Summary of Press Conference on NHK's Corporate Plan for FY2021-2023 (August, 2020)
(Comments by MAEDA Terunobu, President)
As the draft for the next three-year corporate plan, which will start from the next fiscal year in 2021, was approved today by the NHK Board of Governors to receive public comments and opinion, I would like to explain the main points of the draft plan.
NHK has been working towards reform of operations, receiving fees and governance - the ‘trinity of reforms’, so to speak – by moving forward with a range of related measures. The draft of the next corporate plan lays out our resolution to speed up such reforms and bring about real change at NHK.
The thinking behind the next corporate plan
With a situation where receiving fee income is set to fall due to the decrease in the number of households and a shift in the viewing environment because of the launch of multiple video streaming services, along with the rapid progress of technological innovation, NHK finds itself in challenging circumstances as the situation continues to fluctuate drastically. Taking these changes into account, in the next three years, NHK needs to move further ahead with the trinity of reforms, and to respond to this new era, I think what we need is “Pursuing A New NHK Rashisa (uniqueness)”. By implementing ‘management of programs by genre’ and making cuts to fixed costs, with a thorough reform of our cost structure, and by utilizing the creativity of each individual member of staff to the maximum, I would like to see a new ‘slimline and strong NHK’ born. In order to bring this about, I think the single most important factor is to thoroughly control our expenditure. In terms of the assessment of NHK’s budget for next year, I decided to work alongside the director of accounting in leading the assessment.
On income and expenditure during the period of the plan
The currently expected major income and expenditures for the three years are as laid out in the plan. Operational expenditure will be reduced to around the 600 billion yen level by FY 2022. With the reforms of our cost structure, over the three years, expenditure will see a large reduction to the tune of 63 billion yen. However, investment in five important areas will take place that will total 13 billion yen over three years, so we will take a balanced approach. In terms of income, cuts in the level of the receiving fees and the impact of the new coronavirus are expected to greatly reduce revenue in FY 2021, by around 30 billion yen compared to this year’s budget. As it is currently difficult to make forecasts, we are assuming that the level of income for next year will be maintained in FY 2022 and FY 2023.
The situation with our current media
With regards to our current media, we are now re-examining the situation with both our satellite and radio channels. In terms of the satellite channels, we are gradually implementing reorganization and consolidation, with a view to moving towards having just one channel in the future for the right-hand circular polarization. And with regards to the left-hand circular polarization 8K channel, along with efficient program production and thorough control of investment in infrastructure, we will examine the situation with it after the Tokyo Olympic and Paralympic Games. In terms of timing, after the period of public comments, we are scheduled to make an announcement when the decision is made on the next corporate plan. For radio, with increasing use being made of the internet, we are currently looking into reorganizing and consolidating the AM and FM channels.
NHK group management
In terms of NHK group management, we will strengthen governance, implement direct supervision reforms, and thoroughly develop a consensus among our group so that we can pursue “NHK Rashisa (uniqueness)” as one organization. We will strive to create even greater synergies and value. Regarding this, I would like to look into using the holding company system, which is already employed by many commercial broadcasters, though this is not included in the next corporate plan.
Up until now, consolidation has taken the form of mergers, but this takes an extremely long time and such reorganization is not guaranteed to succeed. I think that forming a holding company is far more functional and efficient. But in order to make this possible, there might be a need for reforms to the Broadcast Law and I think we would have to discuss this with the Ministry of Internal Affairs and Communications.
About the receiving fees
At this point in time, we believe the receiving fee is at a level that we should maintain.
And from the point of view of sharing the burden fairly, along with maintaining the payment rate at around 80%, we will continue to work to increase the proportion of people who sign satellite contracts. In terms of the receiving fee system, I am opposed to introducing the so-called ‘German model’ as there are concerns that it may damage independence and autonomy in our broadcasting. But various problems with the current receiving fee system have been pointed out and I think we should re-examine it, including the possibility of introducing a new system. And to make efforts to keep operational costs of the receiving fee system under even tighter control, we will use information on residences to look at introducing a new receiving fee system, while moving ahead with investigations into a receiving fee system appropriate for the era of the convergence of broadcasting and the internet. Using information on residences may require revision of the Broadcast Law, so I think that too may require discussions with the Ministry of Internal Affairs and Communications.
That covers the main points of the draft of the next corporate plan.
On the making the draft of the corporate plan
In drafting this corporate plan, what I kept in mind more than anything else is for it to be a plan that will have the backing of not only our viewers and the people, but also of our younger employees, who will bear responsibility for the future of NHK. I wanted the plan to receive both internal and external support. As our new key concept, “Pursuing A New NHK Rashisa (uniqueness)” shows, I want the younger people to think thoroughly about what is expected of NHK in the coming era and by communicating with our viewers and the people including the younger generation, NHK will to continue to exist as a sustainable organization which into the future will be able to fulfil its role as a trusted ‘core component of social infrastructure’. I would like to improve further the dual system of NHK and the commercial broadcasters. This draft plan is scheduled to be open for public comments and opinions for a period of one month, beginning on August 5th. I hope we will receive constructive comments from many people, particularly our viewers. And after bringing together those many opinions we would like to look even more deeply into the details of our plans and then produce a final version of the corporate plan.