15 Apr 2020

Media make the case for emergency help

From Mediawatch, 5:14 pm on 15 April 2020

News media representatives addressed Parliament’s Epidemic Response Committee on Wednesday to set out the crisis their industry faces as the government finalises a package of measures to help them survive. Mediawatch looks at the talking points from an epic four-hour session.   

Stuff, TVNZ, NZME buildings and Broadcasting Minister Kris Faafoi.

Photo: RNZ / Supplied

Major news media organisations have had huge bumps in engagement and readership during the Covid-19 crisis but the stalled economy has amplified the financial problems they already had. 

When the New Zealand Herald’s publisher NZME announced 200 redundancies on Monday, Finance Minister Grant Robertson described the media as “a patient with pre-existing conditions".

“Not every business in crisis is due to Covid 19,” he said. 

This is the problem the government faces finalising measures to keep media companies going - the risk of spending big sums on outfits already ailing. 

The whole media ecosystem will eventually need an overhaul, but we need to buy time. We can’t recraft the ecosystem if there’s nothing left to recraft," said the Committee’s special witness, former New Zealand Herald editor Gavin Ellis.

“These are not normal times but media are not normal enterprises," he said outlining his own submission.

He believed state-owned media cannot be “not the be-all and end all of a democratic landscape.” 

“They are not too big to fail but they are too important to fail,” he said.

How much the government is prepared to spend to buy time for troubled media - and at what cost - will only be revealed later this week, according to Broadcasting, Communications and Digital Media Minister Kris Faafoi.

Big audiences, but few ads 

Michael Anderson, MediaWorks chief executive.

Michael Anderson, MediaWorks chief executive. Photo: supplied

Few answers emerged over four hours questioning 12 media representatives and the minister. 

But it was made clear to MPs the commercial part of an industry officially classed as an ‘essential service’ during the crisis now has an existential crisis because its advertising revenue has fallen off a cliff. 

“It’s a cliff we can’t see the bottom of. It’s dark,” said Michael Anderson, CEO of MediaWorks, the owner of TV channel Three which put its entire TV arm up for sale before the Covid-19 crisis hit. 

“We need certainty (about) what is coming next so we can build a structure around that,” he said. 

Stuff’s chief executive Sinead Boucher told the committee it was a “cruel irony” that advertising evapourated once we went into level 2 just as the demand for news peaked. 

On top of that, level 4 rules effectively banned its remaining community papers and magazines.

NZME chief editor Shayne Currie said one in three New Zealanders have read its news during the crisis online, on radio, in its flagship New Zealand Herald and other papers. 

But advertising income was down more than 50 percent, he said. 

Seventy percent of its ad revenue came from SMEs which “don’t have the need or the cash to advertise right now,” he told the Committee. 

Sports news was down to one page of The Herald and it had ceased publication of 22 community papers, he added. 

“When restrictions lift, we will have to see if we can still publish them. That’s how serious it is,” he told the Committee.

A common enemy 

Facebook and Google

Photo: AFP

Currie - and many other media reps who appeared - backed Gavin Ellis in urging the government to switch its own  advertising spend from Google and Facebook to local media. 

“It disturbs me that the government uses (them) at an exponentially growing rate and only a fraction of their spend goes to local platforms,” Mr Ellis said.

“That would make an enormous difference on its own to delivering local journalism ... and supports an industry with a code of ethics rather than one that is okay with lies being spread every day,” Stuff’s CEO Sinead Boucher told the Committee.

Shayne Currie pointed to moves in France to “force Google to start negotiating with media companies for the content that appears in its search engine” and he said Australia’s regulator the ACCC was preparing to move on tech giants’ dominance of online ads. 

“Every dollar the government spends on Google and Facebook is a dollar (not spent on) supporting New Zealand. Buy New Zealand is my message,” said TVNZ’s chief executive Kevin Kenrick, joining the chorus.  

“When you have an industry on its knees and the government is spending billions on business ... the first thing to do is stop scoring own goals,” he said. 

No-one asked why ‘the big four’ - TVNZ, MediaWorks, Stuff and NZME - killed off the joint ad sales platform KPEX in August last year, four years after creating it to offer a domestic alternative for digital ads drifting to the offshore platforms. 

Gavin Ellis also proposed advantageous changes to tax status of “low-profit” media and deferring their costs (such as broadcaster’s transmission fees to state-owned Kordia) as short-term measures to ease cashflow problems. 

In the longer term, Gavin Ellis suggested a “Bretton Woods- style” summit to reset the post-Covid 19 media landscape. 

Mega-merger green light? 

No caption

Photo: RNZ

Executives of Stuff and NZME also applauded Gavin Ellis for urging the government to green-light the controversial merger of the two companies, others were not keen. 

NZME and Stuff’s top brass told the committee a merger offered the best chance of medium-term commercial survival - and retaining a national network of their journalists.  

The Commerce Commission declined it in 2018 on the grounds one company would be anti-competitive in some areas and reduce plurality and diversity within the media. The courts backed them up. 

NZME’s Shayne Currie told the Committee: “We are already losing plurality now ... not because of a merger.” 

“We have all had to pull back on the number of people we publish on our platforms ... because of pure financial stress,” he said. 

Pattrick Smellie of BusinessDesk and Mark Jennings of Newsroom.co.nz both said a merger of Stuff and NZME would come too late to be effective - and smaller media businesses would suffer. 

The one executive cautioning against bold moves was MediaWorks CEO Michael Anderson. 

“This is the trigger and what we achieve must be long-lasting. You don’t want to make important policy on the hoof during a crisis,” he argued. 

“There should not be a hierarchy here,” he said, pointing out that the debt his company carries because of its ownership meant short-term measures deferring some costs would be of limited use. 

Government response still under wraps

No caption

Photo: VNP / Daniela Maoate-Cox

Broadcasting Minister Kris Faafoi said the announcement of short-term measures for the media “within the week” would give them “some certainty for six to 12 months ... allowing us to have more conversations.” 

He also said bringing forward government advertising spending by 12 months was an idea he had already discussed with media companies directly. 

But he gave few other clues about the government’s priorities, but the government’s broadcasting funding agency New Zealand on Air may be at the heart of it. 

“Through NZOA the government has for 30 years supported New Zealand content. If the sustainability of news operations is in serious question ... and we can’t be assured the way they operate commercially can sustain journalism, we need more of an appetite for the government to step into this space post-Covid,” he said. 

The notion of “beefing up New Zealand on Air” to fund journalism was frequently raised by MPs  - and welcomed by media executives if their companies had access to contestable funds for content. 

“This could be talked about at a Bretton Woods-type forum - or possibly not,” Kris Faafoi added, confusingly.

TVNZ pitches as a public player 

TVNZ chief executive Kevin Kenrick telling the TUANZ conference how convergences has changed the game.

TVNZ chief executive Kevin Kenrick telling the TUANZ conference how convergences has changed the game. Photo: PHOTO / RNZ Colin Peacock

TVNZ’s chief executive Kevin Kenrick told the Committee it should not try to “defy gravity” by trying to fix pre-Covid weaknesses in the sector. 

“Plurality of voices not entities” should be a priority, he said. 

He has long argued there are too many “subscale” players in the market and consolidation was overdue. 

The state-owner broadcaster had a specific problem, he said: a shortage of content because overseas and local programme production had been severely disrupted 

“The longer the productions are halted, the bigger gap in supply,” he said. 

He used the opportunity to point to the sudden surge in TVNZ's public spirited emergency programming: the daily live Covid-19 daily briefings, daily fitness workouts and the new pop-up home learning channel.   

“Fund local content irrespective of public or commercial,” he said, insisting TVNZ's real competition was not local rivals but offshore providers offering no local content. 

Why are we funding you if Netflix is your biggest competitor? asked the Committee's chair Simon Bridges accusingly.  

“You are not funding me,” Kenrick replied - pointing out TVNZ’s revenue is predominantly from advertising.

(MPs could have replied that TVNZ gets the more of publicly-funded programming money each year than any other outlet, but none did).     

Local papers still in limbo 

David McKenzie, chair of he Community Newspapers Association addressing the pandemic Response Committee  on Wednesday.

David McKenzie, chair of he Community Newspapers Association addressing the pandemic Response Committee on Wednesday. Photo: screenshot

The issue of the safety of delivering local non-daily newspapers - many of which are still deemed ‘non essential’ and therefore not being published - is also yet to be resolved. 

This prompted Committee chair Simon Bridges to ask whether youngsters were still delivering papers these days or whether it was mainly now a job “for adults in a car.” 

Later, Community Newspapers Association chair David McKenzie, who had to lobby to appear before the committee, said uncertainty had harmed some of the 80-plus publishers of local papers and some would now go out of business. 

He said government media interventions should  “support all not just big corporates with challenged balance sheets.” 

“There’s no pot of gold in newspapers but we run small operations so we are in good shape,” he said. 

‘Let’s see who survives,” he said. 

Talk-time is over 

newsroom co-founder Mark Jennings addresses the Pandemic response Committee.

newsroom co-founder Mark Jennings addresses the Pandemic response Committee. Photo: screenshot

Newsroom’s co-editor Mark Jennings backed the idea of New Zealand on Air with a bigger contestable budget to fund more journalism on a “best idea wins” basis. 

Duncan Greive, managing editor of The Spinoff, told the Committee New Zealand on Air could be an “honest broker” but he said he didn’t envy the government's task of trying to settle on “the least-worst option".

“We have gone from 4,000 journalists to less than 2000 in a few years while our population has risen,” he said. 

Asked about a Bretton Woods-style “national conversation” on the media in future, he said: “I love the idea of it but I feel like we have been doing this for 18 months and not getting a long way with it.” 

He’s right. 

The top brass of Stuff and NZME were repeating arguments made to the Commerce Commission hearings and the court in 2017 and 2018.

Media executives have been talking about these issues too with PWC consultants commissioned bu government to make the case for a new public media entity to replace RNZ and TVNZ. 

The current government appointed a Ministerial Advisory Group in 2017 to ponder the issues - and scrapped it in 2019.

This week the PM said the media “patients” needed “triage” after the shock of Covid-19 and that would be step one of  the government’s response this week. 

The time for four-hour conversations has passed. It’s time for the clinical judgments about how the media survive and what the government will support.