Broadcasting Fee Deferments

I wrote a post attacking Steven Joyce and the Government for conspiring with major broadcasters to artificially inflate the price of broadcast fees. If a company wants to pay say $20 million for a 20 year licence fee, (for example) I thought that they would need to find private finance to do that. I’ve since rethought the issue and decided that there is not really a strong enough case to make a charge of conspiring to keep the fees at an inflated level, and that it is probably unfair to malign Steven Joyce on that basis. This is actually a pretty complex issue. The post is taken down.

Story on fees deferment here.

9 thoughts on “Broadcasting Fee Deferments

  1. I’m not sure of the details for MediaWorks, however I support Rhema Broadcasting Group who had to stump up $6.4m on 2 March for 20 years’ worth of frequencies. Most of this was raised in cash by gifts with a small balance via interest-free loans – not a bad effort for a charitable organisation. They too could have borrowed the shortfall from the government at 11.2% over several years but were able to avoid this. Whatever the pros and cons of leasing frequencies, I think everyone is treated much the same, although Rhema did get a couple of extensions to the due date.

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  2. There is definitely something screwy about this but I can’t quite put my finger on it. The main problem seems to be the purchase of the frequencies for a 20 year period. I would assume this long period is for commercial security, but its very hard to say what the worth of a frequency might be in even 10 years let alone 20. So by means of only offering the 20 year lease, and also offering loans to purchasers, the prices of the frequencies are perhaps much higher than they need to be, and therefore work as a barrier to new companies getting into the market.

    I suspect there is something unethical about a government dept that is selling the frequencies also lending money to buy them especially when the value is so intangible.

    I really do not think the government should be lending this money. Was this scheme down to Steven Joyce? Probably not.

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  3. Yes I agree RB, with digital radio on the horizon plus other clever technologies such as instantaneous frequency scanning/sharing I can’t see the existing model lasting 20 years either. However I suspect the cost is not so much a barrier to entry as market forces coming into play: if the current players don’t pay up then a competitor might freeze them out (without necessarily using any or all of the frequencies). But how the value is determined is another question!

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  4. I don’t know much about frequency ownership…

    Surely there should be a one time auction of all frequencies and then let private people and companies trade amongst themselves..?

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  5. Originally I believe that the governments involvement was just on the basis of frequency allocation. I don’t know when they made the change to claim ownership of the radio spectrum and demand money for its yearly lease. I’d guess some time in the Bolger/ Shipley/Klark era.

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  6. I know a person who works for TV3, and from the comments I have been getting over the odd beer it (and Mediaworks itself) is completely fucked financially. May not be too long before it goes belly up, especially with IRD chasing it for an 8 figure sum.

    Does this even surprise you when it is fronted by tools like John Campbell?

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  7. How the hell do you screw up a TV station financially..? Programming is brought on advertising sold… Unless you’re a complete tool it should be damn near impossible…

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  8. Well, if you presume the Herald figures are correct, they’re paying $100 million in interest on loans. Not a big help in an industry that’s failing pretty fast anyway.

    I won’t be sorry to see TV3 go under. Traitors to private enterpise, they’re a bigger blot on this country than TV One. They could have been FOX news. Instead, they made themselves MNSBC. Spineless commies.

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  9. Crap, on say a 16% business interest rate they are about $625m in the hole…

    Cable TV, internet, etc are eating into TV profits but as I understand the standard business model you sell the ads first and know how much you have for programming, staff, et al overheads are dirt cheap just plug in a transmitter and away you go…

    Might have to read up about if the business has fundamentally changed…

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