One Party Media

After the last election, I argued that New Zealand had become a one-party state. National’s electoral dominance and John Key’s dominance of the party political landscape was complemented by the Labour Party’s oppositional shortcomings (Daily Blog, One Party State, 24 September 2014). They seemed incapable of assembling a coherent, costed social democratic programme in defense of social equality, public services provision, economic sovereignty and environmental sustainability. Strategically, this would have required Labour and the Greens to develop a common platform on the central issues of equitable taxation, employment creation, housing affordability and climate change mitigation.

In broad outline my critical analysis still holds up, although there are some positive signs. The National government and John Key himself are looking more vulnerable. And, a coordinated inter-party opposition looks more possible now than before the last election. One party states require a compliant media. Back in 2014, I stated that “Newstalk ZB, Radio Live’s Sean Plunkett and TV3’s Paul Henry operate like mini Fox News outlets reproducing the neoliberal outlooks and prejudices of the Party”. Well, since then, matters have worsened considerably. Within Mediaworks alone, television current affairs shows have disappeared and news and current affairs staff have left or lost their jobs. Meanwhile, major daily newspapers shed staff as their parent companies (NZME and Fairfax NZ) integrated their newsrooms. More recently, came the announcement that APN & News’ New Zealand arm (NZME) was to be divested and then merged with Fairfax NZ. With no opposition likely from the Commerce Commission, the new entity will own every major metropolitan newspaper title (except for the Otago Daily Times), a slew of regional papers (Waikato Times, Manawatu Standard, Taranaki Daily, Marlborough Express, Nelson Mail, Southland Times) along with 52 community newspapers nationwide. This virtual monopoly over New Zealand’s newspaper market will form part of a much larger cross-media enterprise consisting of two major news sites (Stuff.co.nz, NZ.Herald.co.nz) and 130 plus radio stations (one half of New Zealand’s radio market).

In this scenario, NZME/Fairfax NZ will dominate the media landscape. Only three other corporate players would remain – Sky Television, the German-owned Bauer Group (owner of the New Zealand Women’s Weekly, Woman’s Day and the Listener) and, of course, Mediaworks, owned by U.S. private equity firm Oaktree. Their assets include TV3 and the other half of New Zealand’s commercial radio market. What we will have here, virtually speaking, is a one party media system operating alongside the one party state. So, why is this happening?

Well, firstly, New Zealand has no media-specific competition law. In Australia, and every other comparable country, there are at least some legal limits covering foreign media ownership, ownership concentrations in specific media sectors, and cross-media ownership. New Zealand is an outlier, a place where media corporations and their major shareholders are free to roam, without hindrance from any regulatory authority. Secondly, in these circumstances, the Commerce Commission will regard a media corporation as a business like any other. Furthermore, as Sean Phelan has pointed out in the online magazine Counterfutures, the Commission has, on previous occasions, ruled that monopolies need not be uncompetitive. This reflects the Chicago School of Economics’ view that market dominance “is less concerned with a company’s market share and quite relaxed about monopolistic features so long as technical barriers to entering the market remain low” (Phelan, “It’s neoliberalism stupid”, Counterfutures, 2016).  On this basis, the Commission could not rule against Telecom’s control of the local loop or, more recently, Sky TV’s virtual dominance of live sport television coverage in tandem with the replay rights on their Prime channel. In the latter context, the standard argument would now be that internet access to  live sports events precludes any conception of a monopoly. Internet company, Coliseum, has entered the market, therefore consumers have a choice of provider. Similarly, for the proposed NZME/Fairfax NZ merger, the general availability of different internet access points to news, sport and entertainment content will be emphasized alongside the prospect of commercial competition among mass media outlets and internet content providers. On this reading, monopoly or near-monopoly control over a specific media sector is of no consequence. In a converged media marketplace, it seems, consumer choice abounds and monopolies are non-existent. My own view is radically different. If the proposed NZME/Fairfax NZ merger proceeds, the following repercussions are likely. All of them threaten the public interest.

• Financialized ownership versus News Ltd. Which shareholders will control the merged company? There is no guarantee that a standalone New Zealand media company will be New Zealand owned. And, it is not yet evident who the new owners will be. One possibility is that of a financialized structure involving APN News & Media’s largest shareholder, Alan Gray. A major financial owner of Fairfax Australia is Morgan Stanley. If these and other financial players assume control, they will demand maximum returns over short timeframes. The distinctive long-term requirements of a media organization will be of little relevance. Just ask those journalists and news staff who have recently left Mediaworks. Alternatively, Rupert Murdoch’s News Ltd may extend their influence. They presently hold 14.9% of APN & News Media’s substantial shareholdings (JMAD, Media Ownership Report, 2015).  In this scenario, a media-focused management may well exert editorial influence in line with News Ltd’s ideological priorities. One need only observe the editorial lines of the Australian and the Sydney Daily Telegraph.

• Regional news decline. Over the past five years, APN News & Media and Fairfax Media have integrated their newsrooms, cut down print editions and laid off staff. This process will continue within the new merged entity. Consequently, regional and community newspapers will either close or limp along with skeletal staff. In any event, most newspaper content throughout the country will be designed to fit digital formats. Here, the news consumer is assumed to be a networked individual rather than a citizen with community interests and obligations.

• Paywalls. Thus far, neither NZME or Fairfax NZ have introduced paywalls. The first company to charge readers for news stories would have risked losing readers to their competitor. Their still free news content would become attractive for readers and pop-up advertizers. Under one large company, however, introducing paywalls is less risky. Readers of digital newspaper content who are unwilling to pay will have few options.  We have here the prospect of a digital divide separating those who can afford the full range of news stories from those who cannot

• Investigative journalists in danger. Within the major dailies, skilled investigative journalists are not yet extinct. The New Zealand Herald, for example, has published excellent features from Simon Collins, David Fisher, Anne Gibson and Matt Nippert. The latter’s writing on the Panama Papers has been exemplary from a public interest perspective. There is no guarantee that the new company will fund and support such investigative pieces. Under a worst case scenario, tabloid news values will completely dominate the newspaper market offline and online. Thus, again, citizens will be less informed and the public interest irreparably damaged.

• YouTube news bites. Recent advertising trends if they continue will further diminish news quality. These can be summarized as follows. First, much of New Zealand’s ad spend is migrating from mass media organizations towards Facebook and Google. Second, mass media outlets online attract only a small segment of total digital ad spend; Facebook and Google predominate. In this context, the NZME/Fairfax NZ merger is designed to attract advertising dollars away from social media competitors. Unfortunately, even partial fulfilment of this objective requires news stories to become YouTube-style click bait. The intellectual vacuity of YouTube clips featuring runaway alligators, near-thing train fatalities, the Kardashians and other ‘celebrities’ will increasingly become the benchmark for selecting news items. News stories based on journalist reports will become an endangered species.

• Media power and political influence. It is an iron law that the economic power of media corporations translates into substantial political influence. The UK News of the World scandal is a clear case in point. As the resulting Leveson Inquiry revealed, Rupert Murdoch and his accolytes were exerting political pressure on David Cameron, cabinet ministers and those individual politicians favouring regulation of corporate media interests. Furthermore, the relationship between NewsCorp executives and government elites was cosy at best and collusive at worst. In the New Zealand context, if the proposed merger of NZME and Fairfax NZ eventuates the degree of political influence over government could be considerable. The key issue concerns the personnel of the board and their connections, direct or indirect, with senior public servants and cabinet ministers. Given the economic size and scale of the proposed new media entity, many opportunities for political influence will become available. Key issues here include: indirect funding of political parties opposed to media regulation, intense lobbying of parliamentarians, especially media spokespeople, suppression of stories likely to embarrass friendly governments, and pressure to reduce funding for public media initiatives.

This is a pretty bleak picture. The aforementioned tendencies favouring one party media may well intermesh with the already prevailing activities of the one party state. Labour and the Greens must develop a shared policy platform on media competition law and funding for public interest media by the years end. In the interim, political and journalistic opposition will need to mobilize urgently against the deliberations and likely findings of the NZ Commerce Commission.