I was told when asked to make this address that I should be bold. So I thought that like Captain James Tiberius Kirk, I might boldly go where no man had gone before but, I was then told that I should not be so bold as to upset the sponsors … and let’s face it I too, need to still have a job tomorrow and at least someone still willing to fund a show.
So if you appear in this speech, do not think unkindly of me. Just consider that provocation is necessary for change and for our very survival.
Today, I am going to suggest a very ambitious plan that I believe would create a sustainable future for television production. Television production in particular because I think its future is in serious trouble. TV is the bread and butter of the screen production industry. It makes
a greater contribution to turnover, revenue and employment than film.
Over the next 18 months, our company will co-produce three films which would not be possible without the infrastructure provided by our television business.
The fact is free to air television may never recover from the economic recession and earn again the ad revenues of the past. The recession has forced traditional advertisers to think differently and there is no guarantee they will ever go back to traditional platforms.
Drastic budget cuts by broadcasters are likely to continue and you can talk all you like about .cross platforms. opportunities; and content is king, but you’re not going to get a $600,000 an hour drama budget for making mobi-sodes or even $70,000 a half hour for factual series on
We need free to air television, and the television you are watching on your big screen in your lounge not your small screen, to do well so that we, as an industry, can do well.
Today I want you to think about whether we are building a TV production industry or just battling to keep an ailing one afloat? Where is the money for our research and development coming from, particularly outside drama and comedy? Is the TV production industry purely a service one, without income for any activity other than actual production services? Without a healthy industry, the retention of key talent in New Zealand, the development of substantial infrastructure, the money for research and development and to bridge the gap between production and non-production periods, is lost.
So where’s the money to save us coming from?
For a start, the fact is the last Government’s digital strategy has cost us any chance of at least some of this vital income coming from the domestic exploitation of the shows we produce. Most of the rights in the shows we make have been taken away, frequently in perpetuity. We let it happen without any form of compensation.
The very thing that the British legislated to stop happening in their industry, has gone largely unnoticed in ours. Contracts were simply changed. It was a case of sign or lose the show. So now we have little left to exploit locally and no income from the broadcasters. widespread exploitation. All that is left is for us to make a splash internationally.
But does the international market want what we’re producing? Could we be relying on the wrong structures for funding and, as a result, be making the wrong shows for the wrong reasons?
I can’t remember exactly when I went to my first SPADA conference but I think it was about 1993. I’d started my own company about 2 years earlier and we were doing quite well. At a dinner I sat next to a woman who I’d never met though I knew who she was and I was
damn scared of her. The first thing she said to me was, “You know what your trouble is?”
I didn’t need to answer cos she was going to tell me anyway. “You drive way too nice a car. You look like you’re doing too well. Get smart, drive a Toyota Starlet like me.”
Was that the best piece of advice I ever received and didn’t follow? Or was it just Caterina De Nave buying into the “look poor and get more” mentality that she perfected? Of course she was. Looking successful is a no no in our industry. But now we need, more than ever, to not only look successful but to be successful as businesses.
What I do know is that I have been preparing for this speech for 8 years. I know this because from 2001 to 2003, I chaired the Government Taskforce on the Screen Production Industry. We were told creativity, imagination, and innovation will be the driving forces that propel New Zealand back into the top half of the OECD. (Incidentally, right now we’re scraping the bottom of the table for productivity.)
But back then, the Screen Production industry, and the people who work in it, exemplify these qualities, our Minister told us. Amidst post-Lord of The Rings euphoria, he asked the Taskforce to identify the barriers to major growth in foreign exchange earnings and to tell the Government how these barriers might be removed.
The Taskforce’s report noted that the industry has traditionally been heavily reliant on cultural subsidies, the mechanism of which inevitably limits growth. We were charged with advising the Government on how to turn this cycle of dependency into sustainable, independent growth
which will showcase New Zealand talent and creativity internationally, while growing new and existing businesses domestically.
Furthermore, the Report which I read again each year to see how we’re going, said creativity alone will not ensure that New Zealand has a strong, vibrant industry with a significant place in the global workplace. We need business and marketing skills, entrepreneurship, independence, innovation, determination and vision to compete in the international marketplace. Only with growth in investment will we be able to decrease our dependency on the Government dollar that sets limits on funding levels and sometimes also sets inhibiting cultural imperatives, we said.
It pointed out the need for Ministry for Culture and Heritage funding to contribute to economic growth, saying that the industry owes much of its development to a cultural subsidy funding environment which has been largely responsible for the formation and growth of many major
companies. But now is the time to recognise that public funding has limitations, financially, commercially and creatively.
This, I remind you, was 6 years ago.
The Taskforce wanted to establish a climate where, within 5 years, at least 10 companies achieved an annual turnover of $50 million and at least another 20 companies achieved an annual turnover of $10 million. That should have been achieved last year. Obviously, we
have failed dismally.
The Report also suggested that a global market orientation is essential to achieve major growth. New Zealand-based companies must increase their international perspective, irrespective of the genre, and historical or cultural focus.
Reliance on unpredictable, short-term funding from Government agencies means most small to medium-sized companies have yet to develop sound and long-lasting business strategies for growth.
It is the strong economic development of the overall industry, particularly through foreign exchange earnings, that will ensure that the industry continues to be a driver of economic growth in New Zealand. The screen production sector cannot grow and flourish creatively without more stable and forward-thinking business structures.
Companies need to maximise revenue from each idea and therefore must create and exploit as many intellectual properties, and as many rights to these, as possible.
Intellectual capital is a core asset of the industry. The New Zealand industry does not have the benefit of Government intervention in the form of quotas or investment incentives and we need to live with that. The development and exploitation of intellectual property is one of the major ways in which the industry can be responsible for its own growth without direct Government funding or intervention. That was the gist of the 2003 Taskforce Report.
I want you to remember 4 points:
* The need for foreign exchange earnings
* The need for maximum revenues from the exploitation of intellectual property rights
* The need to better use the .cultural. dollar
* And the need for more forward-thinking business structures.
So, in light of all that, here’s my point. What if we re-designed our TV production industry and changed it into one that will grow, will thrive and will be sustainable over time.
First let’s get money back into the industry, not from more Government subsidies, but through exploiting to the max what we are making.
At present, Government funding is considered an investment rather than a grant and the funder demands a substantial return from the exploitation of intellectual property rights to the
project. Although nothing in the Broadcasting Act requires this stance, it is usually justified by the Government funders. duty to maximise the return on what funds they have.
I need to declare here that I am now a director on the Board of the Government’s economic development agency, New Zealand Trade and Enterprise. I also sit on the Grants Committee which approves NZTE grants with the specific aim of increasing exports from this country.
We, as in NZTE, grant – and I say grant – millions of dollars to some of the biggest companies in New Zealand without direct financial return. This is usually done through co-funding, a 50/50 or half each funding of a specific project.
What doesn’t compute is that NZTE grant, or give, funds to some of our largest companies. In TV production, the funding agencies take a position that they must get a financial, as well as a practical, return on their investment. So the Government gives money to the big guy through one agency, in the name of economic development, and takes the money from the little guy through another – there’s something wrong with that picture!
The fact is that if we took an NZTE model to our TV funding. Believing that achieving the purpose of the funding, in NZTE’s case increasing exports; and in our case, perhaps reflecting our cultural identity. Isn’t that enough return on that funding?
Isn’t it fairer to give up the money from overseas sales and from exploitation? Let the creator
have it so that it can go straight back into our industry?
Well let’s face it, when it comes to our contribution to the economic development of the country, our television industry is pretty damn bad. In fact, Government funding is more than double television’s total export earnings – and frankly that’s a disgrace and it’s unsustainable. No other industry is so heavily subsidised for so little return for the country in earnings when it has so much potential to be otherwise.
As the average income in New Zealand continues to fall in comparison to other countries, and we drop further down the OECD ladder, we amble along simply worried about where the next doco funding might come from.
To catch up to Australia, we need to increase our exports by 2.4 times and, if you think failing incomes and stunted growth in this country doesn’t affect you then read Gareth Morgan’s latest book on healthcare which says 18 cents in every dollar we earn will soon be needed to
fund our health system alone. Change has to happen in this country.
And we, as an industry, have to contribute.
So what do we do?
* We give our television production companies a chance to really build sustainable businesses
* We do everything we can to ensure the healthy survival of the free to air broadcasters
* MOST OF ALL, we become unrepentantly MARKET DRIVEN
* WE make television in New Zealand rather than always New Zealand television
* And we change the sort of television that we are making to better meet market needs.
Well let’s get radical:
If we took the funds the Government ploughs into our industry through funding bodies and for three years decided to concentrate first and foremost – not on our current perception of “cultural identity” but on our economic development. So funding decisions are not only
driven by ethnicity loosely disguised as cultural identity, but also on what the market both here and internationally wants.
Concentrate for three years on making the programmes the broadcasters need to keep their audience and prosper. Make the shows that sell internationally.
Let me give you an example. The rise of the multi-platforms for broadcasting and the predicted demise of television as we know it, should have us all asking what conventional broadcasting can offer that you can’t get on your mobile, that you can’t get from sitting in front of a small computer screen.
What it can offer is the shared experience, the family viewing experience. The group-driven entertainment pleasure which once was the cornerstone of our industry in the days of our great talent shows – Studio One, New Faces, Top Town, Pop Idol and even Dancing With The Stars.
We sat down together. We wanted to share the experience in a way we can’t do with most other platforms. But now these shows are gone because the broadcasters simply can.t afford to fund them.
An evil word called “yield” – the difference between what a programme costs and what it earns in ad revenue – has invaded their and our working lives.
At the same time, the Government funders cannot see just how vital such entertainment experiences are to the survival of television. Our funding agencies usually do not fund family viewing shows or entertainment shows because someone decided that they are too
commercial and funding them is the job of the broadcaster. Well in 2009, the broadcaster doesn’t have the money to do it. The light ent genre is dead. As far as I am aware, no such show has been publicly funded since the first series of Idol 9 years ago.
TV2, traditionally the entertainment channel, has gone from 24% local content to less than 17% according to NZOA figures. And it’s fallen every year for the past five. Shiny floor shows are gone along with their decent budgets.
How can this happen when nothing reflects our cultural identity – even our ethnicity – like a good talent show. It just doesn’t make sense that a genre so vital to the survival of our
production industry – and to mainstream television viewing itself – has shut down.
Why can’t we open up Government funding to commercial projects – even on a 50/50 co-funding basis like NZTE does with exporters? Why can’t we embrace commercial television
because it is vital? And it, like no other, can ensure our industry’s future and our broadcasters’ futures.
What would you get from such an open commercial attitude from the funding agencies?
* Excellent television which meets all the criteria required under the Act which governs NZOA. There is no doubt about that.
* Programmes that service the industry’s need to retain the unique shared television experience the genre attracts.
* Programmes and formats which sell overseas because they are what the market wants. The global format market incidentally is worth $22 billion annually. Britain takes one third of that
followed by the US and the Netherlands. Think of what just 5% of that could do for the economic development and sustainability of our industry. Not forgetting that formats now include drama and comedy. In 2002-4 my own company collected $22 million in foreign revenues from one format.
* We’d have more overseas revenues that would contribute to the economic development of the country.
* We’d earn money that we’d plow back into the industry to ensure its development and its sustainability.
* The broadcasters could afford to keep bigger shows on the telly.
Never forget, when the broadcasters do well, we do well. What would the funders lose with this 3-year experimental change in thinking?
They’d risk a lack of diversity, but that can easily be managed within current funding. They might think they’d have less funds to hand out to targeted genres – but I can already see in NZOA’s last annual report at least $10 million that could be carved out simply by stopping
duplicating funding that’s offered by other agencies.
Yes, most funded shows would end up in primetime. I cannot see a downside.
The industry needs government help desperately – but that help does not need to come in the form of more and more money that makes us more and more dependent. Just change the way we spend what we have as I’ve just explained:
* open up Government funds to commercial projects that will benefit the producers, the
broadcasters and the export earnings of the country – for the sake of our industry and for the sake of New Zealand.
* Remove the funders’ right to the back end of series they co-fund. Let that money go back into the industry instead. It is wasted going back into Government coffers when it could do so
much more if allowed to go back into the industry.
The agency’s old fallback position – credited rightly or wrongly with a past CEO of New Zealand On Air – was “we’re not here to buy producers Mercedes.” That’s rubbish. I know. I did have a Mercedes but it was NOT bought through the proceeds of NZOA-funded TV but through the proceeds of a TV format exploited worldwide – the development of which I was able to fund
Drama and film development right now owes me personally 1.2 million dollars. The money goes back into our industry WHEN WE HAVE CONTROL OF IT, not the Government
But with all this, would cultural content currently funded suffer? Well here’s where we have to look at WHAT we fund.
Harsh economic times inevitably mean a decline in niche programming. The broadcasters need proven formats and genres which will attract big audiences. That’s just market reality. We don’t need to fight it by continuing to fund what we think the audience should want rather than what they do want.
Here’s something radical – TRUST THE BROADCASTERS! They know what the audience wants,
they know what they are doing, they know the market way better than you or I. Ask what do they really need funded. Perhaps even ask the WORLD – that is after all, our market too.
We must get over our one-off documentary obsession. It has no market basis. Both the local broadcasters and the international market from which we can earn all this revenue – AND EVEN THE AUDIENCE – are saying they want documentary series primarily, half hour factual doc series, shockdocs. This is what is making it into primetime on our screens.
The Australian organised crime series Gangs of OZ, which we produced in Australia for Channel Seven, makes it into 8.30pm primetime here while one-off local documentaries languish at 9.30 or later. What does this tell us about the market we should be serving?
Back in July, it was astonishing to see that one night the top three ratings shows in all people were not even on Network television – no NBC, no CBS, no ABC or Fox – they were all cable, and all the same genre: Wizards of Waverley Place, Zack & Cody on Deck and of
course, Hannah Montana.
They are children’s half hour sitcoms outrating any grown-up programming. Pulling in 4.2 million more viewers than the nearest mainstream network, CBS. They’re the sort of brands which have changed children’s viewing habits over the past 4 years by treating them as adults and showing their parents amusingly flawed.
But where are our hit children’s sitcoms? Are we ignoring the world AGAIN and spending Government funding on studio kids shows that are not being watched by our children let alone contributing significantly to our economic development and our exports?
NZOA is now a bigger funder of programmes than any broadcaster, if we exclude news and sport. We need them and TMP desperately to help our industry get on its feet, build sustainable businesses and find its own money for effective R & D.
Government can’t actually turn a profit for our business but it can provide a policy framework and environment that removes the barriers to helping ourselves. There is no doubt funding agencies have done well in the past but they are also our hope for the future if they can
just give us a hand.
The handing back of intellectual property rights to the producer and/or creator may result in slightly less revenue for the funding body. For example, for NZOA this could mean a likely cost of around $2 million annually but the upside for the industry, and for foreign exchange
earnings and our country, would be substantial.
There is no one keener to sell a product than the producers themselves and they must be given the best possible chance to sell their product and maximise revenues to put back into their businesses and contribute to our industry’s growth and our country’s growth.
We can continue with our singularly cultural focus offering little to help our country and face the possibility of Government-funded programmes being marginalised into late night or fringe primetime, at best as ratings and revenue-hungry broadcasters look elsewhere to buy suitable programming.
We can make TV for ourselves and for the world but we would need to consider the world from the outset not as a mere add-on. And of course, to conquer the world, we need to know our audience.
I suspect no one out there knows what the top-rating show in the past week in the internationally important demographic of 18-49 is? My point is that it is your job to know, to know your business if we are to be international. It was the US drama, The Mentalist, by the way.
I regret that most of the 2003 Taskforce recommendations and that of the many other reports since into our barriers to growth – most of which I have re-read in the past few weeks – were ignored by the Government, particularly following a change in Ministers of Economic Development.
It seemed that two and a half years’ work was wasted until now. Today I decided against broad strokes like those in our Report, instead I wanted to be specific. You may not agree but we desperately need to think about our place in the TV world.
Are we just making the wrong sort of programmes? Are we funding the right sort of programmes? Does New Zealand as a whole, matter to us?
To quote the great John F Kennedy: “ask not what your country can do for you, ask what you can do for your country.”