New Zealand Herald publisher NZME has shaken up business news with an agreement to buy subscription-based service BusinessDesk. It rewards a bold move by the founder back in 2008 - and also reflects the financial recovery of the Herald's parent company.
BusinessDesk's mobile message in its push to hook subcsribers. Photo: supplied
BusinessDesk founder and editor Pattrick Smellie is one of few senior journalists to go to the “the dark side” of PR and corporate communications in mid-career - but come back again.
After many years at The Dominion, Sunday Star-Times and National Business Review, he was also a press secretary to Roger Douglas and a PR person for Fonterra and Contact Energy.
He returned to journalism creating the independent business news agency with Jonathan Underhill in 2008 - in the wake of the global financial crisis - to supply other publishers with breaking business and financial news, analysis and commentary.
“It’s been 14 years of hard work. We had some options this year and this (sale to NZME) was the best one,” he told RNZ’s Nine to Noon today.
The sale is subject to Commerce Commission approval in 2022 and if granted, NZME will pay up to $5m.
Changing the plan
Pattrick Smellie (left) watches finance minister Grant Robertson at the Acukland launch of BusinessDesk subscriber service on Wednesday. Photo: supplied
Wholesaling news to other media became harder as the major news media companies retrenched in recent years.
I sat next to Pattrick Smellie at a Privacy Commission conference when news of the proposed (but ultimately doomed) merger of Fairfax (later ‘Stuff’) and NZME broke in 2018. That could have seen two major BusinessDesk clients collapsed into just one at a stroke.
But BusinessDesk survived, like other start-ups from the past decade - Newsroom and The Spinoff - which grew from modest beginnings to add variety to the media scene.
Under the slogan 'Follow the Money,' Patrick Smellie targeted the money of individual subscribers and businesses when he relaunched BusinessDesk as a website with a paywall in early 2020.
An injection of capital from Brain Gaynor of Milford Asset Management was crucial to the transformation.
““We’ve got a strong, growing economy, a fast-growing population and a whole generation of people who are taking a significantly greater interest at a younger age at what investment markets are doing,” Smellie told Mediawatch at the time.
But another global financial shock - Covid 19 - was just around the corner.
BusinessDesk survived the Covid shock with the help of the wage subsidy - subsequently paid back - and a boost from the government's emergency post-Covid media assistance package which bankrolled state agencies' news subscriptions.
“There was a bigger market for our retail offering than we thought, ‘ he told Nine to Noon today - and he gave credit to the late Sir Michael Cullen and private landlords.
“Kiwisaver and unaffordable housing has created a new generation of readers who need to know more about money,” he said.
“The news media generally realised the ‘free model’ is fraught. These days there are specific interests readers are prepared to pay for - such as politics and even crosswords. But if it’s not worth paying for, readers won't pay,” he told Nine To Noon.
BusinessDesk hired more reporters in 2020 - including data journalist Andy Fyers formerly with Stuff - and the staff grew to 20.
The government’s Public Interest Journalism Fund has helped too, funding a special project (not paywalled) on how our public service measures up.
Pattrick Smellie runs the BusinessDesk news agency. Photo: RNZ / Phil Pennington
Smellie told RNZ that NZME will keep BusinessDesk as a separate brand distinct from the Herald’s news coverage.
“We will continue to operate . . . with our own staff and subscription offering, but we’ll now have the power of NZX-listed NZME behind us,” Smellie said in a statement today.
It will also strengthen the Herald’s own 'Premium Content' offering - and that will be bad news for a direct competitor in business news, NBR, which is also now an online-only subscriber-funded operation.
When BusinessDesk turned to subscribers in 2020, the Herald’s digital subscriptions attracted just $1.7m in revenue.
But earlier this month NZME said the Herald now has 135,500 digital and print-enabled subscribers and 78,500 digital-only subscribers - an important source of support for the Herald’s journalism and news, estimated at $12m a year by Newsroom.
NZME’s share price is high again after it slumped during the 2020 Covid crisis when the company cut jobs and Radio Sport and pocketed more than $8m in wage subsidies. It has cleared debt and is seeking to buy back $30m in shares
“Maybe the issue we will all face will be subscription fatigue,” Patrick Smellie told Mediawatch when BusinessDesk turned to the subscription model.
“They have to decide which of the good stuff to choose – and it’s not just news. There is Netflix and Spotify and all these other forms of media that take a chunk of change each month. That is the challenge for us."
BusinessDesk now has a parent to help out with that.
