With New Zealand’s new public media organization officially up and running, heated talk about how it should be funded is almost inevitable. Samson Samasoni looks at the options and finds out how other countries finance their own public broadcasters.
During the 1990s, a television commercial featuring the Christchurch wizard urged people to pay the broadcast license fee and raised the question, “How do you price local television?”
That will be the challenge for the government’s new public media entity: determining a price and a sustainability plan when it swallows TVNZ and RNZ sometime in 2023.
Broadcast and Media Minister Kris Faafoi had a lot of ambition but little detail when he recently announced the as-yet-unnamed public media operation. He was confident that the new setup will ensure free access to reliable news and information, future-proof public media in New Zealand and showcase our unique voices and stories. But the mechanics of how it will work are left up to an establishment committee to be announced soon.
Given the evolving media environment and highly competitive advertising market, will the new non-profit entity, which will have both commercial-free and advertising-free revenue elements, be properly funded by the government to achieve the minister’s bold goal?
Financial details associated with the new organization were redacted from the cabinet document released with the announcement, so it’s hard to tell at this point.
However, some, such as Te Herenga Waka, Peter Thompson, associate professor of media studies at Victoria University of Wellington, are concerned that the entity is too reliant on government funding.
“Crucially, balancing public service and business expectations requires organizational structure and funding arrangements to be in sync. But this is unlikely to happen if one is determined by a committee and the other is left to budget uncertainties,” Thompson warns.
Myles Thomas, chairman of the Better Public Media Trust, says how much the government spends and what precautions it takes will decide the fate of the new entity.
He worries that the funding is not sustainable, that the appointment of board members is too political, and that there is no legal watchdog to safeguard the values of public media.
The government group commissioned by Faafoi to present the business case for the new entity will no doubt have looked abroad for successful funding models and public media during their deliberations. RTE in Ireland, CBC in Canada and the BBC are often cited as excellent examples.
But RTE and the BBC still get much of their funding from a license fee that is collected directly from the public that owns the TV.
New Zealand eliminated its license fee of $110 (about $190 in today’s money) 23 years ago. Should the fee or something similar come back to reduce reliance on government funding and advertising? What happens in other places?
In Ireland, every household that owns a television (even if their television is broken) must pay an annual fee of €160 (NZD$254). Certain beneficiaries and those over 70 years of age are exempt.
RTE gets about half of its budget from the license fee and the other half from advertising. But like many public broadcasters, increased competition from digital platforms and private operators has hit its ad revenue.
In 2019, the Irish government came up with the cunning plan to introduce a “device independent streaming charge”: if you had a TV, smartphone, laptop or tablet, you would have to pay because you are “able” to watch RTE, whether you did or not. But that idea was too hot to handle, so now a commission will soon recommend further possible reforms to the Irish TV licensing scheme.
In Great Britain, 74% of the BBC’s revenue is derived from a license fee, which is equivalent to around £5.06 billion (NZ$9.66 billion). The balance comes from commercials, grants, royalties and rental income.
For the British public, failure to pay £157.50 (NZ$300) for a color TV and £53 (NZ$101) for a black and white TV can lead to a fine and, in some cases, a criminal conviction .
But controversially, earlier this year, even before the Conservative Party’s Christmas pennant fell, UK culture secretary Nadine Dorries tweeted that the license fee would be abolished from 2027. Some of his colleagues were not impressed, as it had not been fully discussed by the cabinet.
Whether or not Boris Johnson’s party is in power in 2027 to scrap the fee, the writing is firmly on the wall that the BBC will have to find new sources of revenue going forward. Various options are being discussed, including a subscription service, partial privatization, direct government funding, or a hybrid model.
Certainly New Zealand thought the license fee model was flawed, as it was scrapped in 1999 after a “three-year campaign of civil resistance” against what the anti-fee lobby called an immoral and unfair tax.
Investigative journalist Ian Wishart even wrote the book Beating Big Brother about the campaign, which he said was a tribute to the more than 100,000 people who chose not to pay the tax and the 300 “freedom fighters” who went to court. thus.
There is no doubt that proposing a 1990s-style TV license fee would be political suicide for any New Zealand party, potentially more unpopular than announcing that there will be an announcement about another national Covid lockdown.
Even French President Emmanuel Macron pins his re-election hopes in part on a new policy to scrap the country’s €138 ($218) broadcast fee.
Left-leaning French politicians are concerned about leaving public broadcasting to the whim of government budget decisions, with one Socialist senator saying the implications would be “serious” for the independence of public media and amount to “dangerous demagoguery”.
Canadians they do not seem to have the same concerns as the French senator. In fact, public broadcaster CBC’s efforts to introduce more sponsored content have been so controversial that the Liberal government is now throwing a further $400 million (NZ$456 million) over four years to make CBC less dependent on advertising.
The CBC gets approximately 70% of its funding directly from the government and 30% is generated through advertising, subscription fees, rentals, and other financial arrangements.
If a broadcast license fee is out of the question for New Zealand, what are other ways to generate income?
Telecommunications development rate
The Better Public Media Trust says revenue from the new organization should come from industries benefiting from public media or the digital disruption that the TVNZ-RNZ merger fueled, and should come from a repurposed TDL. Currently, the TDL is paid by companies that earn more than $10 million a year from operating a component of a public telecommunications network (wired or wireless). The government uses the annual levy to pay for telecommunications infrastructure, including relay service for the deaf and hard of hearing, broadband for rural areas, and improvements to the 111 emergency service.
The Irish didn’t get there with a device tax, but Turkey uses a system that imposes different levels of levies on importers and suppliers of televisions/devices (including computers and cars), as well as a levy paid by retail customers. While the Turkish model seems a bit complex, the principle of a tax collected by the private sector contributing to the greater public good is already well established in New Zealand. For example, the National Disaster Fund managed by the Earthquake Commission derives income from a levy on home insurance policies collected by insurance companies.
Many developed countries have already introduced or have very advanced plans to tax international streamers like Netflix and Disney+. In FranceNetflix has committed to investing 20% of its annual revenue in French content, both series and movies. Denmark will soon charge international streamers 5% of their annual turnover to finance local film and television productions.
While the Wellington public servants are apparently doing some backroom work on this, our government’s view on this is still unclear. Many in the New Zealand screen production industry believe that international streamers get a free ride by launching their services here with no commitment to New Zealand storytelling. Ideally, the streamer levy would support the local screen production industry by going to New Zealand on Air for contestable funding of local productions commissioned by subsidiaries of the public media entity.
The difference with the TDL is that the levy would be a percentage of your internet/broadband bill, whether you have a smartphone or a home connection. The Internet provider would pass the tax on to the public media entity or New Zealand on Air. Some argue that New Zealand’s Internet connections are already more expensive than many other countries, mainly due to our smaller population, and that an additional charge would not be reasonable, especially for low-income people. But there is something elegant about a system that requires the digitally empowered to support the digitally private, who rely on free-to-air TV and radio.
Complement of the electricity bill
In Italy the license fee of €90 (NZ$142) is added to people’s electricity bills in 10 equal installments paid from January to October. If you don’t own a television, are over 75, or have a low income, you can apply for an exemption. Their fee is lower than most other countries, in part because they don’t have the exorbitant collection costs and high evasion rates they used to experience. South Korea it also combines your TV license fee with electricity bills. South Korea’s national public broadcaster, KBS, gets about 45% of its revenue from the license fee, 25% from advertising, and the rest from the government and other sources.
Public broadcasting tax
In Finland the tax is automatically included in taxpayers’ withholding calculations. Those who earn more than €14,000 ($22,119 NZ) pay 2.5% of their earnings up to a maximum of €163 ($257 NZ).
Although it dates back to the bad old days of New Zealand, each German the household has to pay €55 (NZ$87) every three months. South Africa The broadcasting corporation advocates a similar approach, as it currently relies on having a television. But SABC believes that a device-neutral domestic tax, based on “accessibility of SABC services,” would be more appropriate.
Clearly New Zealand is not going back to the days when we could expect a loud knock on the front door from someone hounding us for our TV license fee. But we will have to think more creatively about how to achieve sustainable funding if this is truly to be a new golden age for public media and broadcasting.