Tvnz-Annual-Report-Fy-2012.Pdf
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TE WHAKAARATANGA O AOTEROA KI NGA RIANGI WHAKAATA KATOA INSPIRING NEW ZEALANDERS ON EVERY SCREEN CONTENTS Chairman’s Introduction 04 Chief Executive’s Overview 05 Financial Performance 10 TVNZ in Society 14 Performance and Engagement Measures 16 Financial Statements 20 Corporate Governance 69 Directors’ Profiles 70 Main Locations 71 4 CHAIRMAN’S INTRODUCTION THE COMPANY HAS HAD A GOOD YEAR AND THESE ARE EXCITING TIMES TO BE IN THE MEDIA INDUSTRY. I am pleased to report a satisfactory result for the financial year The Board intends to take an active role in assisting the ending 30 June 2012. company to define its strategic direction during the transition from a chartered broadcaster to a full participant in an intensely TVNZ has recorded full year Operating Earnings of $27.9 million, competitive, wider media environment that goes well beyond and a Net Profit After Tax of $14.2 million, up from $2.1 million what has traditionally been called broadcasting. the previous year. This gives a return on shareholders’ equity of 9.2%. A review is underway, and may prove to be a watershed in the evolution of TVNZ. Many of the traditional boundaries have The result reflects a strong performance despite a variable and blurred in recent times – television people engage in print increasingly competitive market. journalism, online publishers offer video, and everywhere there is competition for the advertising dollar from global players. The Board has declared a Dividend of $11.3 million. As in prior years, non-cash impairment charges have been added back to To make our mark commercially while meeting the expectations the after tax profit to arrive at that figure. of our viewers we will need to become more sharply focused, be willing to take a few risks, make new partnerships and The after tax profit of $14.2 million includes the impairment examine ways to make better use of those resources and skills of assets held for sale, and impairment and remediation costs we already have. associated with the switching off of the analogue transmission service. The company has had a good year and these are exciting times to be in the media industry. I have every confidence that the The results also reflect a share of associates relating to the Company has the people and the capacity to continue to deliver start up costs of the Igloo joint venture undertaken with SKY TV. good financial results while ensuring the most compelling content for mass audiences in New Zealand. As the incoming Chairman of TVNZ’s Board of Directors, I have been in a position to observe the effort, creativity and diligence of management and staff at all levels in achieving this result – something that provides a strong platform for the new era we are now entering. Our market has changed and with it, the nature of the game. There is no longer such a thing as a standalone Free to Air Wayne Walden broadcast market. In a converged media market, which offers both huge challenge and huge opportunity, new definitions are required. We are urgently re-working our own role and the position we will occupy in a global age of highly-personalised, instantly available media consumption. // TVNZ ANNUAL REPORT FY2012 5 CHIEF EXECUTIVE'S OVERVIEW EACH YEAR, TVNZ SETS OUT ITS BUSINESS PRIORITIES IN THE ANNUAL StATEMENT OF INTENT. At THE CLOSE OF THE FINANCIAL YEAR, THE COMPANY IS REQUIRED TO REPORT ON PROGRESS AGAINST THESE GOALS. While most of this year’s work took place before I started as Radar's Pacific and long form factual series such as CEO in May, I am pleased to report the business has made good NZ Detectives, Beyond the Darklands and Intrepid Journeys. progress and delivered a satisfactory financial outcome for the Pleasingly we have been able to place more NZ On Air year. This doesn’t mean we get to rest on our laurels; the media funded programmes in primetime, ensuring the maximum environment is throwing up new challenges on an almost daily available audience for these outstanding shows. basis and we need to constantly adapt and keep pace with these media industry changes. While the coming year will be intensely busy the achievements 3. Grow TVNZ’s advertising revenues and be the against priorities over the last year are significant: preferred television and digital media company 1. Grow commercial performance of for advertisers and agencies TV ONE and TV2 TVNZ’s advertising revenue was $313.7 million, up $9 million on the prior year. The company increased its share TV ONE and TV 2 continue to be New Zealand's leading of television advertising revenue to 62.2% from 61.6% in the Free to Air channels delivering the vast majority of the previous financial year and secured 92% of the TV market programmes New Zealanders prefer to watch. growth for the year ended 30 June 2012. Both channels exceeded all commercial and yield targets for the year, driven largely by strong local content on TV ONE and the continuing success of TV2, which has now held the 4. Continue the profitable diversification of lead in its targeted demographic of 18 to 39 year olds for an TVNZ and its activities unbroken run of 44 consecutive months. The strength of the network’s content was reflected in the annual Top 20 list – 17 During the year the company signed a joint venture deal out of the 20 most popular shows during the year came with SKY TV for Igloo, a new pay platform due to launch from TVNZ. towards the end of the 2012 calendar year. It’s expected that this platform will bridge the gap between full cost Pay TV TV ONE's commercial performance has been underpinned and Free to Air reception. by strong local shows such as ONE News, MasterChef New Zealand, Nothing Trivial, Food Truck, Country Calendar and TVNZ's Ondemand platform has experienced strong growth the hugely popular New Zealand Sunday Theatre season during the year, serving on average 1.9m streams to more including titles such as Billy, Tangiwai, Bliss and City Under than 400,000 unique browsers per month. Distribution of Seige. It has also been pleasing to see the way New Zealand the platform is being extended to more devices as technical audiences have embraced quality natural history series such testing is completed and the ongoing success of TVNZ as Frozen Planet and Yellowstone. Ondemand is expected to provide future options given the impending UFB roll out. 2012 was a special year for TV2 with the celebration of the 20th Anniversary of Shortland Street offering a TVNZ's digital pay channels - Kidzone24 and Heartland - range of special programming and unprecedented continue to perform very well, consistently over-achieving audience numbers. audience targets. Heartland consistently reaches well over 800,000 viewers each month. TVNZ's digital-only Free to Air channel, TVNZ U, now 2. Increase TVNZ’s share of NZ On Air funding reaches audiences of more than 1.5 million each month. Market research confirms the channel is perceived as being NZ On Air funding has allowed us, together with local significantly the most focussed on young New Zealanders, production companies, to create a rich and diverse range of and by far the most strongly connected to social media. local content including acclaimed dramas Billy and Tangiwai, comedy such as Auckland Daze, popular factual series such as Foodtruck, The Politically Incorrect Guide to Grown Ups and // TVNZ ANNUAL REPORT FY2012 6 KEVIN KENRICK, TVNZ CHIEF EXECUTIVE // TVNZ ANNUAL REPORT FY2012 7 Photo: NZ HERALD 5. Continue transformation to a consumer and Avalon Holdings will take place in March 2013. There are cost efficiencies from the move of the Good Morning customer focussed organisation programme from Avalon to Auckland in January 2012, and TV One and TV2’s channel demographic targets were closely more will follow on settlement of the sale agreement. examined during the year to ensure they were best placed Last year TVNZ designed a new versatile studio facility to maximise performance and revenue. As a result, we capable of handling both Good Morning and the One News repositioned the channel brands more firmly within their stable of programmes. It handles high volume throughput; core revenue demographics and adjusted content to reflect does not require sets to be changed between shows; has consumer needs within these targets. improved efficiency through automation of cameras, and onenews.co.nz was launched as a separate url destination fast turnaround in graphics and lighting. for news loyalists, and TVNZ Ondemand has evolved from a In summary, the year has been a good one which has “catch- up” service to a primary viewing destination option. reinforced the company’s position as New Zealand’s TVNZ Heartland was rejuvenated in September 2011, leading Free to Air broadcaster and digital media company. moving the channel to a more contemporary brand position. To hold our position and grow in a dynamically evolving media market will require even more of us, and my initial observation as a newcomer to TVNZ is that we are absolutely up for it. 6. Address unprofitable and uneconomic TVNZ business activities, and continue process and cost efficiency initiatives across the company The sale of the Avalon complex was negotiated on a conditional basis during the year, and this became unconditional in September 2012. The ownership transfer to Kevin Kenrick // TVNZ ANNUAL REPORT FY2012 8 // TVNZ ANNUAL REPORT FY2012 9 NZ ON AIR FUNDING HAS allowed US, together WITH local PRODUCTION companies, to create A RICH AND DIVERSE RANGE OF local CONTENT. SUNDAY THEATRE, 'Rage' TV ONE // TVNZ ANNUAL REPORT FY2012 10 FINANCIAL PERFORMANCE TVNZ HAS REPORTED A NET PROFIT AFTER TAX OF $14.2 MILLION; THIS IS A $12.1 MILLION INCREASE ON THE PRIOR PERIOD.