MediaRoom column: Very few competitors, and certainly not the sensible ones, cheered the end of Today FM – because almost all commercial media are staring at the same ‘significant block in terms of revenue’ that hit its owner MediaWorks this year.
Comment: All eyes will be on broadcaster and publisher NZME when it holds its annual meeting in a fortnight.
After warning in its annual result presentation in February that there had been a “soft start” to 2023 and “there is uncertainty across the economy and the market”, the firm will update its shareholders on April 26 on how its revenues are running nearly four months into the calendar year.
The economic conditions since February – continuing interest rate increases by the Reserve Bank and a growing expectation that the country will tip into recession – do not inspire confidence that things for NZME or any commercial media business relying on advertising dollars will get better any time soon. Media businesses are often among the earliest to feel sharp economic downturns, with falls in real estate and retail and services advertising seeing revenues dry up.
If NZME was warming the market for potential negatives, the word out of its private equity-owned rival MediaWorks was already dire.
The admission by interim MediaWorks chief executive Wendy Palmer at an internal staff meeting when closing Today FM of the scale of the revenue problem for the business was rare among media executives who excel at accentuating the positives.
She told staff the business had run into a “significant block in terms of revenue” at the end of 2022 and its own forecasts were for more difficulty ahead. It had to cut its costs now to prepare for worse conditions this year. Palmer indicated the pressures had hit the company’s successful music stations, not just the new talk channel she was ending. And although MediaWorks’ outdoor advertising operation might have been performing relatively better, it was small in comparison.
MediaWorks’ closure of Today FM meant 30 jobs ended, on top of 45 being cut and a further 45 not being filled at the firm. On Tuesday remaining journalists in the now-MediaWorks newsroom learned their number would also fall, believed to be from 20 to 12, with just one newsreader retained.
MediaWorks is not alone. Sky TV cut 170 jobs by outsourcing some technical and call centre jobs overseas. North & South magazine, saved and revived by German investors in 2020, is back on the market, having struck economic challenges. Its editor, Kirsty Cameron, is leaving for the Listener, where editor Karyn Scherer has resigned.
NZME spoke in its annual result briefing of cost pressures remaining “across the business”, foreshadowing spending cuts as it promised to focus “on substantially mitigating these through disciplined cost controls”. The ‘discipline’ extends to a micro level – it has reportedly cut free copies of its print edition New Zealand Herald for staff and the signature daily print and online column Sideswipe with Ana Samways is about to be axed after 20 years.
Other major commercial media businesses are also indicating revenue pressures and are tightening their spends – Discovery, owner of TV3 and Newshub, has a sinking lid on employee numbers with only critical roles being replaced; TVNZ is trying to manage its second half of the year budgets having had to spend substantially on extensive team coverage for Queen Elizabeth’s funeral in the UK and for covering the major summer storms, including Cyclone Gabrielle.
Outgoing chief executive Simon Power said in his company’s interim financial results announcement that “we are aware of economic headwinds ahead and the need to respond appropriately”.
“Inflationary pressures and interest rate increases are likely to deliver a softer domestic advertising market through the remainder of 2023.”
TVNZ reported a profit of just $4.8m for the first half of the 2022/23 year, down from $15.2m for the same period in 2021, so its warning for the second half to the end of June suggests the annual result will be seriously challenged.
The country’s biggest publisher, Stuff, remains an enigma. Privately owned by chief executive Sinead Boucher, Stuff has proudly and stubbornly spurned the chance to raise income from a subscription paywall for the three years rival NZME has been building up its ‘premium’ income to around $14.6m annually. NZME now has 113,000 paying digital subscribers for nzherald.co.nz – and last year, for the first time, that outpointed its 96,000 print subscribers across the Herald and multiple regional newspaper titles.
There is digital subscriber revenue there to be claimed and most rival firms expect Stuff to be forced to introduce a paywall of some sort as advertising revenues fall in tighter economic times.
Stuff has also had to stand on the sidelines as NZME struck deals with Facebook and Google for technology and content arrangements that (with Public Interest Journalism Fund payments) added around $10m to NZME’s ‘other’ revenue last year.
Stuff is instead a leading advocate for the Government to force the big platforms to come to funding arrangements with news creators, as occurred in Australia and Canada. Labour has promised legislation (not yet introduced) that would give the global players three to six months to finalise deals before being compelled. Broadcasting Minister Willie Jackson described the law as a “backstop” to ensure negotiations occurred fairly.
On May 25, it will be three years since Boucher assumed control of Stuff for $1 from Australian media giant Nine Entertainment. The company remains a major player in the market, with a substantial staff and a large team of senior journalists in national roles and areas such as audio on demand.
It went through a restructure of some regional newsrooms last year but with print and digital revenues likely to come off markedly this year, a further cost response may be needed.
Trust in media
As media businesses struggle once again with reductions in expected revenue, and potential journalism job cuts loom, the latest survey on New Zealanders’ trust in our media paints a depressing picture.
The fourth Trust in News in Aotearoa NZ survey of 1,120 people by AUT’s Centre for Journalism, Media and Democracy, has general trust declining from 45 to 42 percent. Most news outlets saw their own trust ratings fall on a ratings scale between 0 meaning untrustworthy and 10 being completely trustworthy (see table below).
Trust score (0-10) for NZ news brands
When the researchers probed those who did not trust the news on their reasons, these were the main answers:
Report authors Dr Greg Treadwell and Dr Merja Myllylahti explained the findings in an excellent RNZ MediaWatch interview over Easter weekend.
One of Treadwell’s points was that New Zealand has seen its newsrooms shrink by around half since the late 1990s, as a nation we are under-resourced journalistically and that could be affecting consumers’ views of the news reporting they encounter.
The survey found New Zealand had the highest proportion of people who avoid the news, when compared with results in a similar Reuters Digital News Report survey globally. Fully 69 percent of Kiwis said they actively avoided the news – 11 percent often and 58 percent sometimes.
Proportion of those who often/sometimes avoid news
On the flip side just 37 percent in New Zealand said they were “extremely interested” in the news, compared with 43 percent in the UK, 47 percent in the US, 57 percent in Brazil and Germany and 67 percent in Finland.