The Government is spending $55 million to help New Zealand media provide more public interest journalism, but when it had the chance to make sure TV3’s new owner, Discovery Inc, stays committed to local news, it demurred.

Discovery’s New Zealand boss, Glen Kyne, recently revealed the global giant’s strategy to turn the previously loss making TV3 into a profitable and powerful force in the rapidly changing New Zealand media market.

It had something of a charmed start.

It now emerges the Government fast tracked Discovery’s approval for the deal that allowed the take over of MediaWorks’ TV arm without any conditions on the global giant for protection of the news at TV3, which operates under the Newshub brand.

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Few details have emerged on the Government’s role in the transaction, which followed a unique process operated by the Overseas Investment Office, one that wouldn’t be possible now.

Discovery’s purchase of TV3 was pushed through the OIO’s Emergency Notification Regime (ENR). This approval regime only existed for one year, operating from June 2020 and ceasing just a few weeks ago.

The ENR provided a temporary but different pathway to approve overseas investment purchases. Ostensibly for use during Covid, it allowed a way to fast-track offshore purchases.

It has taken an Official Information Act request to flush out the details.

On August 26 2020 Discovery applied to the Overseas Investment Office under the ENR to purchase Mediaworks TV3.

Within days the Overseas Investment Office provided an Emergency Notification Assessment of the proposed deal to the relevant minister – the associate Finance Minister David Parker.

This asked the minister if a national assessment test should be held.

On September 4, Parker declined an option to conduct a national assessment test. He simply approved the deal. He did not impose any conditions on Discovery, even though he had the jurisdiction to do so if he so wanted.

On September 9 the OIO then wrote to Discovery to advise it the application was approved – unconditionally.

And just like that, a US global media giant had purchased an important media business in New Zealand within a two week process. No strings attached.

It has left open plenty of questions. The OIO’s website actually says “media businesses with significant impact” should be subject to “mandatory national interest assessment”.

Should Discovery have been wanting to start the purchase today, the OIO advice on the LINZ website also suggests it would be mandatory for such players to undergo a National Assessment Test.

The National Assessment Test is designed to make sure critical pieces of New Zealand’s infrastructure, important assets, or sensitive land face greater scrutiny to protect this country’s interests.

Given the plight of domestic journalism and the scale of Discovery you have to wonder why it wasn’t considered.

Certainly Newshub staff have reason to be wary, given the early signs from the new owners.

Discovery is pruning its news operations. An opening step was to shut its Dunedin office, much to the annoyance of local mayors and the detriment of its national coverage of the lower South Island.

Then there is the possibility that MediaWorks may decide not renew its contract with Discovery for Newshub to supply the news bulletins for its radio stations. The loss of this contract or a reduction in fee would put the expensive AM show, which is currently simulcast on radio, in real jeopardy.

But returning to the government’s hand in approving the deal.

Currently it is seeking to reverse the steep decline of reporter numbers in commercial newsrooms with a $55 million scheme over three years to pay for new positions, training and news coverage that is in the public interest.

So, was an opportunity lost by the Government to set conditions for local news operations or employment expectations on Discovery when it bought TV3?

Local employment conditions are common practice in OIO approvals for offshore investors.

The door is now to ajar to an uncomfortable scenario in which Discovery, a wealthy multinational, as owners of TV3 can apply for government funding of reporter roles in its newsrooms.

Newshub is already a lean outfit and after taking another haircut it would be hard to blame news management if they sought government funding to prop up the numbers.

In an interview with Newsroom, Glen Kyne said Discovery planned to introduce Discovery +, the US company’s flagship streaming service, to Australia before the end of the year and New Zealand would be “a fast follower”.  He also said Discovery planned to increase local programming on TV3.

Like other media organisations Kyne wants NZ on Air to help him fund a good chunk of that programming. He told Newsroom’s co-editor Mark Jennings he is making a big effort to engage with the funding agency and improve the relationship.

Discovery will probably shepherd better programme choices on TV3, but will it breathe new life into the broadcaster’s news division? To a sceptical eye, maybe not.

It has taken the OIA application to shed a glimmer of light on the Government’s decision making process – but just a glimmer.

The OIO has withheld key segments of its advice to Parker.

The OIO’s advice on “Risk Factors Identified’, “Information Gaps Identified” “Analysis”, and “OIO Assessment” have all been redacted. The OIO cites national security as a primary reason for many redactions. That criteria alone is cause for concern. Is there a national security concern or is this a blunt tool to block scrutiny? It is difficult to know.

Furthermore the OIO advice was the Government had no obligation to advise the public of this purchase under the Emergency Notification Regime.

The transaction only came to light after Discovery and TV3 made the purchase announcement. The Government’s role required the OIA process.

Parker told Newsroom he decided to approve the purchase under the ENR because the transaction did not present sufficient risks to require a further national interest assessment.

“This is consistent with the ENR being a back-stop tool to be used rarely and only in respect of transactions that pose material risks to our core national interests – which is a high threshold.

“I note the ‘emergency notification’ power was not a consent regime, so investors did not have to demonstrate that their investments did not pose risks or offer any benefits,” he said.

“There is generally no opportunity to revisit the decision unless the investor breaches a condition of their direction order, or had relied upon – for example – false or misleading information in their notification. This ‘safe harbour’ for investors who have had their transactions allowed to proceed was a core component of the ENR, designed to ensure that investors remain confident in New Zealand’s attractiveness to investment.”

In some respects, the deal may have been attractive to ministers because it was simply swapping one overseas investor (foreign fund Oaktree) for a better-heeled one (Discovery) with access to a lot of programming content and new technology. Maybe they were worried about the political fallout if Discovery pulled out of the deal and MediaWorks followed through on its posturing about the risk of TV3 closing.

It’s just as arguable that an opportunity to buttress news in this country has slipped through the Government’s fingers.

It’s all good for Discovery though. A quick and simple Government approval with no strings attached to maintaining levels of local news, is now followed by a process where it can apply to the Government for money to pay for more reporters and resources for journalism. Sweet.

Stephen Parker is a former political editor for TV3. More recently he was the Chief Media Adviser at MFAT, and also worked in the Foreign Minister's office of both National and Labour-led governments.

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