NZME's 'Kiwishare' plan to buy Stuff takes leaf from 1980s and 1990s privatisation playbook

Wednesday, 20 November 2019

If NZME bought Stuff it would become a giant of online and print news.

NZME's 'Kiwishare' plan to win approval to buy Stuff echoes the schemes designed to soothe public concerns over the privatisations of Air New Zealand and Telecom.

But media champions say even if NZME's plan proves to be credible, the New Zealand media would still need protecting from the 'rape and pillage' of online advertising revenues by social media giants including Google and Facebook.

A merger proposal between media giants Stuff and NZME was rejected by the Commerce Commission in 2017 as it feared the country would suffer a loss of a plurality of voices in New Zealand journalism, if it was allowed to go ahead.

But NZME, which owns the New Zealand Herald and Newstalk ZB, has been trying to persuade the government that it could safely be allowed to buy Stuff, if the deal included the issue of a Kiwishare similar to that used by the Crown to protect free local calls when Telecom was privatised in 1990.

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NZME owns the New Zealand Herald. It wants to buy Stuff, but that would mean overcoming Commerce Commission opposition.

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Media commentator Gavin Ellis would not want to see a 'Kiwishare' in a media company held by a government minister.

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The Kiwishares issued in the privatisations of Air New Zealand and Telecom gave the Crown the power to veto moves by the companies' new owners to do specific things the public did not want to see happen.

The Telecom Kiwishare, which was abolished when Telecom was split into Spark and Chorus in 2011, guaranteed future owners of Telecom could not take the axe to free local calling, or fixed line charges.

The Air New Zealand Kiwishare gave the shareholding Minister of Finance veto powers over decisions to rename or relocate the airline, or sell off its main assets.

The Kiwishare arrangement could 'ringfence' Stuff's newsrooms in Auckland, Wellington, Christchurch and the regions, preventing them from being merged into NZME's newsrooms.

Exactly what powers the NZME Kiwishare would give the holder, or whether the holder would be the broadcasting minister, have have not been revealed, with NZME telling the NZX the discussions were preliminary.

Gavin Ellis, media consultant and former editor-in-chief of the New Zealand Herald, believed a Kiwishare could help to preserve separate newsrooms for Stuff and NZME.

'I can imagine it working, if the structure and safeguards are put in place,' he said.

Those safeguards would have to include mechanisms to ensure the newsrooms were truly independent from NZME management, he said.

And, Ellis would not want a media Kiwishare held by a minister.

'I would feel more comfortable, if it was held by a truly independent authority, perhaps the Ombudsman,' he said.

The Ombudsman is a government agency charged with investigating complaints about the government from members of the public.

Victoria University senior media studies lecturer Dr Peter Thompson says a levy on online advertising is needed to support New Zealand journalism.

Peter Thompson chair of Better Public Media Trust and lecturer at Victoria University of Wellington was sceptical.

'Kiwishare is not the logical analogy,' he said.

'This is not intended to protect journalism to serve democracy or the public interest. It's the continuation of the same corporate agenda that motivated the original merger.'

NZME taking over Stuff, which was for sale by its Australian owner Nine, would not solve the financial crunch that had weakened New Zealand journalism, he said.

'There may be some cost savings to the merged entity and greater leverage in the advertising market, but this does not fix the problem that digital/online advertising -particularly by digital intermediaries like Google and Facebook- is siphoning off an increasing proportion of the revenue while putting nothing back into news content provision.'

Ellis said the Google/Facebook 'rape and pillage' saw some $900 million of advertising go overseas each year, some of it piggybacking off the sharing of news stories produced by NZME and Stuff.

'The first thing government needs to do is put a significant levy on the digital advertising turnover of the digital intermediaries and ringfence the fund to support quality public interest journalism,' said Thompson.

Broadcasting minister Kris Faafoi would not comment on whether the Government was considering NZME's Kiwishare proposal to buy Stuff.

But Thompson warned the government it would need to pass tough laws to police the deal, if it was persuaded by NZME's Kiwishare proposal.

'If the government is persuaded that there is a case for a merger it needs to entail a statutory framework to enshrine editorial and journalistic autonomy and plurality and meaningful measures to check it is functioning- an extension of the NZ Media Council will not suffice.'

Competition lawyers believed NZME would have its work cut out to win over the Commerce Commission.

'The commission could take account of the Kiwishare arrangement, but I think it would be very dubious,' competition lawyer John Land said.

'I just think the Commerce Commission would think it is not particularly rigorous protection for true plurality.'

The Commerce Commission would not comment on an issue that could come before it for a clearance application, or an investigation.