Crisis, Disintegration and Hope: Where to for New Zealand’s News Media?

How many media analysts predicted this course of events? Twenty two months after Australian television network Nine Entertainment absorbs Fairfax Media, the New Zealand arm, Stuff, is purchased by its Chief Executive Sinead Boucher. Her proposals for a charter of editorial independence and a staff-based shareholding structure have attracted favourable comments from media commentators, public media lobbyists, Stuff journalists, Nine CEO Hugh Marks and Communications Minister Kris Faafoi [Stuff CEO Sinead Boucher buys the company, announces ‘great new era’, Stuff NZ, May 25].Co-editor of the Newsroom website, Tim Murphy, headlined his opinion piece “Behold St Sinead of Stuff” before acknowledging the future requirements – financial backing, government subsidies, internal costs and debt management [Tim Murphy, Behold St Sinead of Stuff, May 25].

Behind these messages of hope, the Stuff initiative signifies that a crisis-ridden media system is rapidly disintegrating. COVID-19 has accelerated this process. Threats to public health, national lockdown and long-term economic contraction have been commercially disastrous for all private media organisations. Redundancies and closures have gone viral. On March 30, NZME, owner of the NZ Herald and approximately half of the country’s commercial radio stations, abandoned its nationwide sports operations and 25 full-time staff. Less than a week later, German company, Bauer Media, suddenly closed down all national holdings including the NZ Listener, the NZ Women’s Weekly, North & South and Metro. The first two magazine titles had been in print more than 80 years. On April 13, NZME initiated 200 further redundancies – 15 percent of its workforce. As Sinead Boucher announced her Stuff buyout, MediaWorks, owner of a nationwide television network (TV3) and approximately half of New Zealand’s commercial radio stations chopped 130 staff [MediaWorks takes razor to radio, Mark Jennings, Newsroom, May 25]. 

The government response so far has been belated, partial and narrowly focused. On May 23, a NZ$50 million emergency package included $21 million to cut television and radio fees for six months, $16.5 million to reduce media organisations’ contributions to the NZ On Air funding agency for the 2021 financial year and $11 million of targeted assistance for particular media companies [Kris Faafoi, Media support package delivers industry requests for assistance, press release April 23]. This initial tranche of funding was too late for Bauer magazines and could not prevent spiralling job losses within NZME, Stuff and MediaWorks. More support was allocated to television and radio than print journalism, an imbalance which needs urgent attention as part of a media reconstruction strategy. Before moving forward, though, we need an historical diagnosis of recent events. COVID-19 has exposed a double crisis in New Zealand’s news media system. For decades, the weakening viability of commercial media organisations has damaged the sustainability of news reportage, journalistic enquiry and national media culture. Meanwhile, underfunded public broadcasting institutions have long battled to pay staff, create content and advance digital platforms. 

This double crisis arose from the restructuring of Radio New Zealand and Television New Zealand into state owned enterprises (1987), the arrival of TV3 (1989), the formation of pay subscription Sky TV (1990), the privatisation of Telecom (1990) and the abolition of all restrictions on foreign media ownership (1991). Together, these events allowed transnational media conglomerates to colonise the national media domain. After TV3 began transmission, financial insolvency allowed Canada’s Canwest to accumulate a controlling share. Similarly, Sky TV became a transnational corporate vehicle as News Corp-controlled Independent Newspapers Ltd (INL) became the largest shareholder. Telecom’s privatisation allowed American buyers Bell Atlantic and Ameritech to dominate telecommunication infrastructures and markets. The lifting of foreign ownership restrictions triggered an unending succession of transnational takeovers. By 2010, four major players dominated the New Zealand media market: APN News & Media, Fairfax Media, News Corporation/Sky and MediaWorks. News gathering and journalistic practices had been radically restructured. Fairfax, for example, in July 2008, announced the establishment of hubs in Wellington and Christchurch to centralise the subediting of news across all their major titles, which was soon followed by 160 redundancies.

From 2007, listed and unlisted financial institutions (banks, hedge funds, private equity companies) acquired media holdings as short-term revenue streams (see Merja Myllylahti’s JMAD annual media ownership reports) [free online]. The recent history of MediaWorks illustrates how financialised ownership threatens the journalistic public sphere. The company has been owned by private equity and investment funds for 12 years since the exit of Canwest. Successive MediaWorks managers introduced multiplatform broadcasting, low-cost reality TV shows and infotainment programmes with a skeletal staffing structure. The axing of TV3’s flagship Campbell Live in May 2015 signalled the end of prime time current affairs on New Zealand television. 

However, financialised ownership cannot entirely explain MediaWorks’ difficulties, within its television holdings especially. As Peter Thompson noted, scheduled television’s share of advertising spend in New Zealand has declined from 34 percent in 1988 to 21 percent in 2018. The revenue foregone has been absorbed by Google and Facebook. Digital/online advertising is now worth NZ$1 billion, about 40 percent of New Zealand’s entire advertising turnover (before COVID-19) [Peter Thompson, Mediaworks Television: The death of a thousand cuts. Policy Observatory AUT, November 5, 2019]. Meanwhile, broadcasting audiences were fragmenting as more people accessed news and other content through online and mobile platforms. Print media was also haemorrhaging. From 2018 to 2019, every major newspaper lost circulation. NZME and Stuff continued to lay off staff, integrate newsrooms, delete print editions and close regional titles. In desperation, the country’s most popular title, the NZ Herald, introduced digital subscriptions for its premium content. 

Impossible profit rate expectations, fragile share prices and stalling revenues persuaded major players to amalgamate, if they could. The strategy failed. During the 2017, attempted mergers between Sky TV-Vodafone and NZME-Fairfax were prevented by the Commerce Commission. In the former case, a successful merger would have allowed the combined company to dominate mobile and broadband access for the premium sports content market. An NZME-Fairfax monolith would have controlled half of the commercial radio market, 90 percent of daily newspaper circulation and most online traffic to and from online news sites (a High Court appeal did not succeed). 

Against this historical background, and amidst the recent carnage, allow me to outline a news media reconstruction strategy. First, Sinead Boucher’s Stuff buyout deserves government support to complement private sector financial backing. A funding mechanism specifically designed to foster public interest journalism within Stuff and other media organisations should be established. Second, a national interest test in regard to overseas investment in New Zealand should also apply to transnational media acquisitions. As media commentator, Gavin Ellis, observes, “journalism [is] a strategic asset over which New Zealanders must have control” [Gavin Ellis, There are no benefits to foreign ownership of media, NZ Herald, May 21]. Third, earlier government proposals for a RNZ/TVNZ merger within a new multiplatform entity needs urgent development. The new organisation should, at a senior administrative level, identify exactly what services are to be insulated from commercial pressures. A public service philosophy for the relevant stations, channels and platforms should be clearly stated and legislatively entrenched. Here, I would include an online magazine of arts, current affairs and popular culture to succeed the NZ Listener. The organisation’s board must be independent and nationally representative with informal links to the Māori Television network. Finally, as Peter Thompson suggests, the government should impose a digital services levy on social media companies that have ciphoned off domestic advertising revenue without investing in local content. This would generate the necessary funding revenue for public interest journalism initiatives [Peter Thompson, Should the public subsidise media companies, Newsroom, 22 April]. 

Without the initiatives outlined here the disintegration of New Zealand’s news media system will continue.

This is an expanded version if an article published in The Conversation, June 3rd 2020