Yesterday morning at about 09:20, within minutes of each other, I saw two press releases from TVNZ corporate.
One lauding the “transformation opportunity” from selling the land on Hobson street to Skycity for $10.6 million.
The other was lauding their “only just” achievement of their profit forecast including the news that their advertising revenue was down by 2.1%, a drop of $6.6 million. To achieve a profit they shut teletext and sold the Avalon studio in Wellington plus “rigorous” cost savings.
I put them both to one side for further examination because the sales value of the Hobson street site seemed like an extraordinarily low value. It already had an existing building, was in a prime redevelopment area, and I know for instance that my apartment building with less land and a commercially less useful has a higher land value.
John Drinnan at the NZ Herald posted this yesterday at 10:17 in an immediate response
SkyCity paid $10.6 million for 81-95 Hobson street which is around $2 million more than the ratings valuation for the land.
But in addition to that payment the government has allowed them to cut the dividend to pay for upheavals – effectively a taxpayer contribution.
The level of dividend relief has not yet been spelt out.
TVNZ initially resisted the sale but went into negotiations after the Government focused on long running negotiations.
Actually John is wrong. A quick look at the Auckland City Council rates shows two rateable values on 85-91 Hobson Street. 85 Hobson Street and 91 Hobson Street. They have a combined rateable value in July 2011 of:-
|85 Hobson Street||91 Hobson Street|
|Value of improvements||$500,000||$800,000||$1,300,000|
So unless there has been a rating valuation that isn’t up at the ACC yet, SkyCity are in fact paying slightly than $2 million more than the rateable value of land and improvements. Now the latter would usually mean the building. But how can this be?
My 51 square metre apartment on the periphery of the CBD has a rateable improvement value of more than $200k. Somehow a multistory building(s) on 2000+ square metres have a improvement value of about 6.5x that? But that is probably a question for a different post.
And my apartment has no part in producing a multi-million dollar profit and causing the shift of 500 odd employees.
“TVNZ reached agreement with shareholding Ministers to dividend relief, net of proceeds from the sale to SKYCITY, to cover the costs of refurbishing its main building at 100 Victoria St West.
“The building transformation project will begin during the coming summer. During the natural break in television programme production over Christmas and New Year, up to 500 people will be moved into temporary leased accommodation in the Telecom building in Victoria St West just 200 metres down the road from TVNZ, a spokesman said.
Chief executive Kevin Kenrick said the sale of land – which it initially resisted – was good for the company.
“This is a great result for TVNZ.”
Yeah right. I think that Kevin Kindrick is simply lying through his teeth and I’m mostly wondering who has the stick up his arse running the mouth. The rushed nature of this move and the small remaining site that they’re going to have available will almost certainly suck the life out of TVNZ over the coming year. For a starter, I’d anticipate a lot of people leaving before they get pushed as TVNZ tries to fit 500 employees into a single workplace.
The costs of shifting 500 employees and all of their gear is going to be immense. The refurbishment of a already tight site to fit 500 staff is going to be colossal if at all possible. The disruption to the operations of TVNZ will be long ranging and probably deadly in terms of the disruptions to their usual revenue streams. About the only thing that they have going for them is that
If I was working at TVNZ at either of these buildings then my CV would be heading offshore right now.
It seems to me that the government, and most likely Steven Joyce, has just directly overridden a SOE in the pursuit of a deal with SkyCity that already looked quite corrupt. They have taken an undervalued and depreciated building and sold it to SkyCity for demolition. On the way through they have probably killed much of the remaining operational value of TVNZ.
All for this for a conference centre of dubious economic value, and a increased social cost. If Key and Joyce aren’t simply corrupt, then they are some of the most stupid business people I’ve ever seen. But most likely they’re just politicians trying to cover their arses for making a stupid mistake.
This morning I see that the Greens have picked up on it as well – see National caught hiding cost of SkyCity deal
TVNZ has revealed today that ministers have permitted it to reduce its dividend payments to the Crown so that it can pay for costs of rehousing TVNZ staff from the building it has been forced to sell as part of the SkyCity deal. That will result in a reduced dividend income for the Crown, leaving a fiscal gap that taxpayers will have to finance.
“National has been caught once again hiding the costs of its dirty deal with SkyCity,” said Mrs Turei.National has been caught once again hiding the costs of its dirty deal with SkyCity
“National’s ministers were outplayed in the negotiations with SkyCity and have failed to deliver the ‘free’ convention centre that they promised. Now, the taxpayer has to foot the bill.
“The Government tried to downplay the social costs of increased gambling and failed to tell the public about the job losses the deal will cause. Now, we learn that National had to coax TVNZ to play its part in the dirty SkyCity deal by letting it off paying dividends. That will be a cost of millions of dollar to the Crown’s coffers.