MediaWorks, Sky TV and TVNZ may have best reason to be pleased with media aid

Thursday, 23 April 2020

Broadcasting Minister Kris Faafoi announced the first stage of a two-stage plan to assist the media in April, 2020. (Video first published April 2020).

OPINION After a couple of years of what has looked very much like procrastination, the coronavirus pandemic prompted Broadcasting Minister Kris Faafoi to move fast to put together a $50 million package of short-term aid to assist the media.

The Government was spurred into action after being seemingly caught by surprise by the closure of Bauer Media NZ, owner of magazines including The Listener and North and South that will have been held in high regard by many in the Labour Party liberal intelligentsia.

Prime Minister Jacinda Ardern described Bauer's exit from New Zealand as abrupt, even though it transpired that Bauer had offered its New Zealand business to the Government for a dollar.

The message that the media was not bluffing about the trouble it was in appeared to get through, especially as it was reinforced by MediaWorks, NZME and Stuff asking their staff to take a 15 per cent pay cut and NZME making 200 of its 1400 staff redundant.

The $50 million package of short-term aid announced by Faafoi on Thursday has not pleased everyone equally, though.

* Stuff staff asked to accept 15% pay cut for 12 weeks after huge drop in advertising

* Coronavirus: Media companies plead for Government help as revenue dries up**

Television channel Three owner MediaWorks, Sky Television and state-owned TVNZ are likely to be the biggest beneficiaries of the two largest elements of the package, together worth about $38 million.

That $38m will give television and radio broadcasters a six-month break on transmission costs they pay to state-owned company Kordia and RNZ, and will reduce the levies that they and others pay to NZ On Air.

It is understood that TVNZ will get about a $6m benefit from the initiatives combined.

MediaWorks – which certainly does need the help – may well do better than that.

Kris Faafoi has directed most of the first tranche of media aid towards broadcasters.

It said on Thursday that it was still modelling the numbers, but chief executive Michael Anderson described it as a 'not insignificant' package.

Sky TV should benefit from the NZ On Air funding break, and from not having to pay Kordia to transmit its free-to-air channel Prime.

So it will benefit even though it isn't a big player in journalism outside the area of sports reporting.

NZME may make some small savings from the break on radio transmission costs, and it could grab a decent slice of $1.3m in separate funding that the Government will provide to departments to pay for paywalled content.

But assistance to NZME and Stuff will mainly come in the form of a probably-large slice of the left-over $11.1m that the Government has earmarked for 'targeted assistance to companies as and when needed'.

They are likely to need to share that smaller funding pool with others though, including MediaWorks which says it has eyes on that assistance, and more niche media businesses.

Newspaper Publishers Association editorial director Rick Neville says the first tranche of aid announced by the Government provides 'very little to help news and magazine publishers'.

Faafoi has signalled that some of the $11.1m may be spent simply on 'bringing forward' purchases of government advertising, which would mean that, like a so-called 'mortgage holiday', it might only help delay a day of reckoning.

Stuff chief executive Sinead Boucher appeared unimpressed.

'It seems print and online businesses, which employ the majority of journalists in the country, will not get the same level of benefit as the broadcasters at this stage, and certainly not at the scale needed to make up for the severe impact on the revenues that fund journalism,' she said.

'We would have liked to have seen a package that went further in recognising the need to preserve that journalism across a wider spread of media.'

Newspaper Publishers' Association editorial director Rick Neville echoed that sentiment.

'The publishing industry is pleased to see the Government respond so rapidly with its package to assist some branches of the media,' he said.

'However, most of the benefits will go to broadcasters and there's very little to help news and magazine publishers who are feeling huge economic pain from the advertising slump.'

Faafoi made it clear that this was only the first stage of the assistance to put the media on a more sustainable footing, with additional help possible in the Budget.

But Neville said journalism could only do its job if the second package Faafoi was developing was 'significant in scale, across a range of commercial media, and committed for several years'.

One of the requests that Stuff has made is that the Government direct more of its advertising dollars towards local media and away from online platforms such as Google and Facebook.

TVNZ chief executive Kevin Kenrick enthusiastically backed up that call at the Epidemic Response select committee last wee k.

'Every dollar that the Government spends on advertising with Google and Facebook is a dollar that is not spent supporting local media – 'buy New Zealand',' he told the committee.

Boucher and Kenrick argued Stuff and TVNZ could boast about the same reach as any of their overseas social media competitors.

But National Party MP Michael Woodhouse honed in on the weakness in that argument, questioning Kenrick on whether he was saying that government media buyers were making 'a mistake' buying some adverts on Google and Facebook when they could be getting more bang for all their bucks on local media.

It is not as simple as that, of course.

The main reason government agencies spend money on platforms such as Facebook and Google is because they think it will help them reach more uninformed and marginalised Kiwis who may be disengaged from traditional media and also more susceptible to influence from 'fake news'.

They are often the audiences agencies are keenest to reach with public service and safety announcements.

But follow that logic to its conclusion, and the best way for any media outlet to attract government advertising might be to pump out as much fake news as possible in order to entice the Government to spend money on advertising to set the record straight.

The decision Faafoi will need to make on how best to manage that conundrum is not easy.

Faafoi indicated the Government might address 'competition' in the second tranche of its support package, which may suggest he intends to make a decision on whether the Government could intervene to clear the roadblock on a merger of NZME and Stuff.

The two companies could perhaps do more to make that a more palatable option.

NZME is believed to have suggested it could enter into a 'Kiwi Share' guarantee to keep a set number titles and journalists employed for a two-year period in the event of a merger.

But that seems neither here nor there when the Government is concerned with the long term future of journalism.

Understandably, MPs on the select committee appeared to continue to harbour doubts about the impact of an NZME and Stuff merger on 'plurality'.

NZME managing editor Shayne Currie told MPs it would not make commercial sense for a merged NZME and Stuff to reduce the diversity of voices in their media.

But that disregards the risk that at their current low values, NZME and Stuff – as individual businesses or merged together – could become a tempting target for a wealthy would-be owner with an agenda.

A Kiwi 'Rupert Murdoch' if you will.

NZME and Stuff might be advised to offer up a real 'Kiwi Share' protection, that would ensure no single individual could directly or indirectly own more than say 20 per cent of the proposed merged entity, if they want to win the plurality argument and pool their resources.