Prime Minister 'gutted' Bauer closing its doors, but says company refused wage subsidy

Thursday, 2 April 2020

Prime Minister Jacinda Ardern provides Covid-19 updates, and comments about the closure of Bauer magazines, in April 2020.

Prime Minister Jacinda Ardern is 'gutted' that magazine publisher Bauer is closing its doors after refusing the Government's coronavirus wage subsidy.

'I have to say I am extraordinarily disappointed and frankly gutted to see, what has been a part of New Zealand history, close its doors fairly abruptly today.'

Bauer Media Group confirmed it did not apply for a wage subsidy to keep it going through Covid-19 disruption. It chose to close its New Zealand operations on Thursday after many decades of publishing in the country.

Bauer Media NZ publishes entertainment, lifestyle and current affairs titles including the NZ Listener, Woman's Day, New Zealand Woman's Weekly, North and South and Next, along with a digital network.

In Australia, Bauer has just been given the go-ahead to buy rival Pacific Magazines for A$40 million (NZ$41 million), leaving Australia with just two major magazine groups - Bauer and News Life Media.

* Restrictions on previously 'non-essential' media eased just a fraction

* Coronavirus: What are essential services?

Prime Minister Jacinda Ardern says community newspapers and printed magazines will remain non-essential services.

* NZ Herald owner confirms closure of Radio Sport**

Ardern said Broadcasting, Communications and Digital Media Minister Kris Faafoi asked the company to take up the subsidy, but they refused.

'The Government actively sought to assist Bauer through this period of time.'

She said it appeared to be a decision made at the same time of the coronavirus pandemic, but was not because of it.

The subsidy, if taken up by the company, could have and should have made a difference to the journalists, photographers, and designers it employed, she said.

Ardern explained the Government wanted the company to 'keep their doors open, keep operating, keep an online offering and move through the other side of Covid-19 once we're able to'.

The decision is effective as of April 2.

The Magazine Publishers Association (MPA) said it had worked closely with Bauer and other publishers on a submission about being classified as an 'essential service'.

'We clearly asked for the non-essential ruling to be reversed,' the MPA said.

'Bauer and the MPA had numerous phone calls with Government officials, who indicated their preference for dealing with industry bodies.

'The MPA submission pointed out the anomaly of magazines being singled out as the only product banned from supermarkets, and the impact on the industry of not being able to distribute our magazines.'

Bauer Media NZ published entertainment, lifestyle and current affairs titles including the New Zealand Listener, Woman's Day, New Zealand Woman's Weekly, North and South and Next, along with a digital network.

All New Zealand Bauer staff were advised on Thursday morning that the business was no longer viable and that it intended to close. Staff said it had come as a complete shock and many were unprepared to offer comment as they digested the news.

EY has been appointed to work alongside Bauer New Zealand to facilitate an orderly wind-down of the business.

The media industry is suffering a drop in revenue as all sectors of the advertising market cut back on their marketing during the lockdown. NZME has closed Radio Sport with immediate effect and is understood to be consulting staff about redundancies.

Ugh, I’m heartbroken. Numb. Can’t comprehend Bauer NZ closing. So many close friends who became whānau. Almost my entire career history. Such iconic titles. Kia kaha to my former colleagues doing it tough today. Mag hags 4 lyf xxx

Bauer said the Government decision to go into level four lockdown had made its business untenable.

— Seb van der Zwan (@sebonsafari) April 1, 2020

Bauer chief executive Brendon Hill said: 'Magazine publishing in New Zealand is currently suspended as part of the New Zealand Government's decision to move to the Covid-19 level four restrictions.

'We understand the New Zealand Government's decision to move to Covid-19 level four, but it has put our business in an untenable position. Publishing in New Zealand is very dependent on advertising revenue and it is highly unlikely that demand will ever return to pre-crisis levels.

I've been made redundant, along with the rest of Bauer NZ. I've absolutely loved my year at Metro, have loved working for @Henry__Oliver and with @jeaninprogress. Under no illusions as to how hard it will be to find more work in media right now, but you never know what's next. x

Prime Minister Jacinda Ardern goes on a self-described 'rant' at young people, saying they are the most likely to catch Covid-19 and, though they may not be badly affected by it, will be the ones to pass it on to those more vulnerable.

— the big gun herself (@tnichss) April 1, 2020

'In response to the situation, Bauer carried out an urgent review of its New Zealand operations and considered all options to keep part or all the business open, including engaging with the New Zealand Government.

'An active search is under way to find buyers for our New Zealand assets, including our many iconic titles, however, so far an alternative owner has not been found.'

Broadcasting, Communications and Digital Media Minister Kris Faafoi said the Government could have provided half-a-million dollars for Bauer through the wage subsidy scheme or the business finance guarantee but the company had not sought that.

'In recent conversations I had with Bauer, they indicated they were not interested in seeking any forms of Government assistance. I also note that Bauer had indicated for some time, as have other media organisations, that they were facing challenges around viability of their operations here in New Zealand before the Covid-19 pandemic. Bauer's management ruled out other options that may have kept at least some staff employed and some of their magazine assets available in New Zealand.

'I further note that Bauer is looking for buyers for its New Zealand assets and I don't want to interfere in that process. Government is looking at the overall state of New Zealand media's health and sustainability in light of COVID-19, and there will be more news to follow on this in due course.'

Ruth Cobb, general manager of PrintNZ, said the Bauer titles were a significant portion of New Zealand's printing industry's work. Many were the specialist sort of content that people wanted to read in print format and would not transfer well to online, she said.

'It's a devastating blow for print in New Zealand overall but in particular for the Auckland market and the company that prints these magazines.'

The magazines are printed by Webstar.

Bauer staff would get full redundancy pay and leave entitlements.

'I would like to recognise the impact that this decision will have on our suppliers, customers and the wider publishing industry. This is a very difficult time for the entire media industry,' Hill said.

Former Metro editor Bill Ralston said the decision was tragic.

The killer blow had been the 'dumb' Government ban on magazine sales during the lockdown period, he said.

An exemption classifies media companies NZME and Stuff as essential businesses and allows them to publish their daily and Sunday newspapers. The Magazine Publishers Association had lobbied the Government to be allowed, too, but was refused. Only a 'very limited' number of community newspapers in the more remote parts of the country would be allowed.

Cobb said the sector would try to approach the Government again.

Ralston said: 'It was bad enough they were fighting a recession in terms of advertising revenue… for the Government to ban all weekly and monthly publications was the dumbest decision it ever made.'

He said it made little sense because the magazine staff were working from home and the publications were printed in the same facilities that produced daily newspapers. 'There's unlikely to be additional risk.'

Ralston said it was also a morale blow to New Zealanders who were stuck at home, and wanted magazines to read. 'Eighty years of the Listener gone because some clod in Government decided to ban the publication.'

It would probably start of wave of closures of other magazines and community newspapers, he said. 'They were struggling to survive already - how many will reopen after the Government ban? Very few, if any.'

A former Bauer employee who did not want to be named said she was not surprised.

'It was always coming - advertising has been grinding to a virtual halt for the past couple of years. There are some amazing journalists working at Bauer, but it struggled to move with the times, and find its niche in the online world. I'm incredibly sad for them, and it shows very clearly how important it is for every business to remain forward-focused.'

The decision to close the business is effective as of April 2.

According to Roy Morgan research, between June 2018 and June 2019, readership of the New Zealand Listener dropped by 1.1 per cent to 231,000 readers compared to the same time the previous year.

Meanwhile Kia Ora, Air New Zealand's inflight magazine had a readership 2.8 per cent decline to 112,000. This would also have been heavily affected by the airline's flight cuts in response to Covid-19.

An Air New Zealand spokeswoman said the airline was 'saddened' to hear of the closure and was working through next steps to determine its future.

'The publisher has been a great partner of the airline since 2006 and has printed more than 160 editions of Kia Ora Magazine in that time.'

Other popular magazines under the media organisation such as NZ Woman's Day, Australian Women's Weekly NZ and NZ Women's Weekly also saw declining readership compared to the previous year. But Metro magazine had an increase in readership of 0.1 per cent to a readership of 57,000.