PO Box 2101GB
February 27, 2015
The Company Secretary
Fiji Television Limited
PO Box 2242 GB
Delivered by Hand
Thank you for delivering the package of information in anticipation of the Extraordinary General Meeting of Shareholders to be held on March 10th 2015.
While recognizing that the sale of Media Niugini Limited has in effect already been completed and the resolutions under consideration at that meeting will be decided by a majority vote and that a majority of voting shares are held in certain hands, I feel it is important to express the point of view of an experienced shareholder and broadcaster.
It will be very much appreciated if, at the EGM, theses matters are addressed by the Directors in a clear and understandable manner.
My comments are attached to this letter.
As a minor matter, one which Directors do not appear to know –
EM TV – means “That’s Television” in Tok Pisin.
Ken Clark OF
Suggested Clarifications to the EGM Paper – additional information provided in the interest of clarity and for fuller shareholder understanding
(a) The fundamental establishment of Media Niugini was not quite so simple as the Meeting papers would suggest. There were changes in ownership and legal matters that required attention
c) Refers to terrestrial footprints from established transmitters, i.e. the output from a land-based transmitter which receives its signal usually, these days, from a satellite feed. (Most of the terrestrial transmitters are owned by entities other than Media Niugini and were built at the request of, and owned by the communities they serve.
The comments ignore the fact that the satellite feed covers the whole of the nation of Papua New Guinea.
At last count there were 1006 satellite receive facilities scattered around the country – not just the 38 terrestrial transmitters sites. This came about largely through the important educational programming that EM TV has been providing to the people without charge for many years and the hugely popular presentations of the Rugby League.
Some mine sites around the country have also provided access to EM TV for their workers.
Some years ago (about 2010) Media Niugini established Nielsen audience ratings, which clearly spelled out who was watching EM TV and what the audience demographics looked like in several areas of the country.
It is understood that subsequent decision were taken to stop doing these ratings surveys. If they had been maintained, we would have much more specific data than “approximately 65% - 75% of the PNG market”
In this information paper, emphasis is placed on the potential role that Hitron plays in the PNG market.
In fact, Hitron is available only in Port Moresby and the ratings data revealed that the accumulated audience for all of its channels taken together was relatively small. There are other smallish pay television services scattered around PNG, which would have similar (though not at the moment researched) delivery to households.
It is not precisely correct to say that “PNG does not have regulation to restrict TV broadcasters (in fact not broadcasters but subscription television operators) from showing the free to air channels”
Copyright protection legislation exists in PNG, as it does in many other modern economies around the world.
It is not robust legislation and does not protect local broadcasters as it should, but there is legislation as to copyright protection and an extensive legal case had been undertaken by Media Niugini Limited to correct the situation.
The case was not pursued when management changed in 2005.
A rumour has been circulating in PNG since about 2003, that foreign ownership of media will be restricted. Shareholders should have proof of any verification of the longstanding rumour.
In order to understand this fully it needs to be remembered that almost all of the major media outlets in PNG and in fact “foreign” owned.
Both major newspapers – The National and The Post Courier – are owned offshore PNG – one by Rimbunan Hijau, a Malaysian logging company and the other by News Corp – Rupert Murdoch’s organization.
The dominant player in Radio in PNG is the Fijian, publicly traded company Communications Fiji Limited.
While nothing in Papua New Guinea surprises – it would be a very difficult task for government to insist that media ownership must change.
EM TV has been operating on a policy of being as digital as possible, until it is no longer possible. When the studios and internal transmission (play out) facilities were rebuilt, all equipment installed was, (and remains), digital. At the time it was likely the most modern of any Pacific Island television service.
As a result, when the main transmitter at Burns Peak was rebuilt, all of the operating systems were built using digital equipment, until the actual analogy signal was delivered from the transmitter to homes.
All that is required to change that to a digital system is a software change.
Changes from analogue to digital of the signals at transmitters owned by other people, might normally expected to be absorbed by the people that own those transmitters.
Shareholders are due an explanation of why the present estimate of a conversion to digital would take somewhere between 15 and 27 million Fiji dollars.
Digital reception in TV households will require set top boxes. Is it these that would require the investment?
The EM TV signal is received via satellite in Fiji and can easily be included in the Sky Pacific mix there and the digital signal could thus be delivered back to Papua New Guinea using Sky Pacific set top boxes.
What is the background to the information paper statements?
The sale of MNL has been completed.
It is the Board’s right to make such decisions.
FHL controls the Board of Fiji Television and can make these decisions however, the minority shareholders need to be well informed as the process unfolds.
EGM Paper No 2/2015
Separation of Sky Pacific into a wholly owned subsidiary.
In considering this option it may have value to remember why Sky Pacific was established in the first place.
In the early 2000’s, Fiji Television was already running a small analogue pay television service that was called Sky Fiji. It was established with three channels using second hand equipment from Sky New Zealand.
It did well, for what it was.
When Fiji Television was first established, there was reference to the need to deliver a television broadcast service to all the people of Fiji.
The threshold for consideration of when to consider that as an option was when the distribution of Fiji Television’s Fiji One service reached 85% of the people.
That happened when the transmitter at Vunisea in Kadavu was established in 2003.
Every week Fiji TV was receiving letters from Fijians asking that the free to air service (Fiji One) be extended to them.
There were large geographical areas of the country where there was no terrestrial signal. Macuata, Cakaudrove, Northern and Southern Lau, Eastern Ovalau, Western Mamanucas, and Yasawas – all of these areas amounting to about 15% of the people of Fiji, still needed to be able to watch the Six O’clock Evening News.
In the early years there was an indication that taxpayer funding might be accessed to support this signal extension since there would be no consequent advertising revenue to support the cost.
The options were to extend the terrestrial distribution one community at a time, handle all of the complications of that – land use, power access, signal distribution etc.
Or – to move to satellite distribution, which would reach all of the country all at once and remove the need to “play God” and decide which community would receive coverage first.
The satellite option was carefully chosen.
The service was to use Ku Band satellite technology.
The idea, the objective, was to make Fiji One available to viewers who had acquired the relatively modestly priced satellite receive equipment , wherever they lived in the country,
AT NO CHARGE.
There is still no charge to a subscriber, if they only wish to watch Fiji One. The price of the equipment has gone down since it was first introduced.
The communications gap had been closed
Making a long story short the satellite provider had to be forced to provide the capacity through a legal action, and the result was that the service was to now be provided on C Band rather than Ku Band.
C Band is more robust and has a much greater footprint than Ku Band.
That meant that The New Sky Pacific service could be offered in many countries in addition to Fiji –once programming copyright for all the programming had been cleared for such a purpose.
But the fundamental objective had been accomplished – all of the people of the country now fell under the available signal of the service and could watch Fiji One without having to pay any subscription fee,
The change in the set up of Sky Pacific as a separate entity could change fundamentally the whole reason why Sky Pacific was set up in the first place.
One motivation for such a change would be that it could then be sold as a going enterprise.
But what would then happen to the people of Fiji whose only access to local programming is through the satellite service? 15 % of the people of Fiji.
Someone else would now be making the programming decisions for Sky Pacific. What would keep them from deleting Fiji One, or charging for it?
Would Fiji One have to pay Sky Pacific, now a separate service, for the signal’s distribution?
There are practical synergies in operating free to air television services and pay services alongside each other.
Not the least of these is the ability for the pay service to be able to multiple runs of sports and other programming on the pay TV channels thus keeping the programming costs in check.
These repeats, of course, also provide viewers with a second chance to see that favorite try they may have missed in the live broadcast.
Playout facilities can be shared and the result is effective cost control.
Relationships with programme providers develop more effectively when more content can be acquired from them.
This separation decision must be very carefully taken, if it is to be considered at all and solid advice must be acquired along the way.
Change of Number of Directors and number required for a Quorum
Fiji Television is a significant company, traded on the South Pacific Stock Exchange and has developed a strong profile in the Pacific over many years. Except for recent years it has performed very well.
For a suggestion to be now made that potential Directors do not want to serve is strange in the extreme.
For three directors to be enough to establish a quorum is also strange. In my view it should take at least five directors to establish a quorum
In a responsible corporation, there should be enough directors in a Quorum to reflect a responsible attitude to the decisions that must be taken.
1 It will also be useful for shareholders to learn of progress with the development projects off shore. You will recall that at the last AGM we were told that there would be progress by November 2014
2 What is the status of the broadcast license for Fiji Television in Fiji?
3 When a company is sold, decisions need to be made about cash assets such as money on deposit in banks. It was usually the case at Media Niugini (EM TV) that a considerable amount was regularly on deposit. Could the Directors please inform shareholders of the facts of such deposits as the sale of Media Niugini was being completed?
4 Very considerable effort had been applied by the management team of Fiji Television Limited to the development of Media Solomon Islands Limited in Honiara.
MSIL was, for convenience at the time, positioned as a subsidiary of MNL since MNL was already a subsidiary of Fiji Television Limited.
MSIL was always administered by Fiji Television management.
In November 2011 a television broadcasting license had been issued to MSIL as a result of the efforts of Fiji Television management..
We have seen no mention of the status of MSIL in the MNL sale transaction.
Could the Directors provide full details of what, if any, the disposition of MSIL has been? Does it remain a property of Fiji Television?
5 Fiji Television learned practical lessons early on in the administration of Media Niugini Limited.
The cost of transferring funds from PNG to Fiji was very considerable – there is a 17% charge when moving money out of Papua New Guinea.
If that charge applies to funds generated through the sale of a property such as MNL, then the cost to shareholders would be in the 5 million kina range.
We ask Directors to clarify how much return there will be to shareholders and when shareholders might see the benefit of the sale of Media Niugini Limited.