Herald publisher NZME is debt-free and raking in the millions from digital subscribers; Plus BusinessDesk is speed-dating big media firms
Comment: Listed media business NZME had a good story to tell investors at its briefing day on Thursday, confirming a $30m share buyback after succeeding in its three year plan to eradicate what was $100m in debt.
Its share price is at a lifetime-healthy $1.35 – about seven times its penny dreadful depths of just a couple of years ago, which had followed a long, futile fight to force a merger with competitor Stuff.
NZME also reported 78,500 paying digital subscribers for its nzherald.co.nz premium paywall, up from 67,000 mid-year, bringing in $12m in annual revenues.
It has targeted digital subscriber growth for nzherald.co.nz (to something like 180,000 in four years) and in its investor presentation projected that the total possible New Zealand digital subscriber market could be as high as one million.
The speed of readers’ shift from taking their news in print only is telling. NZME’s paper-only subscribers, which in 2020 totalled 60,000, are expected to decline to around 20,000 by 2023. Those getting newspapers and digital subscriptions at the same time is forecast to fall slightly, from around 110,000 into the 90,000s.
While there was good news for investors, print subscribers simultaneously received letters saying the weekly price for receiving the Herald would rise taking an annual sub for the paper to about $728. “In the face of increasing operating costs, we are having to review the price of the Herald subscription. As a subscriber you pay considerably less than the full retail price, but effective from 1 December 2021, your subscription will rise to $14.00 a week.”
NZME said its advertising revenues had been tracking behind 2019 numbers in the first half of the calendar year, perked up in June, but the third quarter had been hit by lockdowns, and was lower than 2019 (while still around 7 percent higher than the 2020 pandemic year.) Fourth quarter revenues were “encouraging” and real estate advertising had shown signs of “a positive recovery over recent weeks.”
Separately, the company says it aims to grow its radio brands’ total market share, which fell to just 34.4 percent in the first half of this year in the face of competition with MediaWorks radio.
NZME signalled its annual profit for 2021 should be between $63-$67m, compared with last year’s Covid-hit $67m and confirmed it had maintained the annual $20m saving in costs it achieved in major cost-cutting and business restructuring at the height of 2020’s wave of the pandemic.
The business is promising a new youth-focused brand, Kick, across ZM radio, the Herald and podcasts, social media and gaming.
BusinessDesk getting its ‘brand out there’
The business news agency BusinessDesk, which in early 2020 became a subscription paid website after years as a struggling business news wholesaler, has been in talks with first Stuff and later NZME about linking with them.
BusinessDesk has expanded fast since Milford Asset Management chief Brian Gaynor invested to make it a ‘retail’ service to the paying public rather than a wholesaler of news to other media organisations. It relaunched with a puff of publicity, including towing sign boards around Auckland’s CBD with a Rolls Royce, but is still little seen beyond the business and beltway networks.
Indications that it was looking for interest from the big players came first when the business was hawked to Stuff, which does not have a paid journalism offering but has hinted repeatedly that it could yet charge for some of its content. Stuff is understood to have weighed the opportunity and in the end, declined.
More lately, NZME, which has already invested in business journalism for its paid subscriber offering on the Herald site, is said to have been in the frame. Any progress on that front was absent from NZME’s investor briefing on Thursday, which confirmed that that business was now debt free.
But NZME aims to maximise its digital subscriptions and, worldwide, business news is a lucrative driver for those media companies who get it right. A purchase of BusinessDesk might strengthen its offering against the NBR, which has run a rigid paywall for years. All three businesses compete for corporate subscriptions for business news.
There is speculation BusinessDesk might be closed or folded into the NZ Herald offering under such a play. Any purchase could offer Gaynor a return of his spare cash invested in BusinessDesk and founder and editor Pattrick Smellie a payday he would long have worked for.
In response to questions from Newsroom, Smellie tellingly said he was happy “to get the brand out there” but did not address the specific discussions with Stuff or NZME, instead saying his business had grown quickly since last year and was always looking for growth opportunities.
Asked if the pandemic and lockdowns, or other conditions in BusinessDesk’s own business environment might be behind any intra-media discussions, he said: “Covid-19 has created many challenges, but it has also revealed a strong appetite for high quality, trusted news and analysis.”
The question must be, is NZME, or anyone else, willing to tow BusinessDesk into the future?