MediaRoom: TV Three prepares to enter the arms of Discovery, Stuff bounces back under local ownership and NZME is riding the subscriptions and real estate wave. The private media that once seemed doomed is reborn, writes Tim Murphy
Put away the pre-written obituaries for New Zealand’s major media companies.
Turns out that with just a modest prop-up from the taxpayer at the peak of the Covid and lockdown crisis, the media firms have stabilised and even thrived.
The Broadcasting and Media Minister, Kris Faafoi, might yet be able to put away his big chequebook and either cancel or substantially reduce in scope and cost to the taxpayer any second round of media bailouts.
What’s changed since April, when almost all the country’s media bosses joined a Zoom call to Parliament’s Covid response committee to urge financial support, regulatory relief and tax changes?
First, Faafoi delivered an initial tranche of funding that looks to have vaccinated the media businesses sufficiently to resist their industry’s rampant existential crisis.
The state gave $20m plus in relief to broadcasters by waiving technology fees, it spent millions on forward bookings of government advertising to big publishers and encouraged Crown agencies to take annual subscriptions to smaller news producers (including a grateful Newsroom.co.nz).
Second, most media companies qualified for and took the wage subsidy – a cool $8.6m for publishing and radio giant NZME and millions for the soon-to-be-split MediaWorks, for example, and a lifeline for other companies suffering declining advertising revenues as their business clients stopped spending.
Third, beyond the wage subsidy, many of the media firms cut their costs hard. NZME confirmed this week, in a presentation to investors, that it has removed $20m a year in costs from its future performance, leaving hundreds of roles unfilled or redundant and permanently dropping the number of newspapers being printed. Its share price is the highest it has been in years, close enough to its launch on the NZX four years ago, and it expects its ebitda (earnings before interest, tax, depreciation and amortisation) for the full year 2020 to be around the same as 2019.
Advertising looks to be bouncing back in the fourth quarter for print, digital and radio.
At the same time, hard decisions have been taken to do away with sections, programmes, even the whole Radio Sport channel. Regionally, neighbouring community newspapers have been merged (for example the former Waihi and Whangamata papers owned by NZME are now the one Hauraki Post) and the total number of journalists and support roles has fallen, for good.
Fourth, two of the major firms pulled off miracle sales of all or part of their businesses. Nine Entertainment sold publisher and digital powerhouse Stuff to its chief executive Sinead Boucher for $1 – effectively gifting her a clean sheet by swallowing a total of $48m in debt as it withdrew. And MediaWorks sold its Three television business, including the Newshub website and news operation, to global giant Discovery. A loss-making television business, at risk of closing altogether and hit hard by the advertising downturn, found a secure home in the arms of an established player.
Stuff under Boucher’s ownership has been bold and virtuous – removing itself from the evils of the Facebook platform, doubling down on its editorial leadership on climate action, employing star after star editors and journalists.
Three, which this time a year ago winced at headlines suggesting it could have been closed by Christmas 2019, is formally separating from its radio and outdoor company MediaWorks within weeks. The old MediaWorks chief executive Michael Anderson has signed off, Cam Wallace formerly of Air NZ has signed on to run the radio and outdoor wing, email addresses company-wide are being changed for Three, and a future is finally seen for its idiosyncratic, underdog news and entertainment product.
Fifth, a boom in the property market has delivered shots of adrenalin into print and digital media’s advertising budgets, and trans-Tasman retailer Harvey Norman has almost single-handedly saved the display advertising market in newspaper front pages and sections nationwide by buying acres of print territory to spur its own, bold, sales success.
Sixth, the pandemic saw a surge in audiences to news websites, newspapers and television news broadcasts that has never been seen before, and has never lasted so long. With the saturation readership came strong growth in readers paying for subscriptions (the NZ Herald has risen from 21,000 to 49,000 paying digital customers this year and it is looking at adding sport, puzzles, food and travel content into the paid offering) and making donations to sites like ours here at Newsroom and to the Spinoff, and Stuff.
As the future of New Zealand voices and sources of news seemed threatened, New Zealanders rallied around.
When the media had made its industry-wide plea to MPs in April, the biggest magazine publishers Bauer had just been summarily closed by its German owners Bauer, leaving hundreds out of work and titles like the NZ Woman’s Weekly, The Listener, North & South and Metro, Property Press and a suite of lifestyle mastheads seemingly doomed.
After a long sales process, the biggest names in magazines have returned – some being relaunched by former New Zealander Clark Perkins’ firm Mercury Capital, which bought Bauer’s operations in Australia and here, but others by small or new magazine operators convinced of a potential in publishing.
At the same time, entirely new magazine and lifestyle products Scout, Thrive, Haven and Woman have been launched by former Bauer executive Sido Kitchin and the Capsule site by a collective of former Bauer editors and writers.
The pandemic and economic crisis have not dulled ambition.
It can’t all be plain sailing from here. All economic and business forecasters predict tough times through 2021 and very likely beyond. All of the nascent or resurgent media firms need to keep their costs flat or even declining and to find audiences willing to pay for their content. Some products, old and new, will still fail. But a wholesale conflagration of the media caused by the economic crisis overlaying decades of digital disintermediation of content and advertising may have been avoided.
Pressure from the private, commercial media firms on Faafoi will have eased.
Many ventures will need to maintain the previous contestable government funding for video and digital content through NZ on Air and other agencies. They’ll still need the public sector to advertise and subscribe and the public to watch and read, and some ideas for tax reforms eradicating barriers to media survival should still be considered as part of the normal governing process.
If Faafoi is seeking extra funding from Finance Minister Grant Robertson, it might now be best targeted at the public media sector – RNZ, Māori TV, iwi, Pasifika and community broadcasters and digital players. Like their commercial cousins, these businesses have served vital roles during the pandemic through important public messaging, education and scrutiny. They reached communities that needed to be informed and served as conduits for sanity during lockdowns.
Already public broadcasting executives and bureaucrats are dusting off the plans for a possible merger of TVNZ and RNZ, albeit with a fair degree of suspicion over whether this Faafoi plan is a solution in search of a problem. It was the New Zealand First handbrake that brought development of a merger plan to a halt before the election. Just because Winston Peters and co. have gone doesn’t mean the handbrake has to be released for the sake of it.
TVNZ stands apart from direct government funding, paying for itself from its commercial activities, and has been bold in developing its NZ-generated content strategy and containing costs.
It is possible the Government could look at imposing a digital services tax on the likes of Facebook, Google and others and put any proceeds towards funding public journalism or a mechanism for contestable funding. There are risks if New Zealand goes it alone – an international project under the OECD to shape a global tax on such digital operations is progressing and would reduce problems with the US administration seeking to protect its big corporations’ futures.
Faafoi and Robertson have more time to think, now. In April the prospects for a vibrant and commercially sustainable media looked bleak to dire. They have probably reverted now to just being perpetually challenged and on edge.