RNZ’s board chair has called the public broadcaster’s $11.8 million loss “incomprehensible”, as it prepares to cut 58 jobs, with news staff among those facing the axe.
The loss, revealed in RNZ’s annual report today, is more than 25 times the $470,000 the broadcaster had forecast for the year to June. In a statement, RNZ called the result “poor and unsustainable”.
Board chair Brent Impey told 1News he could not understand how it had happened.
“My initial reaction was it’s incomprehensible, and then you thought, how are we going to fix this?
“It’s a crisis, but it has to be fixed, and we’ll do it.”
RNZ said it would make the job cuts by the end of March and reduce operating costs by at least 5%. Staff were informed of the situation at a meeting this afternoon.
Impey said the 58 roles included 18 cuts already announced and a further 40, taking the workforce from 347 to 289.
“It is a very big cut,” he said.
He said the cuts would apply “right across the board”, including senior management, operations, technical, audio and news. Management will present a restructuring plan to the board in early December.
“Nothing is being targeted, but we’ve got to make sure that the business is right-sized.”
Chief executive Paul Thompson said he accepted accountability for the result.
"As chief executive, I take responsibility for this result and for ensuring RNZ takes the action needed to restore confidence in its financial management," he said.
"We must make difficult choices to live within our means, and I recognise those changes will be hard for our people."
RNZ said internal financial reporting during the year had not accurately reflected its position. The board and management relied on that reporting, so they did not take corrective action and failed to cut costs after a 7% drop in baseline funding.
"This helps explain the result, but it does not excuse it," the broadcaster said.
RNZ has reported that EY, which audited the accounts for the Auditor-General, also flagged a breach of the Crown Entities Act. The broadcaster had set up a $5m overdraft without ministers’ approval, when it was only authorised to borrow up to $3.5m.
RNZ said it drew down no more than $2.3m and has since closed the overdraft. It is also checking whether it needed approval for a separate $3.7m deal to sell and lease back equipment for its new Auckland office.
The annual loss was more than 25 times its forecast, prompting 58 full-time job losses. (Source: 1News)
Where the money went
The statement said RNZ had wrongly accounted for $2m of land sales as revenue in its forecast. Staff costs came in $3.2m over budget, including $1.4m in redundancy payments.
Other operating costs ran $6.4m over, largely because of the Auckland office move and the sale of surplus property. That figure included:
- $1.85m on relocating the Auckland office
- $1.7m to remediate the Titahi Bay site before its sale
- $1.1m in assets written off at the former Auckland office and the Henderson site
- $1m to decommission the Henderson towers before that land was sold.
RNZ is forecasting a further $7.8m loss this financial year before returning to a sustainable position the year after. It says it has enough reserves to get through the transition. According to RNZ's reporting, the broadcaster had $8.5m in cash at the end of June, down from $18.8m a year earlier.
RNZ said any proposed changes affecting staff would go through the required employment processes.
Independent review
The board will commission an independent review into the causes of the loss, why internal reporting failed to pick it up, and whether financial controls and governance were adequate.
Jim Mather, who chaired the board during the financial year, described the result as extremely disappointing.
"The board treats all financial matters very seriously and it is clear now that RNZ's internal financial reporting did not reflect its underlying position, limiting the opportunity for effective corrective action during the year," he said.
"Notwithstanding these distinct roles, the prudent financial stewardship of RNZ is ultimately the collective responsibility of the board."
Current chair Brent Impey said the problem did not reach RNZ's newsroom.
"This is a financial reporting, controls and oversight issue. It does not impact RNZ's journalism or its content for audiences.
"The board will ensure the decisions RNZ makes from here are disciplined, evidence-based and guided by RNZ's Charter and the needs of audiences."
RNZ previously reported chief financial officer Hilary Parker resigned unexpectedly and left immediately on October 2. Director Richard Dellabarca was then appointed interim finance chief. Impey has declined to explain her departure, but has said she resigned of her own accord and there was no suggestion of criminality.
Thompson leaves RNZ on December 31. NZME chief audio officer Jason Winstanley takes over in 2027, and chief news officer Mark Stevens will act as chief executive in the meantime.
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