Costs force private TV tenderers to drop out

Press, 16 July 1983, Page 1

Costs force private TV tenderers to drop out

“A Auckland Private-sector morning television in New Zealand appears in doubt, now that the three tenderers for television time have withdrawn.

City Television and Northern Television withdrew yesterday, saying that charges by the Broadcasting Corporation were higher than expected. The Alternative Television Network dropped out in April, saying that morning television would be unprofitable. The Government decided in October to open up public television to private enterprise. In February, it called for tenders for up to 37 hours a week of broadcasting on Television One. For Northern, its manager, Mr Graeme Douglas, said it would lose about $8 million in the first year and about $2O million over five years as a result of the higher charges. “We feel this money would be better spent on transmission equipment,” he said. Northern favoured making a bid for regional television, Mr Douglas said. The chairman of Northern Television, Mr Michael Horton, described the fees as provocative. “Northern has not been looking for any handouts from public broadcasting, but we did not expect to have to subsidise its operations either,” he said. “The Broadcasting Corporation’s demand for a $6 million payment for the first year of morning television makes a mockery of the whole concept.” Mr Horton said that Northern TV calculated that for the five-year term of the morning warrant, it would pay $2O million.

“We would have nothing to show after five years,” he said.

“In short, the corporation wants to take all the revenue, leaving us to foot the bill for all the costs of making and buying programmes and running a television station,” said Mr Horton. The $2O million was enough to set up transmitters for a third channel, covering about 70 per cent of the population, he said. Northern was resigned to losing $2.25 million in its first year, but if the corporation had its way, Northern would lose almost $8 million. The corporation had been aware of the revenue predictions of both applicants, and the losses both companies would suffer in the early years, Mr Horton said. City Television, Ltd, said that charges by the Broadcasting Corporation were much higher than expected and would mean a loss of about $lO million in the first three years. “The decision to withdraw has been taken with a great deal of regret and not inconsiderable anger," said City’s managing director, Mr Andy Tyler, yesterday. A Broadcasting Tribunal hearing for the morning warrant begins on August 2. Among the charges wanted by the B.C.N.Z. were: • $3 million as “up-front” money. • Rental of $5Ol an hour. • A share of the running expenses of $594 an hour. Included in the transmis-

sion charges would also be $299 an hour for a microwave link, and the cost of direct facilities to Avalon, which would push the rental to about $l5OO an hour. Mr Tyler said no initial entry fee had ever been mentioned and that the $3 million wanted by the B.C.N.Z. came as a complete surprise. “The B.C.N.Z. knew last year that it was required to set a scale of charges, but left it until July 14 to advise the applicants what they would be. “It means that all the effort City Television has put into preparing its case for the breakfast-morning warrant has been wasted,” he said. Criticism of the Broadcasting Corporation’s charges was rejected by its chairman, Mr lan Cross, last evening. “The charges proposed by the corporation for the TVI transmission system are no more or less than a fair cost, and I think the two applicants realise that. ft The costs are based on use of an asset worth over $5O million which takes over 200 staff to run,” he said.

“We were proposing an hourly rate of $l4OO for the use of over 400 transmitting stations and a nationwide microwave linking system. The access fee was a onetime payment that recognised the benefits for the operator. These included gaining immediate use of facilities that give access to 99.9 per cent of the population.”

Earlier report, page 21