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Summary of Special Press Conference (November, 2018)

  • On NHK Three-year Corporate Plan (for fiscal years 2018-2020) Amendment Approval (Special Press Conference with Chairman of the Board of Governors )

    (Comments by Susumu Ishihara, Chairman of the Board of Governors)

    Today, the Board of Governors, in line with the proposal by the Executive Board, approved the budget for the next fiscal year being formulated while taking into account the reduction in the receiving fee level. In addition, amending the Three-year Corporate Plan for fiscal years 2018-2020, with regard to the section on reducing the burden of the receiving fees by adding the receiving fee level reduction to the four measures already laid out, was also unanimously approved.
    Matters that were taken into account in the decision to reduce the level of the receiving fees included that income is expected to far exceed the projection of the current corporate plan, which was achieved due to the decision of the Supreme Court in December last year and the efforts made in improving operational performance. And in terms of expenditures, the costs of 4K and 8K broadcasting, internet and other new media services have become clearer and the implementation of various cost-cutting measures has been noted. And a long-term view of projections based on the changes occurring in society, in terms of issues such as television ownership rate and the number of households, has been taken. Taking into account those factors, the Board of Governors reached the conclusion that the proposal from the Executive Board is appropriate, and that even over the mid to long-term, NHK will be able to carry out its role as a public broadcaster and public media.
    On the other hand, in terms of the receiving fee system for a public broadcaster in the age of convergence between broadcasting and the internet, the existing operations of NHK, the radical overhaul of the receiving fee contract payment and collection system, must continue to be discussed. Taking all of these factors into account, in giving approval for the policy of reducing the level of the receiving fees, the Board of Governors issued its collective opinion on this matter.
    We have strongly expressed our wishes to the Executive Board that as it properly implements the current corporate plan, all employees of NHK and the NHK Group act in line with the high standards of ethics appropriate for those involved in public media and are conscious of the heavy responsibility they bear to society. The Board of Governors will also keep a close eye on the Executive Board to ensure it takes to heart the importance of the receiving fees and responds in accordance with the trust given by viewers.

  • (Comments by Ryoichi Ueda, President)

    With today's decision by the Board of Governors, approval has been received to implement the reduction in the receiving level fees during the current Three-year Corporate Plan and to amend the plan accordingly, as well as to formulate next year's budget projection while taking into account the reduction. We take the opinions of the Board of Governors very seriously and every staff member of NHK will work to respond properly.
    We came to the decision to reduce the receiving fees by examining very carefully factors including the mid- to long-term corporate plan and income forecasts.
    The scale of all the measures to return funds would be 42.2 billion yen annually, representing 6% of projected income from receiving fees for the 2018 fiscal year. In addition to measures aimed at spreading the burden of the receiving fees fairly, the decision of the Supreme Court last year has led to more people applying to sign receiving fee contracts of their own accord, raising the amount of expected income above that forecast in our corporate plan. On the other hand, increased major expenditures, such as for the rebuilding of the Broadcast Center, have already been accounted for.
    Going forward, the number of households is on the way down, as is the rate of television set ownership, which along with other factors is making the fiscal environment more challenging. While keeping that in mind, and the fact that NHK must fulfil its 'public role' as the convergence between broadcasting and the internet continues, and having given serious consideration to our corporate plan and income projections over the mid- to long-term, and that NHK operates under regulations that prohibit generating surpluses, we decided that this is the largest level of reduction we can implement at this time.
    In order to implement what we can in a timely fashion, when the consumption tax rate goes up in October 2019 (from 8% to 10%) the amount people pay for the receiving fees will not change, meaning that the actual cost for both terrestrial and satellite viewing contracts will go down by 2%. And from October 2020, the price of terrestrial and satellite viewing fees will come down by 2.5%. The receiving fee payment and collection system will be overhauled before these reductions come into effect. Once they have both come into effect, for people who pay two months at a time by regular direct debit, the total savings will be 59 yen a month, 708 yen a year, for terrestrial contracts; 102 yen a month, 1,224 yen a year, for satellite contracts.
    Including the reduction in the receiving fee level, the scale of all of the measures to return funds is as follows: the reduction in the receiving fees is 32.8 billion yen annually; the four measures to reduce the burden of receiving fees, part of which have already been implemented, amounts to 9.4 billion yen annually, which comes to an annual total of 42.2 billion yen, representing 6% of the expected receiving fee income for the current fiscal year. With the decision to amend the corporate plan, the budget for next year will have to be deliberated on and approved by the Board of Governors, and then submitted to the Diet (parliament) for approval.
    NHK, even as it operates in the middle of the major shift in the broadcasting environment, will continue to be conscious of the value of the receiving fees that are paid by all of our viewers, as it moves toward becoming a public media. Even with the reduction in receiving fees, NHK will continue to properly fulfill our role as a trusted 'core component of social infrastructure'' and operate according to our six core public values.
    From the base of providing rich programming, NHK will work to respond to the wishes of viewers with the improvement of content for the about to be launched BS4K and 8K channels; the introduction of full simultaneous internet and television broadcasting, which we hope to achieve from 2019; the strengthening of cyber security measures; strengthening broadcast equipment and facilities, and other measures to better withstand disasters; all as a public media and public broadcaster.
    In the future, with the operating environment becoming more challenging, implementing a reduction in the receiving fee level will not be an easy option. Because of that fact, I want to make this an 'opportunity for reform'.
    Looking to the future, taking the NHK group as a whole, I will increase the speed of the radical overhaul of operational management which is already underway. With regard to new services and activities, funds will be sourced from thorough reforms of existing operations to create an efficient and effective sustainable business structure.
    In terms of income and expenditure, as well as the scale of operations, management will be carried out according to the principle of keeping them under control. Every member of NHK's staff is as one, dedicated to work together, with a sense of purpose and urgency, to move NHK through the process of reform. Identifying clearly things that can and cannot be changed, with the 'courage to change' and 'preparedness', we will move forward with the necessary measures. And the fundamental factor underlying all of this is the trust of viewers. We will keep that in mind as we strive to increase the value of the receiving fee and work to meet all our viewers' expectations.

  • Q&A session:

    Q: Isn't the amount of the receiving fee reduction small?
    A: (Comments by Ryoichi Ueda) We are conscious of the fact that, in terms of the business environment in which NHK operates, according to figures from the National Institute of Population and Social Security Research, the number of households will peak in 2023 and then begin falling, and the rate of television set ownership is also set to drop, creating an even more challenging business environment. In light of such a situation, examining the mid- to long-term income and expenditure outlook from an overall perspective, bearing responsibility for management, my final decision was that this was the scale of returning funds, including the reduction in the receiving fee level. In terms of the scale of returning funds, this reduction is double what was proposed two years ago, and compared to the 7% reduction that was implemented six years ago, is approximately of the same scale when taken in totality. And, with regard to the comparative size of the reduction compared to the surplus when the receiving fees were reduced in the past, this returning of funds is actually on a larger scale. These measures that we have announced, given the management responsibility I have, I think are of the largest possible scale. Even as the reductions in receiving fees are implemented, I want NHK to continue to meet the expectations of viewers and citizens in fulfilling its role as a public broadcaster and public media, as it has done up until now. Other than years in which there was a significant sale of assets, the surplus generated has been in the order of 10 billion yen to 20 billion yen; given that, the 42 billion yen total return of funds due to the cut in receiving fees and measures to reduce the burden of receiving fees is from our perspective the largest we could implement, taking into consideration the shift to a more challenging business environment.
    (Comments by Susumu Ishihara)
    When there was talk of a fee reduction two years ago, from the point of view of the Board of Governors, there were questions over where NHK's business performance and income would be over the mid- to long-term, with future expenditure set to increase significantly due to the rebuilding of the Broadcast Center and the Tokyo Olympics and Paralympics, the convergence of broadcasting and the internet, the start of 4K and 8K broadcasts and other factors. Until the situation became clearer, it would have been very difficult to decide on a fee reduction and we were against it at the time. Against that background, when the current corporate plan was decided upon, in order to return funds to all viewers, the four measures to reduce the burden of receiving fees were included. After that, the decision of the Supreme Court was handed down, and contract signing and fee collection activities have been carried out thoroughly, leading to an increase in receiving fee income. At the same time, forecasts showing the number of households and the television set ownership ratio both declining in the future came from the Executive Board, so it was decided that this was the most it could be reduced by. I think the total of 42.2 billion yen is really a huge amount from NHK's perspective.

    Q: After the receiving fee reduction, NHK's expenditure will be around the 700 billion yen mark, do you think this will be an appropriate level of operational expenditure for NHK?
    (Comments by Ryoichi Ueda) There will be a period where we run a deficit, and in order to make us financially stable, we will use surpluses carried forward from previous years, as well as keep mid- to long-term costs firmly under control. I intend to maintain costs at an appropriate level and properly steer the management of NHK.
    A:(Comments by Susumu Ishihara) Recently, due to new measures, there is no doubt that there are costs which weren't required in the past, so naturally, where it is possible to cut down on operational expenditures, that should be done to the full possible extent. We want to impress that upon the Executive Board more than ever. However, the quality of NHK programming should be maintained as much as possible. Savings should be implemented as much as possible, but I think that in order to ensure the quality of programs, the required money should be used.