NZ Media Boss Critical of Digital TV Subsidy

11 December 2006

AUCKLAND: The head of television and radio company CanWest Mediaworks NZ has hit out at the government's proposal to subsidise a public service broadcaster's venture into free-to-air digital TV.

Ceo Brent Impey, speaking at the company's annual meeting, called the NZ$79 million ($54m; €40m; £27m) "donation" to TVNZ's FreeView initiative a "disgrace".

"It creates a very uneven playing field, and we believe equates to a bailout of TVNZ, making it virtually a charity," he added. "Cross subsidisation of a commercial organisation like TVNZ by the taxpayer is a very strange scenario and, we believe, an unacceptable scenario."

TVNZ argues that FreeView, backed by CanWest among others, would find it hard to make money initially and would eat into existing advertising revenues when the first of two digital channels launch late next year.

Viewers will not have to pay a subscription fee to the new service but will need a NZ$200 set-top box.

CanWest MediaWorks is 70% per cent owned by Winnipeg-headquartered CanWest Global Communications. It operates two commercial TV channels in New Zealand and a number of radio stations.

Meanwhile, the company's results for the first fiscal quarter show consolidated revenue increased 2% to NZ$74.5m, compared with the corresponding period last year. Similarly, EBITDA (earnings before interest, income tax, depreciation and amortisation) rose 3% on the same quarter to NZ$24.3m.

Chairman Tom Strike commented: "This . . . reveals the extent to which the advertising market has recovered from a somewhat challenging winter in the New Zealand market."

Data sourced from Sydney Morning Herald; additional content by WARC staff