALANd-mAdE PROgRAmmiNg)
TV ONE, 6Am-midNighT TV ONE, PEAK
Local content
International content
Local content
International content
TV2, 6Am-midNighT TV2, PEAK
Local content
International content
Local content
International content
TVNZ, 6Am-midNighT TVNZ, PEAK
Local content
International content
Local content
International content
53.9
46.1%
48.9%
51.1%
19.6%
80.4%
18.3%
81.7%
36.8%
63.2%
33.6%
66.4%
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LOCAL CONTENT (NEW ZEALANd-mAdE PROgRAmmiNg)
hOURs OF FiRsT RUN LOcAL PROgRAmmiNg 6Am TO midNighT BY gENRE
The following graphs present a snapshot of total hours of new, New Zealand-made programming, across both channels, in all genres monitored by TVNZ.
0 5 10 15 20 25 30 35
ARTs
2007
2006
2005
25.5
32.0
32.0
0 10 20 30 40 50 60 70
dOcUmENTARY
2007
2006
2005
70.8
72.3
69.0
0 250 500 750 1000 1250 1500 1750
NEWs & cURRENT AFFAiRs
2007
2006
2005
1416.0
1471.7
1528.3
0 50 100 150 200 250 300 350
cOmEdY & ENTERTAiNmENT
2007
2006
2005
115.5
215.8
343.3
0 25 50 75 100 125 150 175
dRAmA
2007
2006
2005
159.3
154.7
149.5
0 40 80 120 160 200 240
chiLdREN & YOUTh
2007
2006
2005
260.4
253.3
244.2
280
▼ Shortland Street, TV2 ▼ Piha Rescue, TV ONE
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* Special Interest incorporates Maori and Pacific programming, including Maori News; religious or spiritual; natural history; gay and lesbian; disability; rural; ANZAC; Asian.
0 20 40 60 80 100 120 130
PRE-schOOL
2007
2006
2005
133.4
50.7
1.1
0 150 300 450 600 750 900
POPULAR FAcTUAL
2007
2006
2005
787.0
659.5
680.5
0 50 100 150 200 250 300 350
sPEciAL iNTEREsT*
2007
2006
2005
310.1
309.6
320.6
0 15 30 45 60 75 90 105
LiFEsTYLE
2007
2006
2005
40.0
51.5
94.0
0 100 200 300 400 500 600 700
sPORT
2007
2006
2005
422.2
667.0
600.2
▲ Intrepid Journeys, TV ONE
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ACHIEVEMENTS AGAINST STATEMENT OF INTENT
Each year TVNZ prepares a Statement of Intent (SOI) to provide information that will allow the New Zealand public to understand where their largest television public broadcaster is heading, and how it intends to get there.
In FY2007, TVNZ stated its Core Business Strategy and identified six intermediate Strategic Goals that would guide specific activities for the year. For each goal there were a number of related operational objectives on which the Company’s activities would focus over the year.
STRATEGICGOAL1AchieveourcommercialobjectivesandenhanceShareholdervalue
OBJECTIVEAchieve sales revenue targets
COMMENT Total television market revenue declined during this financial year, which resulted in the initial advertising sales targets not being achieved.
During the year TVNZ extended its sales offering by establishing a Digital and Interactive Sales team charged with deriving revenue from emerging business streams, including the TVNZ ondemand online platform. Advertiser response was extremely positive, with sales results ahead of forecast. Further revenue opportunities will be developed as TVNZ continues to develop its strategy of ‘Inspiring New Zealanders on Every Screen’ and monetising this strategy.
OBJECTIVEAchieve ratings and audience share targets
COMMENT TV ONE has seen considerable improvement in channel performance since the introduction of a new programming strategy and supporting brand proposition in early 2007.The channel profile has improved significantly as measured by qualitative surveys, and the ratings for many key primetime programmes have improved over the past six months.
TV ONE achieved an average audience share of 26.5 against its target demographic All People (AP) 25 – 54. This was slightly below target due to a loss in audience in the pre-7pm time zone. The channel held audience share year-on-year post-7pm with a number of significantly improved ratings results. For example, the return of Sunday Theatre and the introduction of entertainment to Tuesday nights with Dancing with the Stars
showed measurable improvement over the previous year’s performance in these slots. We have a well-developed strategy in place to address the year-on-year loss in audience in the 5.30pm to 7pm time zone.
TV2 achieved an average of 31.1 in its core target audience of AP 18 – 39 and continues to be the leading network in its key demographic. This represented a small erosion of total share year-on-year as key properties fell off slightly from their FY2006 highs. However, the channel continues to maintain its position as the leading entertainment choice for its core audience and is well positioned to enjoy further ratings success in FY2008.
OBJECTIVEAchieve quality earnings that support our commercial objectives
COMMENT Although operating revenue declined $34.6 million year-on-year, much of this was offset by a significant reduction in operating expenditure of $23.9 million.
The Company embarked on a comprehensive reorganisation programme to address the decline in advertising revenues, the rapidly changing needs of audiences and advertisers, and the implementation of the new TVNZ five-year strategic plan.
The Company is confident that the changes being implemented will lead to the achievement of its commercial and public objectives.
STRATEGICGOAL2BroadcastgreatNewZealandprogrammesandthebestfromaroundtheworld
OBJECTIVEDevelop strong schedules to achieve ratings and share targets
COMMENT TV ONE’s new brand campaign was launched in April 2007 around event programming such as Dancing with the Stars and This Is Your Life. This has been notably successful in terms of ratings performance and brand recognition. A new schedule structure was launched in February 2007,
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along with selection of acquired and commissioned content in line with the new channel proposition.
TV2 established a structure to address the issues of the competitive environment, moving some shows from their regular slots to freshen the schedule. The channel remained competitive across all demographics and the leader in its audience target of All People 18-39.
TV2 retained the top-performing international dramas such as Desperate Housewives, Lost and Grey’s Anatomy while at the same time local programmes such as Shortland Street (celebrating 15 years on screen) Dream Home, and Police Ten 7 continued to be successful in all demographics.
OBJECTIVEBuild and maintain relationships with international and local content providers to protect access to quality programming
COMMENT We are employing a suite of strategies in order to maintain the strongest possible relationships with our suppliers of overseas programming. These include:
• attending Los Angeles screenings and the MIPTV and MIPCOM international audiovisual content trade shows; and
• having frequent telephone and face-to-face talks with suppliers.
During FY2007, we encouraged New Zealand producers to come to TVNZ first with the widest range of innovative content. We invited New Zealand producers to TVNZ and shared with them our objectives. We had specialist pitching days and conducted road shows to show producers what the channels were looking for, and encouraged them to deliver ideas consistent with that brief. We also maintained a close relationship with industry bodies such as the Screen Production and Development Association of New Zealand (SPADA), NZ On Air, Te Mangai Paho and the New Zealand Film Commission.
OBJECTIVEAlign TVNZ funding requirements with those of statutory funding bodies
COMMENT We had regular meetings with key funding partners, including NZ On Air, the New Zealand Film Commission, Te Mangai Paho and Te Puni Kokori. We opened up
the channels of communication to ensure that TVNZ’s programme commissioners had direct relationships with the television management of NZ On Air. In addition, we undertook to share our future plans and strategies with NZ On Air’s board and management so that we can better align NZ On Air’s objectives with TVNZ’s objectives.
STRATEGICGOAL3EngagewithallNewZealandersandbeguidedbyourresponsibilitytothem
OBJECTIVEEnhance and expand our understanding of viewer tastes, wants and needs
COMMENT A new function, General Manager Research & Insights, was established within the Marketing Department to gather and analyse information about what TVNZ’s audiences want. This function supplements the conventional approach to audience numbers and demographics, which essentially takes an historic, quantitative view of audience numbers and demographics. The ‘research and insights’ function will add a qualitative analysis, using focus groups to research not only what viewers like or dislike, but why, and to gain insights into their tastes, wants and needs for future programming.
OBJECTIVEComply with the relevant broadcasting codes and applicable laws
COMMENT TVNZ takes seriously its responsibility to comply with the standards of programming and presentation administered by the Broadcasting Standards Authority (BSA), which adjudicates on formal complaints referred to it by complainants dissatisfied by the outcome of TVNZ’s internal complaints processes. [See page 25 for details of BSA decisions] TVNZ is in the process of building a strong relationship with the BSA, with the aim of fostering mutual understanding of the other’s perspective, within the context of the BSA’s responsibilities. TVNZ journalists and management with responsibility for programme standards meet periodically with the BSA for informal discussions, the overriding intent being that there is value for both parties in maintaining an open and honest relationship.
OBJECTIVEPursue our Charter aspirations and execute our role as New Zealand’s largest public broadcaster in a fashion that enriches our society and our culture
COMMENT We have reviewed our programming and commissioning processes with a view to being more conscious of our public broadcasting role. When commissioning programmes, TVNZ evaluates them not just in terms of commercial success but also with an emphasis on public broadcasting values. A strategy for the future direction of Maori programming is also under consideration with a view to extending and broadening the scope of our offering.
OBJECTIVEExpand our reach to all New Zealanders by introducing our digital services and continuing to explore alternative means for communicating with our audience
COMMENT TVNZ secured Government funding support of $79 million over six years for the development and launch of two new digital channels, TVNZ 6 (to be launched on 30 September 2007) and TVNZ 7 (planned for launch in March 2008). TVNZ will supplement this with more than $30 million in commercially earned revenues from TV ONE and TV2.
TVNZ 6 and TVNZ 7 will deliver distinctive viewing experiences that complement TV ONE and TV2 and will allow TVNZ to achieve four goals:
• Extend public service broadcasting delivery;
• Increase accessibility by scheduling more content with high public value in prime viewing time;
• Strengthen New Zealanders’ sense of national identity;
• Encourage households to switch from analogue to digital reception by promoting the new channels on Freeview, and on other emerging platforms.
OBJECTIVEDevelop relationships with stakeholders to enhance trust and understanding
COMMENT TVNZ’s new five-year strategic plan, ‘Inspiring New Zealanders on Every Screen’, articulates the Company’s transformation in response to a rapidly changing environment marked by economic uncertainty, stiffer
competition, and fragmented audiences who increasingly access content via a range of digital ‘screens’.
The strategy led to a major organisational redesign that involved both structural and cultural change within TVNZ.
Throughout this process, a concerted effort was made to enhance the trust and understanding of stakeholders by fully consulting with them and keeping them informed:
• TVNZ ran sessions to explain to staff the new strategy and direction of TVNZ and the changes that would be involved;
• A summarised version of the strategy document was posted on the TVNZ website in December 2006 and made available to media;
• TVNZ’s Chief Executive held a series of events to introduce the strategic plan to advertisers and agencies;
• TVNZ commissioning and programming managers had meetings and pitch sessions with independent producers;
• Regular meetings were held with industry bodies and key funding partners.
As part of the cultural change associated with the reorganisation, these relationships with stakeholders will be maintained and developed.
STRATEGICGOAL4Fosteranenvironmentofinnovationandcreativity
OBJECTIVESecure access to creative talent and innovative programming
COMMENT Both the commissioners and the programmers at TVNZ are actively involved in the development process to better refine shows to fit the channels’ time slots and targets. We regularly communicate our requirements to our key suppliers so that they can direct their talent and time towards developing new ideas for the right slots.
We followed up the road shows mentioned under Strategic Goal 2 by encouraging external production houses to come back with their best ideas for possible selection and development. After the cancellation of The Point, we reached out to the production community with a targeted range of creative opportunities we wanted them to research, specifically in drama and comedy. Subsequently we ran targeted pitch days by genre, to encourage producers to submit their ideas so that we could encourage development that was appropriate for where the channels were required to go.
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TVNZ’S DIGITAL TRANSFORMATION
New Zealand television is undergoing monumental changes. The world is going digital, and so is New Zealand.
Television New Zealand’s expansion into the digital dimension is the culmination of three years spent developing new services and setting up the technology that will enable us to play programmes across multiple platforms.
TVNZ’s five-year (2007 – 2011) strategy ‘Inspiring New Zealanders on Every Screen’ acknowledges that in the next five years, although we will watch less television, there will be an increasing demand for television content.
This seeming paradox is because television content will reach people in ways that were hard to imagine just a few years ago – ‘on every screen’, as the strategy’s title states.
Many New Zealanders have already embraced video on demand, digital video recorders, mobile television, YouTube, MySpace and other digital delivery modes. Who knows what will be next? But whatever bright ideas the digital age comes up with, TVNZ now has the digital ‘backbone’ in place to run with them.
In March 2007, TVNZ ondemand was launched so that New Zealanders could, at no charge, access their favourite programmes – past and present – via their personal computers.
From the end of September 2007, viewers will be able to access a family-friendly channel, TVNZ 6, on the shared, not-for-profit Freeview digital platform. The news and factual channel TVNZ 7 will follow from the end of March 2008. Neither channel will carry advertising.
Digital distribution – to television screens and personal devices – will enable the years of investment in public broadcasting and local production to be unlocked for the benefit of all New Zealanders.
The great value of the new digital channels will be in re-screening shows made or commissioned by TVNZ that otherwise would be aired only once and forgotten. With local content costing six to 12 times more than international content, the opportunity to present these programmes to as many New Zealanders as possible via the Freeview digital channels makes both social and economic sense.
The ‘one screen fits all’ constraints of traditional television have been swept away. Digital technology gives TVNZ the chance to deliver full public value for the dollars spent on supporting New Zealand talent, New Zealand stories and New Zealand achievements.
In terms of our internally-produced programmes we are continually and actively searching for new talent in both on-air and production roles.
OBJECTIVEEncourage creativity as part of our programming, commissioning and production processes, with sensitivity to associated creative risks
COMMENT TVNZ works with NZ On Air and the New Zealand Film Commission to encourage and fund a range of innovative programme initiatives. For example during FY2007 we commissioned from Rachel Jean a drama series about boy racers called Ride with the Devil. We also commission innovative programming across all genres for the 10.30pm time slot on both channels to encourage creativity as part of our programming, commissioning and production processes. Should the idea be good enough, it will be developed into a prime time series. However, not all the shows in which we invest money for development are commissioned.
OBJECTIVEMake full use of the programme rights we hold
COMMENT TVNZ’s restructuring placed renewed emphasis on programme rights with the establishment of a Rights team.
During FY2007 the TVNZ ondemand service was launched, which offered another platform on which TVNZ could make use of its existing programme rights.
All content for the first six months of the planned new digital channel TVNZ 6 was secured. The existing rights held in local programming were helpful in achieving this.
STRATEGICGOAL5Actwitheditorialindependence
OBJECTIVEEnsure that decision-making is free from political and commercial special interest
COMMENT The editorial independence of TVNZ’s News and Current Affairs department is enshrined under legislation (Television New Zealand Act 2003) and its freedom from political and commercial influence is a fundamental principle.
The TVNZ Charter states that TVNZ will “provide independent, comprehensive, impartial, and in-depth coverage and analysis of news and current affairs in New Zealand and throughout the world, and of the activities of public and private institutions”. TVNZ journalists are encouraged to report “without fear or favour” – it is their business to question and challenge.
OBJECTIVEPromote public understanding of legislative protection for editorial independence of News and Current Affairs.
COMMENT The legislative protection of TVNZ’s editorial independence under the Television New Zealand Act 2003 is regularly explained and clarified when senior TVNZ executives give public speeches or are invited to speak to senior secondary school, polytech and university students, especially communications and media studies classes.
TVNZ’s commitment to provide independent and impartial coverage of news and current affairs is stated in the TVNZ Charter, which is available to the public on the website.
However the most effective public promotion of legislative protection for the editorial independence of TVNZ News and Current Affairs is through the actions of TVNZ journalists. TVNZ’s adherence to the principle of editorial independence was strongly demonstrated in the public arena in late June 2007, when it took a leading role in contesting parts of new rules banning the ‘satiric’ use of TV images of Members of Parliament in the debating chamber. TVNZ’s stand was widely reported on its own news bulletins, as well as in print and radio media.
STRATEGICGOAL6Facilitatethesuccessfuldevelopmentoffree-to-airdigitaltelevision
OBJECTIVELead the successful introduction of the FTA digital platform
COMMENT In November 2006, the Government announced its support for, and part-funding of, a national digital broadcasting infrastructure through the industry-shared and open platform ‘Freeview’. TVNZ led this initiative, with the endorsement of the other Freeview shareholders/broadcasters prior to and throughout the financial year.
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Freeview was formally established as a not-for-profit business on 18 October 2006. Satellite operations began on 2 May 2007, and terrestrial operations are scheduled to begin at the end of the first quarter of 2008. TVNZ holds the initial management contract on behalf of the other participating broadcasters, with the terms and conditions of access to the platform by new and existing broadcasters being on a fully transparent basis.
TVNZ’s forthcoming new digital services will be added to the Freeview platform, alongside TV ONE and TV2.
OBJECTIVEDevelop and deliver digital services that will help sustain the ongoing success of FTA digital television in New Zealand
COMMENT Prior to developing the new services, TVNZ conducted extensive consultation and research with key stakeholder groups, including the Government, advertisers, the production community and viewers. The service brands and content that make up TVNZ 6 and TVNZ 7 are based on that research and have been selected, and will be presented, in a way that meets the needs of New Zealanders.
High on the list of shared aspirations that emerged from the research were new services that reflected positively on New Zealand life and culture, were advertising-free, encouraged family viewing, and offered the best, rather than simply the most popular, overseas programming. Viewers expect high-quality news, factual and arts content from both New Zealand and international sources, presented in a way that provides a window on the world and explores New Zealand’s place within it.
TVNZ 6 was planned during FY2007 to have three distinct services, TVNZ Kidzone, TVNZ Family and TVNZ Showcase. TVNZ 7, also developed during the year under review, will deliver factual, news and current affairs programming.
OBJECTIVESuccessfully launch new digital services that will broaden and enhance TVNZ’s public broadcasting role
COMMENT The two new digital services will offer more choice and greater accessibility to quality public-interest programming, and will give all New Zealanders increased free access to new, locally-produced programming as well as to high-quality archived programmes that might otherwise never be seen again. TVNZ continues to work with other industry groups to look at ways to ‘unlock’ the rights to use archive material in a fair and equitable manner.
▼ Desperate Housewives, TV2
▼ Dancing with the Stars, TV ONE
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FUNERAL OF TE ARIKINUI
Television New Zealand’s coverage of the tangi of the Maori Queen, Te Arikinui Dame Te Atairangikaahu, in August 2006, was a major feat of organisation and collective talents that earned plaudits from a world-wide audience.
On the final day of the tangi, August 21, nearly half a million viewers at home and abroad tuned in to watch part or all of the five-and-half hours of live broadcast of the ceremony from Turangawaewae Marae.
Tens of thousands attended the final service in person, following the progress of Te Arikinui’s coffin as it was transported by waka 9km up the Waikato River to Taupiri Mountain, then carried up the mountain to be buried.
It was the culmination of six days of coverage provided by TVNZ, involving more than 100 staff across a number of divisions of the Company. This included daily coverage on all our news and current affairs programmes – Te Karere, ONE News, CloseUp, Marae and Waka Huia.
News presenter Simon Dallow did all his introductions to the 6pm news in te reo Maori.
It was a huge event to cover at short notice and it elicited an unprecedented response. By streaming it live on the TVNZ website, we made it available to New Zealanders overseas, who were deeply appreciative of this opportunity to share in a moment of nationhood.
In February 2007, TVNZ Chief Executive Rick Ellis presented Te Arikinui’s eldest son and successor, King Tuheitia Paki, and the Tainui people, with a DVD of significant moments from the tangi as well as highlights of the celebrations, held in May 2006, to mark the 40th anniversary of Te Arikinui’s coronation.
Mr Ellis told his audience at Hukanui Marae that Te Arikinui’s tangi – and the way it was covered by Television New Zealand – might have been a defining moment in New Zealand’s race relations.
“Her passing, I believe, in many ways briefly united us all as a people and made us all reflect on what it is to be a New Zealander, regardless of which waka brought us to Aotearoa.”
▲ A mourner at the tangi of Te Arikinui
CHARTER PERFORMANCE MEASUREMENTS
Under the Television New Zealand Act 2003 there is a requirement for TVNZ to undertake qualitative and quantitative performance measures, which must also involve the public.
During FY2007 TVNZ worked with government officials to devise a new Charter Performance Measurement framework to replace the previous measurements. This new, comprehensive framework was designed to measure TVNZ’s performance as a public broadcaster.
PUBLICPERCEPTIONSURVEYAn independent survey company was commissioned to undertake qualitative and quantitative measurements of public opinions and perceptions of TVNZ’s performance.
The qualitative analysis was carried out at the end of FY2007 using seven focus groups in Auckland, Gisborne and Christchurch, and including two groups of Maori, in Auckland and Gisborne.
The focus groups were asked about their perceptions of the role of public broadcasting and their response to core themes that TVNZ had identified as best representing the principles of the Charter.
Despite reservations in some specific areas, in general the focus groups felt that TVNZ’s performance was in alignment with these core themes, which included demonstrating high standards, diversity and innovation, and fostering an informed society, New Zealand talent, and a sense of national identity.
The focus groups generally viewed TVNZ as being ‘ours’ and delivering public value above that of other broadcasters.
Quality expectations were not limited to ‘highbrow’ programmes; there was an acceptance that quality should apply to all genres. Viewers wanted high-quality local drama and family programming that promoted interaction and discussion.
There were some overlapping responses, with both positive and negative perceptions sometimes being associated with the same theme. For example, TVNZ was perceived positively for its specialist Maori programming. But there was a strong desire to see an ‘everyday’ Maori perspective incorporated into mainstream programmes as well, as an antidote to a prevailing impression that a Maori perspective too often involved conflict and activism.
A desire was also expressed for more ‘hard’ journalism and the expression of alternative or minority points of view to balance coverage of issues.
For the quantitative analysis, a nationally representative group of 1000 adults was surveyed. The results showed that when asked about Charter delivery themes, overall, the public placed most value on the delivery of an ‘informed society’. This was also the area in which TVNZ was rated most favourably in terms of delivery, although ratings were lower when it came to delivery of regional content and ‘discussion of current events’.
Education was rated as being an area of high importance, although TVNZ was rated less positively in the delivery of ‘education for young people’ and ‘different perspectives’.
Also important, but an area where TVNZ’s delivery was rated only ‘moderate’, concerned issues of national identity such as ‘history, heritage, natural environment’, ‘reflecting our New Zealand identity’ and ‘inspiring New Zealanders’.
Diversity was given only moderate emphasis, and delivering to ‘minority interests’ was not seen as a high priority for most New Zealanders. Maori placed more importance on ‘minority interests’ but gave a relatively low rating to TVNZ’s delivery on this, as they did also for specific Maori content delivery.
The Charter Themes table below shows these results in detail:
Net Positive* CharterThemes Importance(%) Delivery(%)
Informedsociety Independent news 79 52 Events of national importance 76 58 Analysis of issues of the day 76 56 Events of international importance 72 54 Events of importance to your region 67 41 Discussion on current issues 57 40 Education Educational for young people 72 36 Different perspectives 60 38 NationalIdentity NZ’s history, heritage, natural environment 62 43 Reflect and reinforce our NZ identity 58 41 Inspiring New Zealanders 57 39 Maori Maori history, culture, current issues 36 37 Promote Maori language and culture 33 38 Voice for Maori perspectives 33 39 Diversity Tastes & interests not covered by other channels 51 32 Appeal to smaller and wider audiences 51 34 Reflect NZ’s many cultures 50 34 Understanding different cultures 48 32 Deal with minority interests 33 27 NewZealandtalent Mix of local and overseas programmes 67 45 Supports local talent 52 36 Good quality local drama 50 36 QualityConsistently high quality programmes 79 40
*Net positive percentages indicate the percentage of survey respondents who chose the two most positive of five options on a negative to positive scale.
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The people surveyed were also asked to rate specific programmes. They rated ONE News highly both in terms of its importance and their personal interest in it – reflecting the high public value New Zealanders place on the theme of ‘an informed society’.
Fair Go was rated second only to ONE News in terms of both importance and viewers’ personal interest.
Although it is of personal interest to a smaller number of people, TV ONE’s coverage of ANZAC Day was rated as having high public value.
The ‘minority interest’ status of programmes such as those with Maori and religious content, Artsville and some local dramas (Insiders Guide, Rude Awakenings) were reflected in their relatively low overall ratings for both personal and public value.
However, the perceived public and personal value of programmes with Maori content and/or interest (Maori Queen’s funeral, Te Karere, Marae, Whanau) was significantly higher amongst Maori viewers.
The Specific Programmes table below shows these results in detail:
Net Positive* SpecificProgrammes Interest(%) Importance(%)
ONE News 43 75 Fair Go 41 63 America’s Cup coverage 35 38 Dancing with the Stars 30 18 Intrepid Journeys 27 23 Country Calendar 26 38 Shortland Street 23 18 Sunday 20 34 This Is Your Life 19 17 TV ONE’s Anzac Day coverage 17 48 Unauthorised History of NZ 16 28 Maori Queen’s funeral 15 29 Child of Our Time 14 16 Eating Media Lunch 11 9 Asia Downunder 8 17 Agenda 7 15 Eye to Eye with Willie Jackson 6 8 Insiders Guide to Love 6 4 What Now? 6 23 Let’s Get Inventin’ 5 10 Simon Schama’s The Power of Art 5 6 Here to Stay 5 8 Attitude 5 8 Praise Be 5 13 Rude Awakenings 5 4 Artsville 5 8 The World According to Willie and JT 4 4 Te Karere 4 18 Marae 3 17 Whanau 2 14
FY2007 was a transitional year in terms of the new Charter Performance Measurements, which will be fully implemented in FY2008. However, this year’s survey results provided some insights into viewers’ opinions that will be a valuable resource for TVNZ in its planning for future years.
FEEDBACKMECHANISMSViewer feedback is becoming a pivotal area of influence within TVNZ. We receive about 3000 messages each month from viewers via phone calls, emails and letters. All of these are saved or logged and forwarded to the relevant people or departments to be noted, replied to or acted upon.
During FY2007 our Auckland and Christchurch call centres handled 10,184 phone calls from viewers with messages about TVNZ’s performance or programming.
Call centre staff log these calls in five categories – comment, complaints/criticism, praise, query, and suggestion – along with details about what viewers said. The phone logs are distributed each morning to give TVNZ’s various departments an opportunity to gauge public reaction to specific programmes, or alert them to programming or other issues of concern.
During FY2007 TVNZ received a monthly average of 2085 emails and letters. Key staff are informed weekly about the five main themes of viewer correspondence. It is reassuring for viewers to know that their opinions are taken on board and given to the right people in a timely manner, enabling changes to be made where necessary.
For example, when the America’s Cup was screening, late programming changes because of factors like wind conditions caused confusion for viewers, who let us know straight away. As a result, new mechanisms – voiceovers and crawlers across the screen – were put in place to address this. The Cup attracted wide-ranging feedback, including queries about sailing techniques and messages of encouragement to Emirates Team New Zealand.
Emailed feedback for ONE News, 20/20, Fair Go, CloseUp, ASB Business and Good Morning, and correspondence about transmission problems, now go direct to the relevant departments. This enables quick response times, especially for news story suggestions.
In response to the advent of digital television, there was a big increase in queries about TVNZ ondemand, digital, widescreen and new television channels. There was also an upturn in queries about advertising, mainly to do with rates and the content of advertisements.
*Net positive percentages indicate the percentage of survey respondents who chose the two most positive of five options on a negative to positive scale.
COMPLIANCEWITHSTANDARDSANDCODESFormalComplaints The Broadcasting Standards Authority (BSA) is responsible under the Broadcasting Act 1989 for administering standards in programming and presentation of programming. All formal complaints must first be made in writing to the Broadcaster (with the exception of allegations of breach of privacy). Complainants may refer their complaint to the BSA if they are not satisfied with the outcome of the TVNZ process.
In FY2007, TVNZ received 346 complaints – eight more than in the previous year. Of these, 35 were upheld – five fewer than in FY2006 (but three more than in FY2005).
2005 2006 2007 453 complaints 338 complaints 346 complaints 32 upheld 40 upheld 35 upheld
In FY2007 the BSA handled 57 referrals by viewers who were dissatisfied by TVNZ’s decisions on their complaints – a drop of five on the previous year. Of these, 16 were upheld – four more than in FY2006. The BSA declined to determine in two cases.
2005 2006 2007 83 complaints 62 complaints 57 complaints 14 upheld 12 upheld 16 upheld
Measurement* FY2007Actual FY2007Forecast
Universality
Average national audience 5+ peak (number of people) NB: All major NZ channels were affected by a reduction in People Using Television (PUTs) to the lowest level since 1993.
700,000 733,000
Average national audience 5+ peak (share of television audience) 54% 55%
Top 20 programmes viewed by national audiences 5+ 90% 75% on TVNZ channels
Diversity
Gross value of NZ productions broadcast (excluding News, Current Affairs and Sport) NB: Forecast included $12m for The Point, which was subsequently cancelled. Transmission plans were altered in view of reduced revenue.
$116 million $130 million
Percentage local content screened 36.8% 34%
Broadcast hours featuring different cultures (including Maori) and minority groups 498.4 hours 200 hours
Children’s programmes (local and overseas) 1876.5 hours 1200 hours
Independence
Complaints considered and upheld by BSA relating to News & Current AffairsNB: Actual percentage was higher than expected because fewer complaints were referred than anticipated, while expected rate of upholds increased slightly.
41% Less than 20% of complaints referred to BSA upheld
Quality
Complaints considered and upheld by BSA (other than News & Current Affairs) 20% Less than 20% of complaints referred to BSA upheld
Goodemployer
Voluntary staff turnover 12.49% Less than 15%
Performance reviews for all employees NB: Reviews delayed until after completion of organisational redesign
Nearing completion and achievement
More than 95%
Average annual leave balances 21.78 days Less than 25 days
Total annual staff training & development days per employee 2.6 days 2 days
SupportingCommunities
Value of airtime provided to support community projects (at ratecard) $643,610 $500,000
Supportingsustainabledevelopment
Energy usage at all sites 15.1m kilowatt hours 17m kilowatt hours or less
Measuring Performance as a Public Broadcaster In the Statement of Intent for FY2007, TVNZ undertook to report against the following measures:
��*These results measure TVNZ’s performance as a public broadcaster. A comprehensive framework for performance measurement was developed in consultation with the Ministry for Culture and Heritage during FY2007 for implementation in FY2008.
As a Crown entity, TVNZ is expected to demonstrate social and environmental responsibility. It is required to be a good employer, to demonstrate ethical and socially responsible behaviour in all its business undertakings, to support and promote community service organisations, to adhere to the codes and practices governing television in New Zealand, and to consider the impact of its physical infrastructure and business activities on the environment.
ENVIRONMENTALSUSTAINABILITY Practices that support environmental responsibility are now firmly established and are encouraged throughout TVNZ’s operations.
(a)RecycledWaste TVNZ’s recycling programme Zero Waste has been in place throughout the company for five years, actively supported by management and staff. TVNZ recyles paper, glass, cans, toner cartridges, cable, and computer equipment. Used video tapes are cleaned and donated to schools throughout New Zealand. TVNZ has a policy of requesting equipment suppliers to remove and recycle packaging received with new equipment.
(b)EnergyUsage The Building Management System in Auckland helps the Company effectively monitor and control electricity usage, and highlight areas where electricity usage is excessive. TVNZ achieved a 3.8% saving in electricity usage for FY2007 compared with FY2006. Where possible, TVNZ eliminates the use of energy from non-renewable sources. The only remaining non-renewable energy used is natural gas at the TVNZ Television Archive in Lower Hutt.
(c)FleetManagement The Company continued to monitor fuel usage throughout its vehicle fleet to ensure the fleet is fuel-efficient.
(d)NewZealandBusinessCouncilforSustainableDevelopment Senior TVNZ management took part in the Workshop Programme run by the NZBCSD.
(e)GreeningtheScreen TVNZ assisted by supplying material and technical information for the Ministry for the Environment’s publication Greening the Screen, and supported Shortland Street’s initiative of becoming carbon neutral. Towards the end of FY2007 TVNZ held discussions with Landcare Research about making the organisation carbon neutral.
PROGRAMMINGINITIATIVES TVNZ commissions and/or screens a range of programmes that fulfil its Charter undertaking to “provide programming of an educational nature that supports learning and the personal development of New Zealanders”.
Environmental During FY2007 TVNZ screened in prime time seven half-hour episodes of Coastwatch, an observational documentary series following the men and women from MAF, the Coast Guard and the Marine Police who patrol, protect and preserve New Zealand’s waterways, fisheries and coastline. Made by an independent production company, Cream TV, and shown on TV ONE, Coastwatch promotes a strong environmental message about the importance of conserving the viability of New Zealand seafood stocks. This series achieved an average share of 30% in TV ONE’s target demographic AP 25-54 and a 35% share in All 5+. TVNZ has commissioned a further series of 10 x half-hour episodes, which will go to air beginning 2 July 2007.
Another series with a strong environmental message, Borderline, also produced by Cream TV, was screened on TV ONE during FY2007. The 12 x half-hour series featured officers from New Zealand’s Customs, MAF and Immigration services protecting the country’s borders. The officers were seen utilising their skills, experience and technology to detect undeclared meat and fruit, insect stowaways and other potential threats to New Zealand’s clean, green environment and our agriculture, horticulture and timber industries.
In preparation for the launch of TVNZ 6 in September 2007, TVNZ commissioned Meet the Locals, a series of 150 four-minute programmes about the environment, which was produced in partnership with the Department of Conservation.
Healthandnutrition On 18 September 2006, Test the Nation – The Southern Cross Health Test, a TVNZ production, screened live on TV ONE, quizzing New Zealanders about their health knowledge. A new component of the test allowed viewers to assess their own risk of suffering a heart attack or stroke. While six groups of studio players competed in the studio, viewers around the country sat the test at home in front of the television, and a further 9000 players took the test online.
TVNZ IN SOCIETY
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‘HANDS-ON’ CAREERS VISITS A HIT WITH KIDS
Forget ‘show and tell’ – when TVNZ representatives visit intermediate schools to talk about careers in the television industry they bring a van-load of professional equipment and help the children make their own school news bulletin.
The students take the roles of studio hosts, reporters, interviewees and camera operators, recording three segments that will be edited back at TVNZ into a professional-looking finished product.
As for any television production, ‘TVNZ in Schools’ involves a lot of planning by Corporate Affairs assistant Vikki Cottingham, who sends the teacher advance notice about what will be involved and how to prepare the students.
When Vikki and veteran camera operator John Robertson (or the equally experienced Stephen Moody) arrive at the school, it’s ‘hands on’ from the start as the children help unload the van and carry in the equipment.
“We start with a question-and-answer session,” Vikki says. “We tell the kids who we are and what we do, talk about the range of career avenues at TVNZ, and invite the children to ask questions. They love to talk to the cameraman and hear stories about where he’s been, what he’s done and who he’s met.”
Then it’s down to work, with the children spending two hours doing an on-the-spot interview with a live cross, and two studio interviews with guests, all linked by a studio host who reads an autocue “live from the studio”.
“Each piece to camera is filmed by a different operator so we involve as many of the kids as possible,” says Vikki. “They learn how to focus the camera and zoom in for a close-up, or capture the audience applause in a group shot.”
Back at TVNZ, the raw footage is edited, with music, titles and rolling credits added, and a DVD of the finished package is sent to the school. “They end up with an awesome little programme that’s all about them, and they made it themselves,” says Vikki. “The feedback we get from both students and teachers is amazing.”
▲ Students from Greenmeadows Intermediate, Manurewa East, set up their shot.
Over the summer, TV2 ran X-Weighted, a series of documentaries about seriously overweight people who, over a period of four to six months, grappled with the emotional triggers for their obesity while following fitness, nutrition and life management guidance to regain a healthy weight.
The BBC six-part series The Truth About Food, on TV ONE, explored widely held beliefs about what we eat, using scientific method to separate fact from fiction.
After the success of Eat Yourself Whole in 2005, The Evil Diet Witch, Nikki Hart, featured in another successful series about childhood obesity called The Fat Chance in FY2007. The six-part series, sponsored by the National Heart Foundation and created and produced by Glenn Sims for independent production company Screentime Limited, introduced parents to the living, breathing adults that their children could become if they did not improve their eating habits. Both Eat Yourself Whole and The Fat Chance are now shown in schools, universities and hospitals across New Zealand as a tool to teach healthy eating.
In May 2007, TVNZ agreed to a joint initiative with the Government and other television companies that would see food advertisements vetted by broadcasters as part of the fight against childhood obesity. Under the new measures agreed to, advertisements for food would have to meet certain criteria before being cleared for broadcasting during children’s hours. In addition, the broadcasters agreed to give free commercials to the Health Sponsorship Council and to work with the Sport and Recreational Council on diet and exercise programming for children.
Socialinformation TVNZ’s production, Fair Go, on TV ONE, remained not only the country’s top consumer information show but also consistently one of viewers’ favourite programmes across all genres. During FY2007 Fair Go celebrated 30 years on air.
Your Money Sorted, made by local production company TV Factory, followed the progress of a featured person or couple over four weeks as financial coaches Neil Geddes and Yvonne Hilsz helped them to curb their spending habits and get their debts under control. The 10-part series, which began in FY2007 on TV ONE, encouraged viewers to visit the independent money website www.sorted.org.nz for information about managing their own finances.
Why We Buy, a six-part series on TV ONE made by local company Razor Films, explored why we shop, and the strategies, science and psychology used to persuade us to buy.
Supernanny returned to TV2, with Nanny Jo Frost dispensing practical help and advice to parents overwhelmed by the unruly behaviour of their children, while on TV ONE the BBC’s Little Angels featured child psychologists Rachel Morris and Dr Stephen Briers showing parents how their own behaviour was impacting on that of their children.
Dog trainer Victoria Stilwell shared useful tips on dealing with the kids’ canine counterparts on It’s Me or the Dog on TV ONE.
SPONSORSHIP Since the early 1980s TVNZ’s Community Support Foundation has donated more than $30 million worth of airtime to help not-for-profit or charitable organisations to promote their services and educate New Zealanders to build a better community. The sponsorship policy was revised and relaunched in December 2006 to focus on a smaller number of beneficiaries but to maintain TVNZ’s relationship with them for longer periods. The criteria for these major sponsorships, which involve providing free air time to the value of $50,000 a month for each organisation, is that they go to community organisations and initiatives that reflect:
• Who we are – which is about national identity and citizenship;
• How we live – which is about New Zealand lifestyles; and
• Where we live – which is about New Zealand’s natural environment.
For FY2007 and the following two years, TVNZ selected the National Heart Foundation, the SPCA, the Refugee and Migrant Service and Surf Life Saving New Zealand to receive Community Support Foundation sponsorship.
In addition, there was support by TVNZ, TV ONE or TV2 during FY2007 for the following organisations and events: the New Zealand Symphony Orchestra, the cultural fashion extravaganza Westfield Style Pasifika, the EFFIE Awards for the advertising industry, the Farmers Santa Parade, Kidsfest, the Screen Production and Development Association of New Zealand (SPADA) conference, the DOCNZ Festival for New Zealand documentary makers and the Christchurch Arts Festival.
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COMMUNITYSUPPORT Websitereferenceforcommunityservices TVNZ’s website is a source for easy reference to alphabetical listings, information and contact details for around 50 community services and support organisations dealing with problems ranging from Attention Deficit Disorder, Aids and Alcohol to Spinal Muscular Atrophy, Stress and Youthline.
SuperSquad Super Squad, a national inter-school challenge for Year 8 students, ran for a third successive season on the weekday TV2 show Studio 2, with a new sponsor for FY2007, Just Juice Splash.
2007AXISSTUDENTCHALLENGE In May, for the fourth successive year, TVNZ sponsored the Axis Student Challenge, a unique learning opportunity for advertising creativity students. Seventeen teams of students from the Axis Adschool and the AUT Advertising Creativity course competed to develop an integrated communications campaign around the 30th anniversary of TVNZ’s Fair Go programme.
Judged by industry leaders, the student challenge was won this year by Tim Yates and Ashwin Gopal, of AUT. They were presented with their award in front of around 800 of the top industry creatives at the Axis Awards, an annual celebration of excellence in creative advertising.
TVNZINITIATIVESINSCHOOLS TVNZNetGuideSchoolsWebChallenge For the sixth successive year, TVNZ sponsored the annual challenge for children to create websites related to their curriculum. The challenge attracted 2627 entries from primary, intermediate and secondary students throughout New Zealand. Nineteen awards to individuals, teams and classes were presented at a ceremony at TVNZ in October 2006. The students and their schools took home prize packages from a total prize pool of $40,000 in cash and technology products. The winners ranged from a class of Year 1 students from Rototuna Primary School, Hamilton, whose website Foot-astic was all about feet, footprints and shoes, to senior secondary students from Macleans College, Bucklands Beach, with a website about stem cell research.
Careersvisits After being trialled successfully during FY2006, TVNZ visits to schools to discuss career opportunities and give the children a hands-on opportunity to make their own school news bulletin were continued. During FY2007, the two-person team of script writer/director and camera operator made six visits to intermediate schools, and TVNZ has received positive and enthusiastic feedback from both teachers and students. See page 27 for more details about this initiative.
GOODEMPLOYER TVNZ faced a challenging year with a company-wide restructure. The changes were robustly consulted on, with all employees having the opportunity for input. Sessions were run to ensure all employees understood the new strategy and direction of TVNZ, and ‘Change Navigation’ sessions were offered to prepare for a difficult period. Those made redundant were offered career transition advice and confidential access to an external employee assistance programme. Although more than 100 people were made redundant, the restructuring also created new roles, providing opportunities for some employees to take new and better positions.
Educational, health and cultural programmes and events for employees during FY2007 included:
• In-house Finance Seminars to support questions about investment decisions, including Kiwi Saver.
• Learning and Development programmes, including Team Leader and Management Development programmes.
• A year-long Wellness Programme, with a special Wellness Expo at the end of 2006.
• The celebration of Maori Language Week, including music performances and a hangi served in the TV Centre Atrium.
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32 Statement of Responsibility
33 Statement of Financial Performance
34 Statement of Movements in Equity
35 Statement of Financial Position
36 Statement of Cash Flows
37 Statement of Accounting Policies
41 Notes to the Financial Statements
54 Statement of Service Performance
60 Report of the Auditor-General
62 Five Year Trend Statement
63 Additional Information
financial statements
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sTATEmENT OF REsPONsiBiLiTYFOR THE YEAR ENDED 30 JUNE 2007
The Board and management of Television New Zealand Limited are responsible for:
• The preparation of these financial statements and the judgements used in them. • Establishing and maintaining a system of internal control designed to provide reasonable assurance as to the integrity and reliability of financial reporting.
In the opinion of the Board and management these financial statements fairly reflect the financial position of Television New Zealand Limited as at 30 June 2007 and its financial performance and cash flows for the year ended on that date.
Sir John Anderson John Goulter Chairman Director 30 August 2007
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sTATEmENT OF FiNANciAL PERFORmANcEFOR THE YEAR ENDED 30 JUNE 2007
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Group Company
2007 2006 2007 2006
Notes $000 $000 $000 $000
Operating revenue 1 375,203 409,790 375,203 409,782Operating expenses 2 (365,905) (389,777) (365,977) (389,989)
Operatingsurplusbeforenonrecurringitems,interestexpenseandincometax 9,298 20,013 9,226 19,793
Non recurring reorganisation costs 3 (11,145) 0 (11,145) 0Interest expense (4,136) (92) (4,136) (92)
Operating(deficit)/surplusbeforeincometax (5,983) 19,921 (6,055) 19,701
Income tax benefit/(expense) 4 1,750 (6,619) 1,774 (6,399)Effect of change in income tax rate 4 (267) 0 (259) 0
Net (deficit)/surplus for the year (4,500) 13,302 (4,540) 13,302
The accompanying notes form part of and should be read as part of these Financial Statements.
sTATEmENT OF mOVEmENTs iN EqUiTYFOR THE YEAR ENDED 30 JUNE 2007
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Group Company
2007 2006 2007 2006
Notes $000 $000 $000 $000
Net (deficit)/surplus for the year (4,500) 13,302 (4,540) 13,302
Totalrecognisedrevenuesandexpenses (4,500) 13,302 (4,540) 13,302
Distributions to the shareholder Dividends declared and/or paid in the year 7 0 84,525 0 84,525
Movementsinequityfortheyear (4,500) (71,223) (4,540) (71,223)
Equityatstartoftheyear 198,861 270,084 198,922 270,145
Equityatendoftheyear 194,361 198,861 194,382 198,922
The accompanying notes form part of and should be read as part of these Financial Statements.
sTATEmENT OF FiNANciAL POsiTiONAS AT 30 JUNE 2007
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Group Company
2007 2006 2007 2006
Notes $000 $000 $000 $000
Equity Share capital 5 140,000 140,000 140,000 140,000 Retained earnings 54,361 58,861 54,382 58,922
Totalequity 194,361 198,861 194,382 198,922
Currentliabilities Bank overdraft (unsecured) 764 1,232 764 1,232 Payables 6 65,673 46,673 65,671 46,699 Provisions 7 7,979 14,626 7,979 14,525
74,416 62,531 74,414 62,456
Noncurrentliabilities Payables 6 2,135 1,956 2,135 1,956 Borrowings 8 42,750 49,000 42,750 49,000
44,885 50,956 44,885 50,956
Totalequityandliabilities 313,662 312,348 313,681 312,334
Currentassets Cash balances 520 161 520 161 Short term deposits 13,070 14,521 13,070 14,521 Receivables and prepayments 9 53,959 51,202 53,913 51,145 Future income tax benefit 12 4,553 0 4,553 0 Property, plant and equipment intended for sale 10 1,620 0 1,620 0 Inventories 302 356 302 356
74,024 66,240 73,978 66,183
Noncurrentassets Property, plant and equipment 11 115,705 117,752 115,705 117,752 Deferred tax asset 12 4,242 7,324 4,112 7,099 Investments in subsidiaries 13 0 0 195 268 Other investments 42 42 42 42
119,989 125,118 120,054 125,161
Intangibleassets Programme rights 15 114,698 114,801 114,698 114,801 Frequency licences 4,951 6,189 4,951 6,189
119,649 120,990 119,649 120,990
Totalassets 313,662 312,348 313,681 312,334
The accompanying notes form part of and should be read as part of these Financial Statements. On behalf of the Board
Sir John Anderson John Goulter Auckland Chairman Director 30 August 2007
sTATEmENT OF cAsh FLOWsFOR THE YEAR ENDED 30 JUNE 2007
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Group Company
2007 2006 2007 2006
Notes $000 $000 $000 $000
Cashflowsfromoperatingactivities Cash was provided from: Receipts from customers 379,111 409,422 379,083 409,324 Interest received 1,105 2,510 1,105 2,510
Cash was applied to: Payments to suppliers and employees (339,272) (378,705) (339,238) (378,450) Interest paid (4,128) (82) (4,128) (82) Taxation paid (3,148) (9,020) (3,217) (9,523)
Net cash flows from operating activities 18 33,668 24,125 33,605 23,779
Cashflowstoinvestingactivities Cash was provided from: Sale of property, plant and equipment 17 59 7 39
Cash was applied to: Purchase of property, plant and equipment (13,479) (11,647) (13,479) (12,004)
Net cash flows to investing activities (13,462) (11,588) (13,472) (11,965)
Cashflowstofinancingactivities Cash was provided from: Drawdown of loan 0 49,000 0 49,000 Borrowings repaid by subsidiaries 0 0 73 723
Cash was applied to: Dividends paid (14,525) (80,452) (14,525) (80,452)Repayment of loan (6,250) 0 (6,250) 0
Net cash flows to financing activities (20,775) (31,452) (20,702) (30,729)
Netdecreaseincashheld (569) (18,915) (569) (18,915)Addopeningcashbroughtforward 13,450 32,308 13,450 32,308Effect of exchange rate changes on cash (55) 57 (55) 57
Endingcashcarriedforward 12,826 13,450 12,826 13,450
Ending cash carried forward comprises: Cash 520 161 520 161 Short term deposits 13,070 14,521 13,070 14,521Bank overdraft (764) (1,232) (764) (1,232)
12,826 13,450 12,826 13,450
The accompanying notes form part of and should be read as part of these Financial Statements.
sTATEmENT OF AccOUNTiNg POLiciEsFOR THE YEAR ENDED 30 JUNE 2007
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ReportingEntityTelevision New Zealand Limited (the “Company”) is a limited liability company incorporated in New Zealand under the Companies Act 1993 and is wholly owned by the Crown. The Company is bound by the requirements of the Television New Zealand Act 2003. The Crown does not guarantee the liabilities of Television New Zealand Limited in any way.
Financial Statements for the Company and consolidated financial statements are presented. The consolidated financial statements comprise the Company, its subsidiaries and joint ventures (the “Group”).
BasisofPreparationThe Financial Statements comprise the Statement of Financial Performance, Statement of Movements in Equity, Statement of Financial Position, Statement of Cash Flows, Statement of Accounting Policies and the notes to these statements. The Financial Statements have been prepared in accordance with generally accepted accounting practice in New Zealand, the Financial Reporting Act 1993 and the Crown Entities Act 2004. The Financial Statements have been prepared on the basis of historical cost unless otherwise noted within the specific accounting policy.
BasisofPreparingConsolidatedFinancialStatementsSubsidiaries Subsidiaries are those entities controlled, directly or indirectly, by the Group. Subsidiaries are consolidated under the purchase method on a line-by-line basis.
Joint Ventures Joint ventures are joint arrangements with other parties in which the Company has several liability in respect of the costs and liabilities, and shares in any resulting output. The Company’s share of assets, liabilities, revenues and expenses of joint ventures are incorporated into the Company and consolidated financial statements on a line-by-line basis using the proportionate method.
Acquisition or Disposal during the year Where an entity becomes or ceases to be a Group entity during the year, the results of that entity are included in the net surplus of the Group from the date of acquisition or up to the date that control or significant influence ceased.
Transactions eliminated on Consolidation All intercompany transactions, balances and unrealised surpluses and deficits on transactions between Group companies are eliminated on consolidation.
OperatingRevenueRevenue recognised in the Statement of Financial Performance comprises amounts received and receivable for goods and services supplied to customers in the ordinary course of business. Revenue is deferred where payment has been received in advance of the completion of a contract.
Interest revenue is recognised in the Statement of Financial Performance as it accrues. Dividend income is recognised in the Statement of Financial Performance when it is received or qualifies for recognition.
Television production funding is recognised as income in the Statement of Financial Performance when it is earned. This is on receipt of the funds or fulfilment of specific conditions attached to the funding.
Direct government funding received from the Ministry for Culture and Heritage is recognised in the Statement of Financial Performance when specific conditions attached to the funding have been fulfilled, generally on receipt.
sTATEmENT OF AccOUNTiNg POLiciEs (cONTiNUEd)FOR THE YEAR ENDED 30 JUNE 2007
InvestmentsInvestments in subsidiary companies are recorded at cost less any amounts written off as an impairment in value.
Property,PlantandEquipmentProperty, plant and equipment is recorded at cost less depreciation unless there is an impairment in the value of the asset in which case the asset is written down to recoverable amount immediately. Cost includes the cost to acquire the asset and other directly attributable costs incurred to bring the asset to the location and condition for its intended use. Costs cease to be capitalised as soon as an asset is ready for productive use.
Where an item of property, plant and equipment is disposed of, the gain or loss recognised in the Statement of Financial Performance is calculated as the difference between the sale price and the carrying value of the item of property, plant and equipment.
Property, plant and equipment designated to be sold within the next financial period is classified as a current asset at the lower of net book value or net market value.
DepreciationDepreciation is provided for on a straight-line basis on all tangible items of property, plant and equipment other than freehold land and work in progress, at rates calculated to allocate the assets’ cost over their estimated useful lives.
Major depreciation periods are: Freehold buildings 40 years Leasehold improvements 3 to 10 years Transmission equipment 10 years Studio equipment 5 to 10 years Other plant and equipment 5 to 10 years Information systems 1 to 5 years Motor vehicles 5 to 10 years
Intangiblesa)ProgrammeRights Programme rights are recorded as follows: (i) Programmes produced by Television New Zealand Limited, either completed or still in production and not in licence, are recorded at direct cost including a proportion of production-related overheads. These rights are amortised from the date the licence period commences.
(ii) Programmes commissioned by Television New Zealand Limited and made by independent production houses, either completed or still in production, are recorded at cost less amounts amortised. These rights are amortised from the date the licence period commences.
(iii) Rights acquired to screen overseas productions are recorded at cost less amounts amortised. These rights are amortised from the date the licence period commences.
Programme rights are utilised on the following basis: (i) Non movie programme rights are amortised on a systematic basis such that all rights are amortised within a period not exceeding one year from the broadcast licence period start date.
(ii) Movie programme rights are amortised on a systematic basis such that all rights are amortised within a period not exceeding three years from the broadcast licence period start date.
(iii) The impact of any changes in the application of the programme rights utilisation policy is reflected in the Statement of Financial Performance in the period in which the change is made.
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sTATEmENT OF AccOUNTiNg POLiciEs (cONTiNUEd)FOR THE YEAR ENDED 30 JUNE 2007
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b)FrequencyLicences Frequency Licences are recorded at cost less amortisation, less any amounts written off as a permanent diminution in value. Amortisation is calculated on a diminishing value methodology using the sum of digits over the remaining life of the licence.
InventoriesInventories comprise technical stores and videotape. All inventories are recorded at the lower of cost or net realisable value. Cost is determined on a weighted average basis.
ReceivablesReceivables are valued at their estimated realisable value. An estimate is made for doubtful receivables based on a review of all outstanding amounts at year end. Bad debts are expensed in the Statement of Financial Performance when considered irrecoverable.
TaxationThe taxation expense in the Statement of Financial Performance includes both the current year’s provision and the income tax effects of timing differences calculated using the liability method.
Tax effect accounting has been applied on a comprehensive basis to all timing differences. A debit balance in the deferred taxation account, arising from timing differences or income tax losses, is only recognised if there is virtual certainty of realisation.
LeasesGroup entities lease certain land and buildings, motor vehicles, plant and equipment and satellite transponders.
Operating lease payments, where the lessors effectively retain substantially all the risks and benefits of ownership of the leased items, are included in the Statement of Financial Performance in equal amounts over the lease term.
ForeignCurrenciesTransactions in foreign currencies are converted at the exchange rate ruling at the date of the transaction except where forward currency contracts have been taken out to cover specific foreign currency commitments. Where forward foreign currency contracts have been taken out, the transaction is converted at the rate specified in the contract.
Monetary assets and liabilities in foreign currencies at balance date not covered by forward exchange contracts are translated at the exchange rates ruling at balance date. Exchange differences arising on the translation of monetary assets and liabilities in foreign currencies are recognised in the Statement of Financial Performance, except as detailed below. Monetary assets and liabilities in foreign currencies at balance date covered by forward exchange contracts are translated at the exchange rates specified in those contracts ruling at that date.
DerivativeFinancialInstrumentsThe Group uses derivative financial instruments within predetermined policies and limits in order to reduce its exposure to fluctuations in foreign currency exchange rates and interest rates.
Derivative financial instruments that are designated as hedges are deferred and recognised in the measurement of the specific item or in the case of a general hedge in the period in which the underlying transaction occurs.
The Group does not engage in speculative transactions or hold derivative financial instruments for trading purposes.
EmployeeBenefitsA liability for annual leave, long service leave and retirement leave accruing to employees is recognised in the Statement of Financial Position. The liability is stated at the present value of the estimated future cash outflows to be incurred resulting from employees’ services provided up to balance date.
sTATEmENT OF AccOUNTiNg POLiciEs (cONTiNUEd)FOR THE YEAR ENDED 30 JUNE 2007
RestructuringProvisionsRestructuring occurs when the Group materially changes the manner in which its business is conducted or the Group is organised and operated. A provision for restructuring is recognised when a formal and detailed restructuring plan has been approved and the restructuring has either commenced or the Group cannot otherwise withdraw from its plans. Costs relating to the ongoing activities of the Group are not included in the provision.
StatementofCashFlowsThe following definitions apply to terms used in the Statement of Cash Flows:
(i) Cash means coins, notes, cash on deposit with banks and bank overdrafts.
(ii) Investing activities comprise the purchase and sale of property, plant and equipment and investments. Interest and dividends received are included in operating activities.
(iii) Financing activities comprise the changes in the equity structure of the Group. These include the issuing and redemption of share capital and the payment of dividends. Cash flows in respect of the proceeds or repayment of loans are presented net where the movements are roll-overs covered by an arranged finance facility.
(iv) Operating activities include all transactions and events that are not investing or financing activities.
NonRecurringItemsNon recurring items are those items of income and expenditure that are not expected to occur as part of the normal course of business activities.
ChangesinAccountingPolicyUniform accounting policies have been applied throughout the Group on a consistent basis with those of the previous year.
40
NOTEs TO ThE FiNANciAL sTATEmENTsFOR THE YEAR ENDED 30 JUNE 2007
�1
2007 2006 2007 2006
$000 $000 $000 $000
1.Operatingrevenue Advertising revenue 312,824 334,753 312,824 334,753 Government funding (MCH, NZ On Air, Te Mangai Paho) 33,559 29,382 33,559 29,382 Commercial production funding 4,658 4,658 4,658 4,658 Satellite sub lease revenue 411 9,664 411 9,664 Other trading revenue 22,643 28,394 22,643 28,394 Interest revenue 1,108 2,507 1,108 2,507 Net foreign currency gains 0 432 0 424
Totaloperatingrevenue 375,203 409,790 375,203 409,782
2.Operatingexpenses Bad debts written off 123 258 117 246Movement in provision for doubtful debts 102 (110) 102 (64)Directors’ fees 311 303 311 303 Frequency licences amortisation 1,238 1,373 1,238 1,373 Net foreign currency losses 766 0 764 0Gain on sale of property, plant and equipment (10) (42) 0 (22)Rental and operating lease costs 4,298 15,884 4,298 15,884 Programme utilisation 229,780 234,828 229,780 234,828Movement in provision for net liabilities of subsidiaries 0 0 0 (169)
Auditors’ fees - audit services 265 228 265 228 - other services 25 71 25 71
Depreciation Freehold buildings 2,556 2,495 2,556 2,495 Leasehold improvements 63 0 63 0 Transmission equipment 1,184 1,228 1,184 1,228 Studio equipment 7,151 7,522 7,151 7,862 Other plant and equipment 746 784 746 793 Information systems 2,016 1,952 2,016 1,959 Motor vehicles 183 209 183 209
13,899 14,190 13,899 14,546
3.Nonrecurringreorganisationcosts 11,145 0 11,145 0
Costs associated with the reorganisation of the Company to meet the approved five-year strategic plan have been fully recognised. These costs include redundancy, outplacement, consultancy and other costs associated with the reorganisation.
Group Company
NOTEs TO ThE FiNANciAL sTATEmENTs (cONTiNUEd)FOR THE YEAR ENDED 30 JUNE 2007
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Group Company
2007 2006 2007 2006
$000 $000 $000 $000
4.Taxation Net surplus before taxation (5,983) 19,921 (6,055) 19,701
Taxation at 33% (1,974) 6,574 (1,998) 6,501
Adjusted for the tax effect of: Non deductible expenditure 207 231 207 175Prior period adjustments 17 (186) 17 (277)
Taxation (benefit)/expense (1,750) 6,619 (1,774) 6,399Impact of change in corporate tax rate 267 0 259 0
Total tax (benefit)/expense (1,483) 6,619 (1,515) 6,399
The Taxation Expense comprises: Current taxation (12) 10,891 51 11,098Deferred taxation (1,471) (4,272) (1,566) (4,699)
(1,483) 6,619 (1,515) 6,399
On 17 May 2007 the New Zealand Government announced a change in the corporate tax rate from 33% to 30% from the beginning of the 2008/09 income year. This change in income tax rate has resulted in an additional charge to tax expense of $267,000 and a corresponding reduction in the deferred tax asset.
2007 2006
$000 $000
5.ShareCapital Opening balance 140,000 140,000
Closing balance 140,000 140,000
As at 30 June 2007 there were 140,000,000 shares issued and fully paid (2006: 140,000,000). All ordinary shares rank equally with one vote attached to each fully paid ordinary share.
2007 2006 2007 2006
$000 $000 $000 $000
6.Payables Current Trade payables and accruals 48,536 36,933 48,534 36,930 Revenue in advance 9,451 1,953 9,451 1,953 Employee entitlements 7,686 7,669 7,686 7,669 Tax payable 0 118 0 147
65,673 46,673 65,671 46,699
Non current Employee entitlements 2,135 1,956 2,135 1,956
Group Company
Group and Company
NOTEs TO ThE FiNANciAL sTATEmENTs (cONTiNUEd)FOR THE YEAR ENDED 30 JUNE 2007
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Group Company
2007 2006 2007 2006
$000 $000 $000 $000
7.Provisions Restructuring 7,979 101 7,979 0 Dividend 0 14,525 0 14,525
7,979 14,626 7,979 14,525
Restructuring provisions Opening balance 101 329 0 0 Raised during the year 7,979 0 7,979 0Utilised during the year (36) (169) 0 0 Reversed during the year (65) (59) 0 0
Closing balance 7,979 101 7,979 0
Restructuring provisions relate to redundancy, outplacement and other costs associated with the reorganisation of TVNZ which commenced in December 2006. The amount provided is based on a detailed analysis of the reorganisation plan. The reorganisation is expected to be substantially completed by December 2007.
Dividend provision Opening balance 14,525 10,452 14,525 10,452 Raised during the year 0 84,525 0 84,525Paid during the year (14,525) (80,452) (14,525) (80,452)
Closing balance 0 14,525 0 14,525
8.Borrowings Bank borrowings (unsecured) 42,750 49,000 42,750 49,000
Borrowing facilities are repayable as follows: Within one year 0 0 0 0 One to two years 0 0 0 0 Three to five years 42,750 49,000 42,750 49,000
42,750 49,000 42,750 49,000
The Group has four revolving cash advance facilities committed to a maximum amount of $120 million (June 06 $75 million); these facilities expire in January 2010.
9.Receivablesandprepayments Advertising receivables 29,534 29,911 29,534 29,911 Other trade receivables 10,345 7,626 10,345 7,593Less provision for doubtful debts (312) (210) (312) (210)Trade prepayments 3,688 5,927 3,665 5,903 Prepaid programme rights 7,662 7,948 7,662 7,948Tax receivable 3,042 0 3,019 0
53,959 51,202 53,913 51,145
10.Property,plantandequipmentintendedforsale Freehold land 1,250 0 1,250 0 Buildings 370 0 370 0
1,620 0 1,620 0
NOTEs TO ThE FiNANciAL sTATEmENTs (cONTiNUEd)FOR THE YEAR ENDED 30 JUNE 2007
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2007 2006 Accum. Book Accum. Book Cost Depn. Value Cost Depn. Value $000 $000 $000 $000 $000 $000
11.Property,plantandequipment Group Freehold land 18,551 0 18,551 19,801 0 19,801 Freehold buildings 80,606 34,482 46,124 81,010 32,891 48,119 Leasehold improvements 973 571 402 441 434 7 Transmission equipment 25,600 19,477 6,123 24,935 18,328 6,607 Studio equipment 126,293 103,566 22,727 125,179 97,704 27,475 Other plant and equipment 9,125 6,058 3,067 9,836 6,083 3,753 Information systems 34,854 29,336 5,518 31,499 27,333 4,166 Motor vehicles 2,446 1,586 860 2,489 1,446 1,043 Work in progress 12,333 0 12,333 6,781 0 6,781
310,781 195,076 115,705 301,971 184,219 117,752
Company Freehold land 18,551 0 18,551 19,801 0 19,801 Freehold buildings 80,606 34,482 46,124 81,010 32,891 48,119 Leasehold improvements 973 571 402 441 434 7 Transmission equipment 25,600 19,477 6,123 24,935 18,328 6,607 Studio equipment 126,293 103,566 22,727 124,937 97,462 27,475 Other plant and equipment 9,125 6,058 3,067 9,836 6,083 3,753 Information systems 34,854 29,336 5,518 31,499 27,333 4,166 Motor vehicles 2,446 1,586 860 2,489 1,446 1,043 Work in progress 12,333 0 12,333 6,781 0 6,781
310,781 195,076 115,705 301,729 183,977 117,752
The Directors are satisfied that the fair value of land and buildings is not less than their book value and that there has been no impairment in the overall value of land and buildings.
2007 2006 2007 2006
$000 $000 $000 $000
12.Futureincometaxbenefit Balance at start of the year 7,324 3,052 7,099 2,400Deferred portion of current year tax expense (2,815) 4,272 (2,728) 4,699Tax losses 4,553 0 4,553 0Effect of change in company tax rate (267) 0 (259) 0
Balance at end of the year 8,795 7,324 8,665 7,099
Current 4,553 0 4,553 0 Non current 4,242 7,324 4,112 7,099
8,795 7,324 8,665 7,099
The Group has tax losses of $4,553,000 (2006: nil) which have been recognised in the current period. The realisation of this income tax benefit is subject to the Group meeting the requirements of income tax legislation.
Group Company
NOTEs TO ThE FiNANciAL sTATEmENTs (cONTiNUEd)FOR THE YEAR ENDED 30 JUNE 2007
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Company
Group Company
2007 2006
$000 $000
13.Investmentsinsubsidiaries Shares 1,416 1,416 Advances to subsidiaries 136 209Advances from subsidiaries (1,357) (1,357)
195 268
Subsidiaries of Television New Zealand Limited comprise: Company Principal Activity % holding
2007 2006
TVNZ Satellite Services Limited Non trading 100% 100% nzoom Limited Non trading 100% 100% TVNZ International Limited Non trading 100% 100% Avalon Studios Limited Non trading 100% 100% Horizon Pacific Television Limited and subsidiaries Non trading 100% 100%
All companies are incorporated in New Zealand. All have balance dates of 30 June.
14.InterestinJointVentureThe Company has a 44.9% interest in Freeview Limited an incorporated joint venture with CanWest TVworks Limited, Maori Television Service Limited and Radio New Zealand Limited. Freeview Limited is audited by Ernst & Young and has a balance date of 30 June. The following share of assets and liabilities of Freeview Limited have been included in the financial statements.
2007 2006 2007 2006
$000 $000 $000 $000
Assets Current assets 722 0 722 0
Liabilities Current liabilities 722 0 722 0
Share of revenues 329 0 329 0Share of expenses (329) 0 (329) 0
Share of operating surplus before taxation 0 0 0 0
15.Programmerights Current 92,057 86,992 92,057 86,992 Non current 22,641 27,809 22,641 27,809
114,698 114,801 114,698 114,801
NOTEs TO ThE FiNANciAL sTATEmENTs (cONTiNUEd)FOR THE YEAR ENDED 30 JUNE 2007
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2007 2006
$000 $000
16.Imputationcreditaccount Balance at start of the year 9,099 64 Income tax paid/(received) during year 3,111 8,886 Adjustment to opening balance 0 149
Balance at end of the year 12,210 9,099
17.Financialinstruments
Exposure to foreign exchange, interest rate and credit risk arises in the ordinary course of the Group’s business.
(a)ForeignExchangeRisk The Group undertakes transactions denominated in foreign currencies, predominantly Australian dollars, for programme purchase commitments. As a result of these transactions, the Group has exposure to foreign exchange risk. The Group’s policy is to manage these risks, as they arise, in accordance with prudent commercial practice.
Derivative financial instruments are utilised to reduce exposure to fluctuations in foreign exchange rates. The principal or notional amounts of these instruments are not recorded in the Statement of Financial Position, as they are off-balance sheet contracts.
The principal or notional amounts of derivative financial instruments outstanding at balance date were:
2007 2006
$000 $000
Forward foreign exchange contracts 124,332 127,501
At balance date the Group has current assets US$72,000 ($94,000) [June 2006: US$246,000 ($408,000)], current liabilities A$4,000 ($4,500) [June 2006: A$31,000 ($38,000)] and current liabilities £1,000 ($3,000) [June 2006: current assets £17,000 ($52,000)] that are not hedged. The Group does not have any other foreign currency monetary assets or liabilities that are not hedged for the lesser of the next twelve months and the period until settlement.
(b)InterestRateRisk Interest rate risk is the risk that the value of the Group’s financial instruments will fluctuate due to changes in market interest rates. It is Group policy to manage its interest rate exposure in accordance with prudent commercial practice.
The principal or notional amounts of interest rate contracts outstanding at balance date were:
2007 2006
$000 $000
Interest rate swaps 25,000 28,000
Group and Company
Group and Company
Group and Company
NOTEs TO ThE FiNANciAL sTATEmENTs (cONTiNUEd)FOR THE YEAR ENDED 30 JUNE 2007
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17.Financialinstruments(continued)(c)RepricingAnalysis The following tables indicate the effective interest rates, the earliest period in which recognised financial instruments reprice and the extent to which these factors have been modified by off-balance sheet financial instruments. This information provides a basis for evaluation of the interest rate risk to which the Group is exposed in the future.
Effective Within One to Two Two to Five Group Interest Rate One Year Years Years Total $000 $000 $000 $000
Assets Cash and bank 5.01% 520 0 0 520 Short term deposits 8.25% 13,070 0 0 13,070
Liabilities Bank overdraft 8.85% (764) 0 0 (764) Debt 8.33% (42,075) 0 0 (42,075)
Off Balance Sheet Interest rate swaps 7.22% 25,000 0 0 25,000
Repricing profile (4,249) 0 0 (4,249)
Effective Within One to Two Two to Five Group Interest Rate One Year Years Years Total $000 $000 $000 $000
Assets Cash and bank 1.79% 161 0 0 161 Short term deposits 7.41% 14,521 0 0 14,521
Liabilities Bank overdraft 9.00% (1,232) 0 0 (1,232) Debt 7.51% (49,000) 0 0 (49,000)
Off Balance Sheet Interest rate swaps 7.24% 3,000 25,000 0 28,000
Repricing profile (32,550) 25,000 0 (7,550)
2007
2006
(d)CreditRisk In the normal course of its business the Group incurs credit risk with financial institutions and trade receivables. The Group has a credit policy which is used to limit counterparty risk through restrictions on the amount of short-term investments that may be placed with any one approved financial institution.
The major concentration of credit risk within trade receivables is the extension of credit to advertisers through accredited advertising agencies. These agencies are required to comply with a formal accreditation process, which includes the regular review of their financial position. Each accredited agency is required to meet a certain financial ratio or alternatively provide other forms of financial reassurance to the Group. The Group has a credit insurance policy for a selected range of agencies, to protect against loss through default. The Group does not have any other significant concentrations of credit risk.
The Group does not require collateral or security to support financial instruments due to the quality of the financial institutions with which it deals.
NOTEs TO ThE FiNANciAL sTATEmENTs (cONTiNUEd)FOR THE YEAR ENDED 30 JUNE 2007
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17.Financialinstruments(continued)The maximum exposure to credit risk arising from derivative financial instruments is as follows:
2007 2006
$000 $000
Forward foreign exchange contracts 0 7,541 Interest rate swaps 71 17
For foreign exchange contracts, the mark to market value of the contract is used to estimate the maximum credit risk arising from derivative financial instruments. For interest rate swaps, the net interest receivable is used to estimate the maximum credit risk.
The maximum credit risk in relation to on balance sheet financial instruments is equal to their carrying value.
(e)FairValues The estimated fair value of the Group’s financial assets and liabilities relating to foreign exchange and interest rates are noted below. The purpose of reporting the carrying and fair values is to show the extent to which the Group is carrying an exposure from its foreign exchange and interest rate hedging activities. The table below identifies whether the Group is in a notional gain or loss position as if the Group had closed out the instruments at balance date.
The Group revalues certain foreign currency general hedges and the unrealised loss of $1,690,000 is included in the Statement of Financial Performance.
In addition the Group also has other foreign currency general hedges and specific forward exchange contracts representing specific hedges against exposures for sports rights and capital expenditure. At balance date, these hedges would have given rise to a realised loss of $6,417,000 had the Group closed the contracts out. These losses have not been included in the Statement of Financial Performance.
Group and Company Group and Company
2007 2006 $000 $000
Carrying Fair Carrying Fair Value Value Value Value
Financial Instruments Forward foreign exchange contracts (1,690) (8,107) 1,517 7,541Interest rate swaps 2 143 0 (7)
The following method was used to estimate the fair and carrying values of forward foreign exchange contracts:
• The fair value is estimated based on the quoted market price of these instruments. • The carrying value of the forward foreign exchange contracts represents the unrealised gain or loss on certain contracts entered into for general hedges. • The carrying value of interest rate swaps represents the net interest accrued.
Other Financial Instruments - Fair Values The carrying value of cash, short term deposits, advertising and other trade receivables, bank overdraft, trade payables and accruals, employee entitlements, tax payable and borrowings is equivalent to the fair value.
Group and Company
NOTEs TO ThE FiNANciAL sTATEmENTs (cONTiNUEd)FOR THE YEAR ENDED 30 JUNE 2007
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18.Reconciliationofnetsurplusfortheyearwithcashflowsfromoperatingactivities
Group Company
2007 2006 2007 2006
$000 $000 $000 $000
Netsurplusasperstatementoffinancialperformance (4,500) 13,302 (4,540) 13,302 Add/(deduct) non cash items: Depreciation and impairment 13,899 14,190 13,899 14,546 Amortisation of licences 1,238 1,373 1,238 1,373 Unrealised foreign currency losses/(gains) 894 136 894 143 Change in future income tax benefit (1,471) (4,272) (1,566) (4,699)Movement in provision for doubtful debts and bad debts written off 225 148 219 182 Movement in provision for net liabilities of subsidiaries 0 0 0 (169) Employee entitlements non current 179 (572) 179 (572)
14,964 11,003 14,863 10,804
Items classified as investing activities: Programme rights 103 (5,885) 103 (5,885) Gain on disposal of property, plant and equipment (10) (42) 0 (22)
93 (5,927) 103 (5,907)
Movements in working capital: Trade receivables and prepayments 40 7,968 11 7,872 Inventories 54 47 54 47 Payables and other provisions 26,177 (4,139) 26,280 (3,914)Tax provision (3,160) 1,871 (3,166) 1,575
23,111 5,747 23,179 5,580
Netcashflowsfromoperatingactivities 33,668 24,125 33,605 23,779
19.Programmerightscommitments Commitments for the purchase of programme rights are: Within one year 96,417 106,802 96,417 106,802 One to two years 59,569 69,488 59,569 69,488 Later than two years 108,499 170,341 108,499 170,341
264,485 346,631 264,485 346,631
Commitments for programme rights are primarily denominated in Australian dollars and are converted at the exchange rate ruling at the date of the transaction and revalued at year end. The commitments are determined with reference to the licence period start dates.
20.Leasecommitments Commitments under non-cancellable operating leases are: Within one year 4,123 3,464 4,123 3,464 One to two years 2,559 2,276 2,559 2,276 Two to five years 2,142 2,029 2,142 2,029 Later than five years 286 565 286 565
9,110 8,334 9,110 8,334
Neither the Group nor the Company had any finance lease commitments at balance date (2006 – nil).
21.Capitalcommitments Capital commitments are: Within one year 7,003 7,614 7,003 7,614
NOTEs TO ThE FiNANciAL sTATEmENTs (cONTiNUEd)FOR THE YEAR ENDED 30 JUNE 2007
50
Group
22.Contingentliabilities In the normal course of business various legal claims have been made against Television New Zealand Limited. Given the stage of proceedings and uncertainty as to the outcomes of the cases, no estimate of the financial effect can be made and no provision for any potential liability has been made in the financial statements.
23.Relatedpartytransactions The Company did not purchase or supply goods and services from or to any of its subsidiaries during the year (2006 - $nil).
The Crown is a 100 percent shareholder in Television New Zealand Limited. All transactions with other Crown entities, State Owned Enterprises and Government departments are at arm’s length, and it is considered that these do not fall within the intended scope of related party disclosures.
24.Segmentinformation (a) Industry Segment The Group operates predominantly in one industry segment: the broadcasting and production of television programmes and channels.
(b) Geographic Segment The Group operates predominantly in one geographic segment: New Zealand.
25.Comparisonofbudgettoactualresults The Company prepares an annual Statement of Intent and Business Plan which is approved by the Shareholder and incorporates financial measures for the ensuing year.
A comparison of the Group’s actual results for the year ended 30 June 2007 with those budgeted follows.
Actual Budget
$000 $000
a)FinancialPerformance Operating revenue 375,203 399,161Operating expenses (365,905) (368,168)
Operating surplus before non recurring expenditure, interest expense and income tax 9,298 30,993
Non recurring expenditure (11,145) 0
Interest expense (4,136) (4,116)Income tax benefit/(expense) 1,483 (8,870)
Net (deficit)/surplus for the year (4,500) 18,007
b)Movementsinequity Net (deficit)/surplus for the year (4,500) 18,007Distributions to the shareholder 0 (12,605)
Movements in equity for the year (4,500) 5,402
Equity at start of the year 198,861 197,038
Equity at end of the year 194,361 202,440
The decrease in operating revenue against budget is primarily a result of lower television advertising revenue due to a fall in audience share of TV ONE and TV2. Operating expenses have been held at below budget levels. The unbudgeted non recurring expenditure relates to the company reorganisation, please refer note 3 for further details. The positive income tax variance is a direct result of the recorded deficit.
The budgeted distributions to Shareholders are based on 70% of the net surplus; since a net deficit has been recorded in the current financial period no distribution has been provided for.
NOTEs TO ThE FiNANciAL sTATEmENTs (cONTiNUEd)FOR THE YEAR ENDED 30 JUNE 2007
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Group
Actual Budget
$000 $000
25.Comparisonofbudgettoactualresults(continued)c)FinancialPosition Share capital 140,000 140,000 Retained earnings 54,361 62,440
Total equity 194,361 202,440
Current liabilities 74,416 70,296
Non current liabilities 44,885 47,389
Total funds employed 313,662 320,125
Current assets 74,024 69,236
Non current and intangible assets 239,638 250,889
Total assets employed 313,662 320,125
d)Cashflows Net cash flows from/(to):Operating activities 33,668 34,545Investing activities (13,462) (17,000) Financing activities (20,775) (20,437)
Net (decrease)/increase in cash held (569) (2,892)
Add opening cash brought forward 13,450 16,152
Effect of exchange rate changes on cash (55) 0
Ending cash carried forward 12,826 13,260
Certain balance sheet budgeted amounts have been reclassified to give a direct comparison to actual results.
Current liabilities are greater than budget primarily due to the provision for restructuring. Current assets are greater than budget due to an increase in future income tax benefits and tax receivable. These increases have offset lower levels of advertising debtors. Non current and intangible assets are lower than budget as expenditure on property, plant and equipment was below budget and programme rights holdings are below expectations.
Overall cash flows exceeded budget expectations. This has resulted in lower levels of borrowings at year end than budgeted.
26.Eventssubsequenttobalancedate There have been no significant events occurring since balance date requiring disclosure.
NOTEs TO ThE FiNANciAL sTATEmENTs (cONTiNUEd)FOR THE YEAR ENDED 30 JUNE 2007
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27.Implementationofinternationalfinancialreportingstandards In December 2002, the New Zealand Accounting Standards Review Board announced that all New Zealand reporting entities required to comply with NZ GAAP under the Financial Reporting Act 1993 will be required to adopt New Zealand equivalents to International Financial Reporting Standards (NZ IFRS) for reporting periods beginning on or after 1 January 2007, with the option of early adoption for periods beginning on or after 1 January 2006.
The Minister of Finance in 2003 announced that the Crown will be adopting NZ IFRS for reporting periods beginning on or after 1 January 2007. The Group will therefore be required to prepare financial statements under NZ IFRS for the year ending 30 June 2008, including comparative financial information for the year ending 30 June 2007.
In 2005 the Group established a project team to plan and implement the Group’s transition to NZ IFRS. The project team has completed a diagnostic of the differences between current NZ GAAP and NZ IFRS, finalised NZ IFRS accounting policies and completed an NZ IFRS compliant opening balance sheet position as at 1 July 2006. The significant differences between the position previously reported under NZ GAAP and NZ IFRS are set out below:
FinancialInstruments The Group maintains an off balance sheet portfolio of forward foreign currency contracts to hedge currency risks resulting from the purchase of programme rights and other goods and services denominated in foreign currencies. The Group also uses interest rate swap agreements to hedge interest rate risks. Under current NZ GAAP these contracts are accounted for as off balance sheet hedges with any gains or losses being recognised on the same basis as the underlying hedged item.
Under NZ IFRS all derivative contracts, including foreign exchange and interest rate hedges, will be recognised at fair value in the Statement of Financial Position. Changes in the fair value of the derivatives will be recognised in the Statement of Financial Performance unless strict hedge accounting criteria are met. The project team has identified that a large proportion of programme rights purchases, denominated in a foreign currency, contain an embedded derivative. Under NZ IFRS hedge accounting cannot be applied to the embedded derivative portion of the contract. For other foreign currency and interest rate hedging the Company intends to apply hedge accounting where the criteria have been met.
Where the Group is unable to meet the strict NZ IFRS hedge accounting criteria volatility in earnings may result.
The total fair value of hedges that were treated as effective under NZ GAAP and will be treated as effective in the NZ IFRS opening balance sheet was $1.5 million. These hedges will be treated as discontinued in the 2007 financial year.
At 1 July 2006 a fair value adjustment of hedges that do not meet the hedging criteria is expected to result in a asset of $4.0 million, a fair value adjustment of embedded derivatives is expected to result in a liability of $2.8 million resulting in a net increase in retained earnings of $1.2 million.
GovernmentGrants The Group receives grants from various Government agencies in the normal course of business. Under current NZ GAAP direct Government funding from the Ministry for Culture and Heritage is recognised in the Statement of Financial Performance when specific conditions attached to the funding have been fulfilled, generally on receipt.
Under NZ IFRS Government Grants should only be recognised as income over the period necessary to match them with the costs they are intended to compensate. The project team has identified that grants from Government agencies currently recognised as revenue on receipt of the grant will under NZ IFRS be recognised as revenue in the Statement of Financial Performance at the same time the associated expenditure is recognised.
At 1 July 2006 revenue in advance of $27.4 million is expected to be recognised as a liability with a corresponding decrease in retained earnings.
Property,plantandequipment Under NZ IFRS software is classified as part of intangible asset rather than property, plant and equipment.
At 1 July 2006 intangible assets are expected to increase by $7.5 million with a corresponding decrease in property, plant and equipment.
NOTEs TO ThE FiNANciAL sTATEmENTs (cONTiNUEd)FOR THE YEAR ENDED 30 JUNE 2007
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27.Implementationofinternationalfinancialreportingstandards(continued)Programmerights Under NZ IFRS certain programme development costs will no longer meet the criteria to be capitalised as intangible assets. At 1 July 2006 programme rights are expected to decrease by $0.7 million with a corresponding decrease in retained earnings.
DeferredTaxation Under NZ IFRS deferred tax will be calculated based on a balance sheet approach. This method recognises deferred tax assets and liabilities by reference to temporary differences between the accounting and tax values of balance sheet items. Current NZ GAAP recognises differences between the accounting surplus and taxable income.
At 1 July 2006 the impact of the changes to NZ IFRS are expected to result in the deferred tax asset increasing by $8.4 million.
Summary The areas identified above should not be taken as an exhaustive list of all the differences between current NZ GAAP and NZ IFRS. It is possible that future developments to NZ IFRS could materially change the nature of the adjustments required by the time the Group reports its first financial statements prepared under NZ IFRS for the year ended 30 June 2008.
sTATEmENT OF sERVicE PERFORmANcEFOR THE YEAR ENDED 30 JUNE 2007
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This statement reports on the performance of Television New Zealand Limited (TVNZ) in relation to the output targets set in the Statement of Intent for the year ended 30 June 2007.
This is the first year in which TVNZ has been required to provide a Statement of Service Performance. In previous years, under the Public Finance Act 1989, TVNZ was exempt from including a Statement of Service Performance in its Annual Accounts. The legislation governing Statements of Intent for Crown Entities has changed and TVNZ now reports under the Crown Entities Act 2004. Under this Act, TVNZ’s expectations of revenue and related outputs were stated in the Statement of Intent for the year ending 30 June 2007 for all categories of funding from the Crown.
TVNZ has been granted an exemption under section 143 of the Crown Entities Act from including in its Statement of Service Performance outputs which are not directly funded (in whole or in part) by the Crown.
a)DirectGovernmentfundingfromtheMinistryforCultureandHeritagetoassistTVNZtoimplementtheCharter
The Government has provided TVNZ with direct funding through Vote Arts, Culture and Heritage. This funding is for programmes and initiatives that TVNZ would not have committed funding to in a wholly commercial environment.
The table on page 55 details the programmes that have been broadcast in the period 1 July 2006 to 30 June 2007 that were funded by direct government funding, and the financial year in which TVNZ received the funding.
In addition to the table of programmes broadcast during the period, the following table reconciles the receipt of direct government funding by fiscal year with the year of broadcast of the programmes for which the funds were used.
There is generally a time lag between receipt of funding and broadcast of the programmes.
The programmes funded by the direct government funding in FY2003 were all broadcast prior to 1 July 2006 and are therefore not included in the tables below.
i) Reconciliation of funding received by year of broadcast
Total Direct Government Funding received $
FY2004 13,333,000 FY2005 25,622,222 FY2006 15,111,110 FY2007 15,111,000
69,177,332
Direct Government Funded programmes broadcast
Funding Year FY2004 FY2005 FY2006 FY2007 Total $ $ $ $ $
Year of Broadcast FY2004 6,200,162 6,200,162 FY2005 5,033,533 5,135,402 10,168,935 FY2006 1,259,577 8,375,470 6,435,816 16,070,863 FY2007 730,393 10,373,334 1,677,180 4,976,223 17,757,130
13,223,665 23,884,206 8,112,996 4,976,223 50,197,090
Still to broadcast 109,335 1,738,016 6,998,114 10,134,777 18,980,242
Total Funding 13,333,000 25,622,222 15,111,110 15,111,000 69,177,332
sTATEmENT OF sERVicE PERFORmANcE (cONTiNUEd)FOR THE YEAR ENDED 30 JUNE 2007
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ii) Funded Programmes
Audience
Monthof Funding FundingYear Reach
Programme Transmission Hours $ FY2004 FY2005 FY2006 FY2007 5+
Arts
Artsville Jul-Aug 8.0 1,229,531 1,229,531 428,046
Total Arts 8.0 1,229,531
Documentary/Factual
NZ At Home Jul-Aug 4.0 489,668 489,668 513,406
Human Traffic aka My Sons Feb 1.0 55,000 55,000 151,192
Deserve Better*
NZ Exposed Feb-Mar 3.0 924,449 10,664 913,785 589,151
Son for the Return Home Jul 1.5 192,880 192,880 151,192
aka The New Oceania
Settlers aka Here to Stay Mar-May 6.0 1,400,000 1,400,000 1,307,532
Henderson to Hollywood Sep-Oct 4.5 578,218 578,218 452,997
School of Home Truths Jan-Feb 4.0 540,000 540,000 838,594
Country Calendar* Mar-Jun 7.0 238,479 238,479 1,956,258
Mucking In May-Jun 4.0 571,176 571,176 1,663,602
Crimescene Jun 1.5 219,997 219,997 713,055
Total Documentary/Factual 36.5 5,209,867
Drama
Rude Awakenings Feb-Apr 11.5 5,497,382 5,497,382 1,372,916
Total Drama 11.5 5,497,382
Entertainment
The Great New Zealand Spelling Bee Jul-Aug 8.0 1,137,180 1,137,180 1,681,333
This Is Your Life Apr&Jun 3.0 415,888 415,888 1,350,837
Total Entertainment 11.0 1,553,068
Maori
Taonga* Jul-Aug 3.5 175,061 175,061 644,507
Whanau* Jul-Jun 11.2 861,538 561,538 300,000 974,518
Eye to Eye with Willie Jackson Jul-Jun 13.0 580,353 580,353 448,237
Total Maori 27.7 1,616,952
Sport
Basketball Aug-Sep 23.3 435,046 435,046 907,323
Hockey Oct 4.0 64,954 64,954 144,772
Total Sport 27.3 500,000
Special Interest
Agenda Jul-Jun 37.0 1,179,023 1,179,023 755,304
BBC World Jul-Jun N/A 722,140 722,140 1,619,311
Anzac Day Coverage Apr 6.0 30,667 30,667 590,629
Funeral of Te Arikinui Aug 5.5 218,500 218,500 421,220
Total Special Interest 48.5 2,150,330
TotalDirectGovernmentFunded
ProgrammesTransmitted 170.5 17,757,130 730,393 10,373,334 1,677,180 4,976,223
*These programmes were jointly funded with NZ On Air/Te Mangai Paho.
Audience Reach is the total number of different people who viewed a particular programme at any time during a specified time period.
The programmes included in this table are first run only.
sTATEmENT OF sERVicE PERFORmANcE (cONTiNUEd)FOR THE YEAR ENDED 30 JUNE 2007
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b)ProgrammeFundingfromNZOnAir On a specific programme-by-programme basis, funding is received from NZ On Air. The table below notes the specific funding received directly, by TVNZ, from NZ On Air. This table excludes NZ On Air funding provided directly to independent production companies for programmes broadcast by TVNZ.
Audience
Monthof Funding Reach
Programme Tranmission Hours $ 5+
Drama
Killian Curse Jul - Aug 3.5 1,013,167 387,154
Karaoke High Dec - Jan 7.5 2,885,676 1,249,975
Total Drama 11.0 3,898,843
Entertainment
The Wedding Dec 1.5 277,316 266,010
World of Wearable Art Awards Oct 1.0 110,859 189,563
Total Entertainment 2.5 388,175
Maori
Mai Time 2006 Jul - Dec 12.0 477,139 531,950
Mai Time 2007 Mar - Jun 8.5 384,619 371,200
Polyfest Apr - May 2.5 183,567 205,838
Total Maori 23.0 1,045,325
Sport
World Wheelchair Rugby Champs Sep 2.0 203,636 229,217
Total Sport 2.0 203,636
SpecialInterest
Anzac Day Wreathlaying Apr 1.0 35,000 226,697
Hyde Park Memorial Nov 3.0 351,244 203,394
Praise Be 2006 Jul - Mar 14.5 376,998 501,404
Praise Be 2007 Mar - Jun 8.0 209,889 374,356
Tagata Pasifika 2006 Jul - Mar 19.5 1,011,219 764,847
Tagata Pasifika 2007 Mar - Jun 7.0 339,750 518,135
Total Special Interest 53.0 2,324,100
Children’s
Studio 2 2006 Jul - Dec 55.0 903,697 1,387,131
Studio 2 2007 Feb - Jun 46.0 1,102,244 1,263,752
Total Children’s 101.0 2,005,941
TotalNZOnAir 192.5 9,866,020
Audience Reach is the total number of different people who viewed a particular programme at any time during a specified time period.
The programmes included in this table are first run only.
sTATEmENT OF sERVicE PERFORmANcE (cONTiNUEd)FOR THE YEAR ENDED 30 JUNE 2007
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c)ProgrammeFundingfromTeMangaiPahoTe Mangai Paho funds TVNZ for the production and broadcast of certain programmes. The use of Te Mangai Paho funding is for payment of costs and expenses identified in the various programme budgets.
Audience
Monthof Funding Reach
Programme Tranmission Hours $ 5+
Marae 2006 Jul - Dec 25.0 778,570 454,547
Marae 2007 Mar - Jun 18.0 782,482 350,438
Te Karere 2006 Jul - Dec 32.3 1,156,871 832,423
Te Karere 2007 Jan - Jun 32.5 1,147,130 1,035,103
Waka Huia 2006 Jul - Mar 28.0 748,025 485,226
Waka Huia 2007 Mar - Jun 14.0 540,715 299,841
TotalTMP 149.8 5,153,793
Audience Reach is the total number of different people who viewed a particular programme at any time during a specified time period.
The programmes included in this table are first run only.
d)FundingforprogrammecaptioningfromNZOnAir NZ On Air Funds TVNZ for the purpose of providing a captioning service on TV ONE, TV2 and TV3. The captioning funding is used to provide continuous prime time coverage (with any failure rate not to exceed a weekly rate of 10% of non captioned hours) with at least four children’s programmes captioned per week. Also, an English language subtitling service is provided for the Maori language news programme Te Karere and the daily 6.00pm ONE News and Tonight late bulletin.
Total funding received from NZ On Air: $1,747,740 (excl GST).
ActualPerformance TargetPerformance Measure Measure
Continuous captioning during prime time (6.00pm – 10.00pm) on TV ONE, TV2 and TV3. 99.9% 90%
At least four children’s programmes captioned per week (average) 9 programmes 4 programmes
Subtitles for Te Karere (repeat screening) every weekday 74 minutes per week 75 minutes per week
Captions for ONE News 6.00pm daily 100% 100%
Captions for Tonight daily 98.5% 100%
Minimum 90 hrs per week (average) on TVNZ channels 143.9 hrs per week 90 hrs per week
Minimum 40 hrs per week (average) during prime time on TVNZ channels 49.7 hrs per week 40 hrs per week
Average 15hrs per week on TV3 35.5 hrs per week 15 hrs per week
sTATEmENT OF sERVicE PERFORmANcE (cONTiNUEd)FOR THE YEAR ENDED 30 JUNE 2007
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e)TransmittingTVNZprogrammestoPacificnationswithfundingfromtheMinistryforCultureandHeritage The transmission funding received by TVNZ is to enable TVNZ to transmit programming by satellite to Pacific nations.
TVNZ will provide a minimum 11 hours’ transmission of TVNZ programming to Pacific nations weekly; such programming includes the daily transmission of One News, the weekly transmission of Tagata Pasifika and the transmission of other programmes relevant to the Pacific nations.
Total funding received from the Ministry for Culture and Heritage: $590,000 (excl GST).
Total costs of transmission: $585,185 (excl GST). The unspent funding relates to repairs and maintenance and has been carried forward for use in FY2008.
ProgrammesTransmitted HoursTransmitted
ONE News 365.0Close Up 108.0Tagata Pasifika 26.5Mai Time 20.5Wellington Rugby Sevens 18.3Weight Lifting 15.5Netball 10.0King of Tonga Special 9.8Basketball 6.7Funeral of Te Arikinui 5.6Samoan Head of State Funeral 3.5Polyfest 3.5Dancing with the Stars 1.7Mucking In 0.5Changing Lives 0.5Pilot of Dokosamaloa 0.5Te Karere 0.3Other 1.4
Total 597.8
f)Maintainingnon-commercialtransmissionsiteswithfundingfromtheMinistryforCultureandHeritage This funding is to assist the transmission coverage of the TV ONE and TV2 signals to those New Zealand communities that would not otherwise receive a commercially viable terrestrial signal.
The Company operates and maintains 167 non-commercial transmission sites in accordance with the Memorandum of Understanding with the Ministry for Culture and Heritage. All equipment used on non-commercial sites complies with the Ministry of Economic Development’s specification No. RB16 for television transmission devices.
TVNZ incurs annual costs of approximately $17,000,000 for the maintenance and operation of analogue terrestrial transmission including transmission from the non-commercial sites. These costs include co-siting & broadcasting charges, equipment maintenance, distribution linking charges, energy costs and annual spectrum licence fees. The estimated annual operating costs of maintaining transmission from the non-commercial sites is approximately $1,600,000.
Total funding received from the Ministry for Culture and Heritage, to subsidise the cost of maintaining transmission from the non-commercial transmission sites, was $1,150,000 (excl GST).
sTATEmENT OF sERVicE PERFORmANcE (cONTiNUEd)FOR THE YEAR ENDED 30 JUNE 2007
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g)FundingforTVNZ’stwonewdigitalchannelsfortheFreeviewplatformfromtheMinistryforCultureandHeritage
TVNZ is to launch two new digital channels on the Freeview digital television platform. The total cost of these two channels in their first five years of operation is projected to be about $112 million, of which $79 million will be funded by the shareholder through the Ministry for Culture and Heritage.
The two new channels have four key objectives:
• Extend public broadcasting delivery beyond that currently provided by TV ONE and TV2;
• Increase accessibility to public broadcasting content by scheduling more of it in prime viewing time;
• Strengthen New Zealanders’ sense of national identity by commissioning and producing an increased level of original local content; and
• Encourage households to switch from analogue to digital reception by promoting TVNZ channels on the Freeview platform.
Total funding received from the Ministry for Culture and Heritage in FY2007 was $5,200,000 (excl GST).
During the period the following expenditure was incurred and committed:
$000
Acquired & commissioned content 2,448
Marketing costs 111
Technology and operational costs 204
Establishment costs 713
3,476
The balance of the funding received will be committed by TVNZ in advance of the launch of the first digital channel, TVNZ 6, in September 2007.
h)AchievementofPerformanceStandards Under the Crown Entities Act, the Statement of Service Performance is required to include the standards of delivery performance achieved, as compared with the forecast standards.
In the case of programmes funded by Te Mangai Paho, and programmes and captioning funded by NZ On Air, TVNZ has met the forecast standard through compliance with all programme specifications and contractual conditions agreed with the respective funding authorities, such that the programmes and services were permitted to be broadcast.
The terminology used in describing the performance standard sought in respect of a public survey was changed on the advice of the research consultancy. Qualitative analysis of the results showed that respondents felt TVNZ delivered public value above that of other broadcasters.
In respect of transmission of TVNZ programmes to Pacific nations, this service has been enthusiastically received. We have been unable to obtain confirmation of the rebroadcast of over 90% of programmes transmitted, but have no reason to believe this has not occurred. We have also received requests for an extension of the service.
TVNZ has complied with the standards laid down in TVNZ‘s contract with the Ministry for Culture and Heritage in maintaining non-commercial transmission sites.
REPORT OF ThE AUdiTOR-gENERAL
60
TotheReadersofTelevisionNewZealandLimitedandGroup’sFinancialStatementsFortheyearended30June2007
The Auditor-General is the auditor of Television New Zealand Limited (the Company) and Group. The Auditor-General has appointed me, Gordon Fulton, using the staff and resources of Ernst & Young, to carry out the audit on his behalf. The audit covers the financial statements and statement of service performance included in the annual report of the Company and Group for the year ended 30 June 2007.
UnqualifiedOpinion In our opinion:
• The financial statements of the Company and Group on pages 33 to 53
• Comply with generally accepted accounting practice in New Zealand; and
• Give a true and fair view of:
- the Company and Group’s financial position as at 30 June 2007; and
- the results of its operations and cash flows for the year ended on that date.
The statement of service performance of the Company and Group on pages 54 to 59:
• Complies with generally accepted accounting practice in New Zealand; and
• Gives a true and fair view of, for each class of outputs:
- standards of delivery performance achieved, as compared with the forecast standards outlined in the statement of forecast service performance adopted at the start of the financial year; and
- actual revenue earned and output expenses incurred, as compared with the forecast revenues and output expenses outlined in the statement of forecast service performance adopted at the start of the financial year
• Based on our examination the Company and Group kept proper accounting records.
The audit was completed on 30 August 2007 and is the date at which our opinion is expressed.
The basis of our opinion is explained below. In addition, we outline the responsibilities of the Board of Directors and the Auditor, and explain our independence.
BasisofOpinion We carried out the audit in accordance with the Auditor-General’s Auditing Standards, which incorporate the New Zealand Auditing Standards.
We planned and performed the audit to obtain all the information and explanations we considered necessary in order to obtain reasonable assurance that the financial statements and statement of service performance did not have material misstatements, whether caused by fraud or error.
Material misstatements are differences or omissions of amounts and disclosures that would affect a reader’s overall understanding of the financial statements and the statement of service performance. If we had found material misstatements that were not corrected, we would have referred to them in our opinion.
The audit involved performing procedures to test the information presented in the financial statements and statement of service performance. We assessed the results of those procedures in forming our opinion.
Audit procedures generally include:
• determining whether significant financial and management controls are working and can be relied on to produce complete and accurate data;
• verifying samples of transactions and account balances;
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• performing analyses to identify anomalies in the reported data;
• reviewing significant estimates and judgements made by the Board of Directors;
• confirming year-end balances;
• determining whether accounting policies are appropriate and consistently applied; and
• determining whether all financial statement and statement of service performance disclosures are adequate.
We did not examine every transaction, nor do we guarantee complete accuracy of the financial statements or statement of service performance.
We evaluated the overall adequacy of the presentation of information in the financial statements and statement of service performance. We obtained all the information and explanations we required to support our opinion above.
ResponsibilitiesoftheBoardofDirectorsandtheAuditor The Board of Directors is responsible for preparing financial statements and a statement of service performance in accordance with generally accepted accounting practice in New Zealand. The financial statements must give a true and fair view of the financial position of the Company and Group as at 30 June 2007 and the results of operations and cash flows for the year ended on that date. The statement of service performance must give a true and fair view of, for each class of outputs, the Company and Group’s standards of delivery performance achieved and revenue earned and expenses incurred, as compared with the forecast standards, revenue and expenses adopted at the start of the financial year. The Board of Directors’ responsibilities arise from the Financial Reporting Act 1993, the Crown Entities Act 2004 and the Public Finance Act 1989.
We are responsible for expressing an independent opinion on the financial statements and statement of service performance and reporting that opinion to you. This responsibility arises from section 15 of the Public Audit Act 2001 and the Crown Entities Act 2004.
Independence When carrying out the audit we followed the independence requirements of the Auditor-General, which incorporate the independence requirements of the New Zealand Institute of Chartered Accountants.
In addition to the audit we have carried out assignments in the areas of assurance related advice, which are compatible with these independence requirements. Other than the audit and these assignments, we have no relationship or interests in the Company and Group.
G A Fulton Ernst & Young On behalf of the Auditor-General Auckland, New Zealand
MattersRelatingtotheElectronicPresentationoftheAuditedFinancialStatements
This audit report relates to the financial statements of Television New Zealand Limited (the Company) and Group for the year ending 30 June 2007 included on Television New Zealand Limited’s website. Television New Zealand Limited’s Board of Directors is responsible for the maintenance and integrity of the Television New Zealand Limited website. We have not been engaged to report on the integrity of Television New Zealand Limited’s website. We accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.
The audit report refers only to the financial statements named above. It does not provide an opinion on any other information which may have been hyperlinked to/from these financial statements. If readers of this report are concerned with the inherent risks arising from electronic data communication they should refer to the published hard copy of the audited financial statements and related audit report dated 30 August 2007 to confirm the information included in the audited financial statements presented on this website.
Legislation in New Zealand governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
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FiVE YEAR TRENd sTATEmENTFOR THE YEAR ENDED 30 JUNE 2007
2007 2006 2005 2004 2003 $000 $000 $000 $000 $000
GroupFinancialPerformance Television advertising revenue 312,824 334,753 344,130 335,045 304,763 Other revenue 62,379 75,037 92,602 135,631 187,314
Total revenue 375,203 409,790 436,732 470,676 492,077Net (deficit)/surplus after taxation (4,500) 13,302 6,269 28,223 29,066Dividends 0 84,525 48,052 98,071 3,079
GroupFinancialPosition Funds employed: Share capital 140,000 140,000 140,000 140,000 140,000 Foreign currency translation reserve 0 0 0 0 (1,012) Retained earnings 54,361 58,861 130,084 171,867 242,667
Total equity 194,361 198,861 270,084 311,867 381,655 Current liabilities 74,416 62,531 61,036 64,379 79,793 Term liabilities 44,885 50,956 2,528 2,387 65,264
Total funds employed 313,662 312,348 333,648 378,633 526,712
Assets employed: Current assets 74,024 66,240 93,764 114,106 97,813 Programme rights 114,698 114,801 108,916 131,951 125,998 Property, plant and equipment 115,705 117,752 120,312 118,776 255,497 Frequency licences and other intangibles 4,951 6,189 7,562 9,155 43,727 Investments 42 42 42 42 42 Future income tax benefit 4,242 7,324 3,052 4,603 3,635
Total assets employed 313,662 312,348 333,648 378,633 526,712
FinancialRatios Operating surplus*/total revenue 2.5% 4.9% 13.1% 11.3% 10.2%Net surplus after taxation/equity (average) (2.3%) 5.7% 2.2% 8.1% 7.9%Equity/total assets employed 62.0% 63.7% 80.9% 82.4% 72.5% Interest cover (times) ** 2.2 217.5 658.4 21.4 9.5
* Operating surplus before non recurring items, interest and tax ** Excludes non recurring items.
AddiTiONAL iNFORmATiON
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PrincipalActivityThe Group’s principal activity during the year was television (programme content supply and delivery, production, acquisition of television programmes, and online services).
ShareholdingThe Group is wholly owned by the Crown.
The Shareholding Ministers at balance date were: Hon Dr Michael J Cullen Minister of Finance Hon Steve Maharey Minister of Broadcasting
DirectorsMs M Anne Blackburn was appointed to the Board on 1 August 2006.
Auditor The Auditor-General is the auditor of the Group in accordance with Section 14 (1) of the Public Audit Act 2001 and has appointed Gordon Fulton of Ernst & Young to act for and on his behalf as auditor in 2007.
GeneralDisclosuresThe following disclosures of interest were made to the Board:
Directors’DisclosuresGeneral disclosures of interest given by the Company pursuant to Section 211 of the Companies Act 1993 as at 30 June 2007:
SirJohnAnderson Commonwealth Bank of Australia Director International Cricket Council Executive Board Director New Zealand Cricket Chairman New Zealand Cricket Foundation Secretary New Zealand Cricket Museum Trustee New Zealand Festival of the Arts Foundation Chairman New Zealand Sports Foundation Chairman Wellington Regional Stadium Trust Trustee Wellington Regional Strategy Committee Chairman
MAnneBlackburn Centre for Clinical Research and Effective Practice (CCREP) Chairman Chinese Language Foundation Trustee Export Credit Office Advisory Board Director Forsyth Barr Director Meridian Energy Limited Director PKW Investments Manager Royal New Zealand Ballet Deputy Chairman The Boardroom Practice Limited Associate Unitec Council Member (co-opted) Wellington Regional Holdings Limited (and each of its subsidiaries) Director
RobertGMFenwick Hauraki Charters Limited Director Landcare Research Limited Chairman Living Earth Limited Director NZ Business Council for Sustainable Development Board Member Order of St John Chancellor St John Ambulance National Board Chairman Waiheke Fresh Seafoods Limited Director
BryanCGould Centres of Research Excellence (CoRE) Fund Committee Member Massey University Consultant Ministry of Research Science & Technology Mentor to Group of Emerging Social Science Researchers (Te Waka Tangata) National Centre for Tertiary Teaching Excellence Chairman Opotiki Art Society Consultant, Feasibility Study
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JohnPGoulter ABN AMRO New Zealand Limited External Advisor Bay of Islands Realty Limited Principal New Zealand Lotteries Commission Chairman NZ Business & Parliament Trust Chairman Opua Commercial Estate Limited Director Packard House Limited Director Reserve Bank of New Zealand Director United Carriers Group Limited Chairman
JuneNMcCabe Advanced Dynamics (New Zealand) Limited Director Business in the Community (BITC) Director Cranleigh Merchant Bank Director E-Centre (NZ) Limited Director Excelerator – Leadership Institute New Zealand Chairman New Zealand Venture Investment Fund (NZVIF) Director NZ Business & Parliament Trust Trustee & Board Member Payworks Limited Chairman Te Wananga Aotearoa Councillor Tribal Affiliations Ngapuhi, Te Rarawa, Te Aupouri, Ngati Kahu, Ngati Kaharau Turn Your Life Around (TYLA) Trustee
PhillipRMelchior New Zealand Land Search and Rescue Director
SpecificDisclosuresNo specific disclosures were given pursuant to Section 211 of the Companies Act 1993.
UseofCompanyInformation
No notices have been given to the Board under Section 145 of the Companies Act 1993 with regard to the use of Company information received by Directors in their capacity as a Director.
Directors’RemunerationandBenefits
The following persons held the office of Director of the Company during the year and received the total amount of remuneration and other benefits shown.
Director Company $ Sir John Anderson 73,000 M Anne Blackburn 34,833 Robert Fenwick 48,750 Bryan Gould 38,000 John Goulter 40,000 June McCabe 38,000 Phillip Melchior 38,000
310,583
Directors’IndemnityInsurance
The Company has arranged directors’ and officers’ liability insurance cover with QBE Insurance (International) Limited for $20 million. The 2007 premium (net of GST) was $26,850. This cover is effected for all directors and employees of the Group.
AddiTiONAL iNFORmATiON (cONTiNUEd)
AddiTiONAL iNFORmATiON (cONTiNUEd)
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EmployeeRemunerationEmployee remuneration includes salary, bonuses, payments for projects, programme production, presentation, motor vehicles, employer’s contributions to superannuation and health schemes, redundancy, other compensation on termination of employment and other sundry benefits received in their capacity as employees.
Employees include executives and staff involved in programme production and presentation where applicable.
Employee remuneration in overseas locations has been converted to New Zealand dollars at current exchange rates.
Current Former Employees Employees
$100,000 to $110,000 34 1
$110,001 to $120,000 29 3
$120,001 to $130,000 23 0
$130,001 to $140,000 17 1
$140,001 to $150,000 10 2
$150,001 to $160,000 8 0
$160,001 to $170,000 4 1
$170,001 to $180,000 7 0
$180,001 to $190,000 4 2
$190,001 to $200,000 2 0
$200,001 to $210,000 2 1
$220,001 to $230,000 1 0
$230,001 to $240,000 2 3
$240,001 to $250,000 1 1
$250,001 to $260,000 2 0
$270,001 to $280,000 1 1
$300,001 to $310,000 1 0
$310,001 to $320,000 0 1
$330,001 to $340,000 1 1
$350,001 to $360,000 0 3
$360,001 to $370,000 0 1
$390,001 to $400,000 1 0
$470,001 to $480,000 0 1
$480,001 to $490,000 1 0
$600,001 to $610,000 0 2
$670,001 to $680,000 1 0
152 25
EmployeeCompensationonTerminationofEmploymentDuring the year $2,962,540 compensation was paid in total to 38 employees whose employment was terminated. Compensation includes redundancy entitlements, payment in lieu of notice and any payments in settlement of disputes.
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CORPORATE GOVERNANCE
THEBOARD RoleoftheBoard In addition to its duties under the Companies Act 1993, the Board, under Section 92 of the Crown Entities Act 2004, must ensure that the Company acts in a manner consistent with its current Statement of Intent and current output agreement.
Each year the Board negotiates the Statement of Intent with its shareholding Ministers. It includes the Company’s objectives, nature and scope of the activities to be undertaken and the performance targets and other measures by which its performance may be judged for the current year and following two years. The Board monitors management’s performance relative to these objectives and targets.
TVNZ’s principal output agreement with the Crown relates to the provision of funding for programming broadcast in accordance with the Company’s Charter. The Board monitors compliance with the Company’s obligations under that agreement.
The full Board met formally 10 times during the financial year, including a planning meeting in October.
The Board has delegated day-to-day management to the Chief Executive Officer. Policies are in place that define the individual and collective responsibilities of the Board and management. In particular, the Board has approved specific delegated authorities to enable management to incur expenditure and create binding obligations.
AppointmentofDirectors Shareholding Ministers make all appointments to the Board, including that of the Chairman. Appointments are for fixed terms not exceeding three years, which may be renewed.
The Board comprises individuals with a wide range of experiences and skills to ensure that all governance responsibilities are completed in a manner consistent with best possible management practice. Profiles of each of the Directors are set out on pages 68 and 69 of this report.
BoardCommittees The Board has two standing committees:
AuditandRiskCommittee The Audit and Risk Committee met four times during the year. The Committee assists the Board in fulfilling its responsibilities
by providing recommendations, counsel and information concerning its accounting and reporting responsibilities under the Companies Act 1993 and related legislation, and evaluating risk management practices.
During the year membership of the Committee comprised Mr J P Goulter (Chairperson), Sir John Anderson, Mr B C Gould, Ms J N McCabe and Ms A Blackburn, who joined the Committee on 30 August 2006.
RemunerationandHRCommittee The Remuneration and HR Committee met four times during the year. Its work is consistent with TVNZ’s obligations to be a good employer under the Crown Entities Act 2004.
In addition to its role of adding value to TVNZ’s human resources’ plans and practices at a strategic level, the Committee approves any movement to the remuneration of the Company’s top executives and presenters. The Committee also approves the structure and operation of the Executive Bonus Scheme and the level of any payments to be awarded, based on the Company’s business performance.
TVNZ operates a remuneration system designed to ensure that employees are rewarded for individual performance, for the responsibilities and skills required in their jobs, benchmarked against both external and internal relativities.
At year end, membership of the committee comprised all the members of the Board. Its Chairman is Mr P R Melchior.
MillenniumSuperScheme In November 2000, TVNZ launched the Millennium Super Scheme. At least one of the six Trustees is a Director of the TVNZ Board. During the year the Chairman of the Scheme’s Trustees was TVNZ Deputy Chairman, Mr R G M Fenwick.
Prompted by the Government’s KiwiSaver initiative, and in support of this, the Board of TVNZ, upon the recommendation of the Trustees, instructed the Trustees to wind up the Millennium Super Scheme in terms of the provisions of the Millennium Super Scheme’s Trust Deed. A Master Trust Provider has been appointed with effect from 30 June 2007 to provide similar services to employees who elect to participate in the Company’s scheme.
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KEYGOVERNANCESTATEMENTSBusinessContinuity,InsuranceandRiskManagement TVNZ has developed Business Continuity Plans for use in any emergency situation facing the Company.
TVNZ maintains a number of insurance policies designed to support the philosophy that, in the event of a disaster, the Company is not materially affected.
The Company has in place policies and procedures to identify and manage risks. Exposure to foreign exchange and interest rate risk is managed in accordance with a comprehensive Board-approved treasury policy, which sets limits of management authority. Derivative instruments are used by the Company to manage specific business risk; they are not used for speculative purposes.
EditorialIndependence TVNZ has in place an editorial protocol that details the duties and responsibilities of TVNZ, its Board and its executives on editorial matters. The principle of editorial independence recognises the importance of isolating control of editorial content from commercial or political influence. This principle is reflected in the Television New Zealand Act 2003 and the Company’s Statement of Intent.
ExternalAuditor The Auditor-General is the Company’s auditor pursuant to Section 14 of the Public Audit Act 2001. The Auditor-General has appointed Mr Gordon Fulton of Ernst & Young to act as external auditor on his behalf in the current financial year.
LegislativeCompliance The Company has in place a legislative compliance programme to ensure the Company’s compliance with its various statutory obligations. A biannual review is undertaken, the results of which are reported to the Audit and Risk Committee.
OccupationalSafetyandHealth TVNZ’s Health and Safety policy is to promote excellence in health, safety and welfare by implementing best practice health and safety systems while seeking continuous improvement.
ProgrammeStandards The Broadcasting Act 1989 places an obligation on the Company for the broadcasting of programmes to comply with the requirements of that Act and with programme codes adopted by the Broadcasting Standards Authority. TVNZ as a broadcaster is required to receive and consider formal complaints and to have procedures for investigating them.
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DIRECTORS’ PROFILES
SIR JOHN ANDERSON, KBE, CHAIRMAN (WELLINGTON)
Sir John is a former Chief Executive of the ANZ National Bank Limited, and has held advisory and governance roles for successive governments through the 1980s and 1990s. He has been Chairman of New Zealand Cricket since 1995 and is New Zealand’s representative on the International Cricket Council. He became Chairman of the World Wide Fund for Nature in 1990 and joined the International Board in Switzerland in 1994. He was knighted in 1994, and in 2005 was the inaugural winner of the Blake Medal for demonstrated leadership in business, sport, the environment and the community.
ROB FENWICK KStJ, DEPUTY CHAIRMAN (AUCKLAND)
Rob Fenwick’s business interests are closely aligned with sustainable development. He is a Director of Living Earth Limited and Waiheke Fresh Seafoods Limited, Chairman of Landcare Research, immediate-past Chairman of the NZ Business Council for Sustainable Development, and Chancellor of the Order of St John.
ANNE BLACKBURN (AUCKLAND)
Anne Blackburn is a banker by professional background, having had earlier careers in journalism and diplomacy. She is currently a Director of a number of businesses in the infrastructure, finance, investment and research sectors. She also holds governance positions in arts and education not-for-profit organisations.
BRYAN GOULD CNZM (OPOTIKI)
Bryan Gould was born and educated in New Zealand before winning a Rhodes Scholarship to Oxford, where he gained a postgraduate law degree. He was the Vice-Chancellor of Waikato University for 10 years. He previously served in the UK’s Labour Shadow Cabinet, was a law don at Oxford, and spent a number of years in the British Foreign Office. He was also a presenter and reporter on Thames Television’s former current affairs programme TV Eye.
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JOHN GOULTER, DCNZM, JP (PAIHIA)
John Goulter, formerly Managing Director of Auckland International Airport Limited, is currently Chairman of the New Zealand Lotteries Commission and Chairman of United Carriers Group Limited, as well as being a Director of the Reserve Bank of New Zealand. He was appointed Chairman of the New Zealand Business and Parliament Trust in 2007, having been a Trustee since 2000. In 2002 he was the Deloitte/Management Top 200 Executive of the Year. In 2003 he was inducted as a laureate into the New Zealand Business Hall of Fame and was appointed a Distinguished Companion of the New Zealand Order of Merit for services to Business and the Community.
JUNE McCABE (AUCKLAND)
June McCabe is an Auckland-based Director and was formerly with Westpac Banking Corporation. Her career spans both the public and private sector with extensive experience in policy-making, banking and finance. Her governance positions include Chairman, Excelerator - New Zealand Leadership Institute, the New Zealand Venture Investment Fund and other private and not-for-profit boards.
PHILLIP MELCHIOR (WANAKA)
Phillip Melchior has held a range of senior positions with the Reuters Group plc, culminating in his appointment as the London-based Managing Director of Reuters Media. Before his international career with Reuters, he had an extensive career in journalism in New Zealand (both press and television). He has also held governance roles with a number of international media companies.
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MANAGEMENT STRUCTURE AS AT 30 JUNE 2007
RICKELLIS
Chief Executive
JEFFLATCH
Television
DAVEWALKER
Advertising Sales
JASONPARISEmerging Business/ Marketing, Research
& Insights
VACANT
Broadcast Services
RODNEYPARKER
Chief Financial Officer
DIANEO’BRIEN
Human Resources
PETERPARUSSINI
Corporate Affairs
ANTHONYFLANNERY
News & Current Affairs
DAVIDLAZARUS
Company Secretary/ General Counsel
KERRYHEATH
Internal Audit
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MAIN LOCATIONS
AUCKLAND RegisteredOffice Television Centre 100 Victoria Street West PO Box 3819 Auckland 1140 Tel: 64 9 916 7000 Fax: 64 9 916 7934 tvnz.co.nz
HAMILTON Sales 533 Anglesea Street PO Box 889 Hamilton 3240 Tel: 64 7 957 6300 Fax: 64 7 957 6311
ROTORUA News 5th Floor, Trustbank Building 1154 Hinemoa Street PO Box 944 Rotorua 3040 Tel: 64 7 350 2540 Fax: 64 7 350 2543
WELLINGTON Sales 97-99 Courtenay Place PO Box 1752 Wellington 6140 Tel: 64 4 914 5198 Fax: 64 4 914 5140
News&CurrentAffairs 86-90 Lambton Quay PO Box 1910 Wellington 6140 Tel: 64 4 914 5000 Fax: 64 4 914 5043
AvalonStudios 45 Percy Cameron Street PO Box 31444 Lower Hutt 5040 Tel: 64 4 914 5600 Fax: 64 4 914 5888
NewZealandTelevisionArchive Archive Building Avalon Studios 45 Percy Cameron Street PO Box 31444 Lower Hutt 5040 Tel: 64 4 914 5300 Fax: 64 4 914 5319 email: [email protected]
CHRISTCHURCH 202 Gloucester Street PO Box 1945 Christchurch 8140 Sales Tel: 64 3 961 8500 Fax: 64 3 961 8555 News Tel: 64 3 961 8585 Fax: 64 3 365 6705
DUNEDIN News 11 Dowling Street PO Box 1070 Dunedin 9054 Tel: 64 3 474 2880 Fax: 64 3 474 2885
SYDNEY News C/- ABC News Level 1, 700 Harris Street Ultimo, NSW 2001 Tel: 61 2 8333 4744 Fax: 61 2 8333 4188
LONDON EuropeBureau 54 Portland Place London W1B 1DY United Kingdom Tel: 44 20 7079 3241 Fax: 44 20 7079 3243
TVNZ also has News representatives in Queenstown, New Plymouth, Napier and New York
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