In 1935, the first Labour administration set up the National Broadcasting Service as a government department to bring the emerging medium under public control. The following year, 22 private radio stations were nationalized to create a state monopoly.

A government inquiry into the prospects for television was appointed in the 1940s but did not report until 1957. It advocated a public monopoly, and a full service was eventually launched in 1960. Its take-off coincided with a major change in the overall organization of broadcasting when, in 1961, the old National Broadcasting System became the New Zealand Broadcasting Corporation (NZBC), an institution closer to the BBC model.

Because of the country’s relatively small population, it was clear that the license fee would not generate sufficient income to cover the costs of the new service, and so advertising was allowed from the outset as a supplementary source of income. Consequently, although the NZBC looked to the BBC as a model, it never enjoyed the same relative independence from commercial pressures, or from political overlordship, as its British counterpart.

As a national monopoly it was expected to reflect and foster national culture and national identity. However, its ability to do this was severely limited by financial constraints. The start-up costs of the new television service were substantial. Constructing a transmitter system across a huge, topographically difficult land area was particularly expensive. Comparatively little funding was therefore available for original program production, and scheduling relied heavily on imported material, particularly from Britain. By the late 1960s, NZBC was the largest purchaser of BBC programs in the world.

In 1972, the organization successfully fought off a bid to introduce a competitive commercial service, and itself launched a second channel. Having more hours of broadcasting time to fill made imported programs even more attractive to cost-conscious executives. They were ten to twenty times cheaper than domestic productions, filling the screen for two days for the price of one hour of home-produced material. By the mid-1980s, imports were providing the majority of programs but taking only 4 percent of the television di- vision’s total expenditure. When a UNESCO study calculated local content on television in 1983, Great Britain logged 85 percent, Australia 50 percent, and New Zealand 25 percent—including sports, game shows, news, and current affairs—strong evidence that in a market of only three million people, financial logic worked powerfully against public television’s ability to reflect the full diversity of national life.

Despite the rebuff to the private sector lobby in 1972, a limited form of competition was introduced in 1974 when NZBC’s two channels became separate operating companies and entered into vigorous competition for viewers and advertising. This pushed programming toward a more populist, entertainment-oriented style. Television viewing increased appreciably.

This fueled renewed pressure from private companies wishing to enter the increasingly lucrative market for television advertising. In 1976, the newly elected (conservative) National Government responded positively with a Broadcasting Act that set up a quasi-judicial Broadcasting Tribunal, with the power to license new stations by issuing broadcasting warrants. However, it took rather longer to break the public monopoly than many early enthusiasts had anticipated. The private consortium that later became the country’s first terrestrial commercial service, TV3, lodged an application for a warrant in 1984. It obtained a favorable decision in August 1987 but a judicial review in their favor was not handed down until September 1988. The channel finally went on air in November 1989. It entered a depressed economy encumbered with debts accrued from the protracted tribunal process and went into receivership after only six months. It had also underestimated the public channels’ ability to fight their corner.

In addition to establishing the tribunal, the 1976 Act had also replaced the old Broadcasting Service with the Broadcasting Corporation of New Zealand (BCNZ), a publicly owned institution with two major operating divisions: radio, and Television New Zealand (TVNZ). The two television channels were brought back under unified control and run as complementary services. The government also addressed the organization’s mounting deficit produced by the costs of launching the second channel and converting from black-and-white transmissions to color. In 1977, they agreed to retire the debt on the condition that future developments were funded from revenues. To underline the point the license fee was frozen. By 1993 it stood at NZ$110, by which point, if it had been index-linked to inflation since 1975, it would have been NZ$280. Faced with a capped income from the license fee, TVNZ set out to attract more advertising revenue, successfully increasing its overall share of the advertising market from 21 percent to 30 percent in the ten years from 1977. By 1987 advertising accounted for 80 percent of its total revenues, helping it to record a return on equity of close to 20 percent.

This more commercially minded attitude ran counter to the recommendations of the Royal Commission on Broadcasting that had sat between 1984 and 1985. It had advocated a strong public-service system with limits on advertising levels and a local program quota. But even as it reported, it sounded like an echo from the past.

As a division within a public corporation, TVNZ was free to retain any earnings and reinvest them. The treasury, however, favored returning them to the public purse for general use. Its 1984 briefing to the incoming government floated the idea of converting commercially viable public operations into state-owned trading enterprises (SOEs), which would function as private-sector businesses and return a dividend to the government. The process began in 1986. Nine new SOEs in various sectors, including telecommunications, were established, and at the end of 1988 the principle was extended to radio and television broadcasting.

However, TVNZ’s capacity to increase its revenues was affected by a radical shift in the terms of competi-tion in the television marketplace initiated by two key pieces of legislation passed in 1989. In response to widespread concern about the costs and delays of the tri-bunal process for granting new licenses, the government introduced the Radio Communications Act. This allo-cated radio frequencies by tender, the winning bidder becoming the frequency “manager” for a 20-year term with freedom to pass the license on to another party. The first auction of national and regional UHF frequencies in 1990 opened the market to several new services. They included Sky Network, the country’s first pay-TV service, rebroadcasting satellite sports, news, and film services; a regional service based in Canterbury in the South Island; and a racing channel, Action TV.

TVNZ, which had become a separate operating company in December 1988 in preparation for increased competition, responded aggressively in an effort to cut costs and increase revenues. Staffing numbers were cut and employees moved to limited-term individual contracts. Much of the programming formerly made in-house was contracted out to independent producers. Internal subsidiaries looked for outside clients. And the organization moved to spread its interests beyond its traditional business of mass-market national broadcasting. It acquired a 35 percent stake in Sky, formed a partnership with Clear Communications, the second force in the emerging telecommunications market, and entered the burgeoning overseas broadcasting market with a 29.5 percent stake in Asia Business News.

It also retained its dominant position in the national television market. By October 1990, TVNZ’s two channels still commanded an 80 percent share of the television audience, as against TV3’s 17.3 percent and Sky’s 1.5 percent. Its share of television advertising however showed a steeper decline, dropping from 100 percent in 1984, before the advent of competition, to 70 percent ten years later. At the same time, TVNZ lost its monopoly control over the license income.

The 1989 Broadcasting Act transferred responsibility for collecting and distributing the public broadcasting fee to a new body, the Broadcasting Commission, with a particular responsibility for funding local production. It later adopted the title New Zealand on Air (NZOA). Although anyone could bid for funds, TVNZ held on to its dominant position with 76 percent of NZOA’s 1992 production budget going to programs made by or for its two channels. A substantial portion of this figure was spent on the medical soap opera Shortland Street, NZOA’s major prime-time vehicle for representing a changing national culture.

Although the introduction of competition has significantly increased the number of television services available within New Zealand, there is heated debate as to whether it has extended the range of programming on offer.

Critics of the reforms point to the cultural costs of the minimal restrictions on commercial operators, the intensified competition for ratings points, and the shift toward transnational ownership with the removal of all restrictions on foreign holdings in television in 1991. They point to the absence of any quota to protect local programming, to NZOA’s inability to compel stations to show the programs it has funded in favorable slots, and to the marked increase in advertising time, which gives more space to commercial speech and less to other voices. Although the figures are contested, one government report suggested that between 1988 and 1991, advertising on the two TVNZ channels increased from an average of 9–10 minutes per hour to 15 minutes.

This eclipse of public-service ideals by commercial imperatives is, critics argue, part of a pattern of change that has produced plurality without diversity. Whether this pattern will be broken or reinforced by current moves towards multimedia convergence and interactivity remains a central question.