Countdown to closure: How Newshub collapsed
Thursday, 29 February 2024
When Newshub staff gathered for a meeting at the Dalmatian Cultural Society building down the road from the Three offices on Wednesday morning, they knew something was up.
Staff were told to prioritise attendance over normal newsgathering activities and there had already been rumours circulating that there could be cuts coming for more parts of the business.
But what happened took them by surprise.
James Gibbons, Warner Bros Discovery Asia Pacific president, told them that advertising revenue had fallen away more quickly than the company could manage it.
Put simply, the business was not sustainable.
The company was proposing big changes for the channel, including the end of Newshub: “The proposed model would see a shutdown of the newsroom,” he told staff.
“We simply cannot afford to produce news in-house. That’s the fact. This doesn’t mean news isn’t valuable. We just haven’t found a way to make it work financially here in New Zealand.”
The news was met with stunned silence, and then tears. As staff filed out, some went to the pub. Others tried to work out what to do next. To receive their redundancy payments, they were told they had to work until the end in June.
“It was so brutal. Any newsroom has history, and have worked hard together. To hear it’s gone is just so sad,” one staff member said.
The proposal has been reported to affect about 200 jobs.
While the news of the closure came as a shock to many staff members, as well as the news audience, the problems have been brewing for a while.
This isn’t a channel that is unused to trouble – it has been in receivership twice – in 1990, and again in 2013.
Mediaworks put the TV part of its operations up for sale in 2019. At the time, it was reported that the company had trimmed its overall loss to $5.5 million in the previous year, but again failed to bring its television business into the black.
In 2020, Discovery said it was “taking a bet on New Zealand” by buying the television arm, Three.
It was a bet that started to look shaky pretty quickly – Discovery posted a $35m loss for the year to the end of 2022, roughly the same as it lost the year before.
There have been other signs of trouble recently – a recruitment slowdown delayed the start of Ryan Bridge’s new evening programme, which had been intended to be a signature set piece for the channel.
Add to that a crunch that has reduced advertising spending across the industry, and it is tough times for a news brand that is delivered via the expensive medium of television.
Gibbons told staff on Wednesday that nearly $100m had left the advertising sector in New Zealand in the last 24 months and that trend looked like it would continue in 2024.
“It was not a surprise that something was going to happen,” said former Newshub news boss and now Newsroom co-editor Mark Jennings. “It was a surprise to me that they are shutting down the whole news division.”
He said the company had been in an unsustainable situation losing such significant sums of money.
“They can’t keep losing $30m a year and I think it was $100m over three years is what they said and not do something. The problem I see is that they seemed to have no strategy,” Jennings said.
“It will be a big shock for the staff, I think there’s been a feeling that these financials are relatively small in the overall scheme of Warners Bros Discovery but that’s not the way business works.”
Last year, Warner Bros Discovery head of networks Glen Kyne met with the then-Broadcasting Minister Willie Jackson to discuss Newshub’s struggles. Kyne said he never approached the then-Labour Government - nor had he gone to the current coalition Government - asking for a bailout.
Is there any saving Newshub?
As for Government support, commentators are unconvinced. This Government does not appear to be one with appetite for bailing out a media business – deputy prime minister Winston Peters has been scathing of the support received during the pandemic.
Add to that the fact that Discovery is backed by the might of Warner Bros., and it might be an unpalatable decision for many New Zealanders, anyway.
Prime Minister Christopher Luxon had been advised of the decision before staff were told. He told media on Wednesday that the company was facing up to declining advertising revenues and changing consumer habits.
Former chief news officer Hal Crawford said it would not be a case where a simple one-off Government intervention would help, even if it was willing.
“This is a full newsroom to nothing… it’s very difficult to have a regulatory remedy for. A one-off handout is not going to do it. What avenues are open to the Government? That’s one thing I would say is you’ve got to absolutely do a lot of creative thinking around this. There are agencies in New Zealand that could help. The spirit is there but the real question is what would be a plausible intervention here?”
He said rather than supporting an existing troubled newsroom it might be more effective to think about funding news media in other ways.
“I have believed for some time that the Government publicly funded news media is one big part of the answer for the problems with ad-funded news.”
He said New Zealand’s market was small and relatively well serviced. “It’s a high cost set-up for a market around the same size as Sydney.”
But he said Newshub’s newsroom was “extremely thrifty” and “made TV news on the tightest budget imaginable”.
Jennings suggests someone could attempt to buy Newshub for $1, as Sinead Boucher bought Stuff from Australian owner Nine when it had plans to close the business.
Media commentator and Spionoff founder Duncan Greive said Newshub did not even seem to be asking to be saved. “In some ways the fact they don’t seem to be asking for that in the communications around it suggests they almost don’t want a bailout – they fundamentally don’t think this thing is viable, or in sync with what Warner Bros Discovery is doing – it really is an outlier. They don’t do local small country news operations anywhere else.”
He said there would be nothing for anyone to buy because Discovery wanted to keep the channel – including for shows like Married at First Sight.
What could happen to the journalists?
Greive said it was unlikely all the affected journalists would be able to find roles.
“Who’s hiring? RNZ has been hiring but even then you’d think whatever hiring splurge was associated with their funding uplift has largely passed through. There might be a few figurehead hires, the most prominent people will probably be able to get jobs but there’s not really anyone who’s doing a lot of hiring of journalists at the moment.”
He said at one point Newshub was said to have 300 staff alone, so 200 job losses across all the changes highlighted the level of attrition that had happened already.
What does this mean for NZ media?
Jennings said it would be significant for the news landscape in New Zealand. “We’ve had two quite vibrant news services for a long time now which has been good for a small country that is no longer a wealthy country… I think now we’re going to have one Crown-owned television company with a news service, that is not great in terms of diversity, competition, innovation, all those things that happen when a news ecosystem is hacked away at.”
Media commentator Gavin Ellis has said that journalism was approaching the threshold where its audience or workforce was no longer capable of sustaining it. “I think this is yet another example of the fragility of our journalism particularly when there are overseas players making decisions.
“The thing that really worries me is I don’t think this is the end. I think we’ll see other news outlets put under the hammer as well – I’m thinking in terms of particularly regional news operations and community news operations but not limited to that.”
He said there was no one single silver bullet but it would require a deep rethink of how journalism was supported.
Discovery has talked about the potential for co-production in New Zealand but Ellis said there would not be a queue of people willing to invest the money to make that happen.
Greive said it could raise questions for NZ on Air Funding, too.
“NZ on Air will be in two minds. Part will want to keep the production houses and talent in motion and part will also imagine a much diminished ratings base out the back in the absence of news and shoes like The Block. The appearances of having a company withdraw from all the other stuff you typically have to do to keep a business going and still want NZ on Air funding … I imagine they will find that pretty galling and won’t want to reward that.”
For Newshub staff, life goes on - for now.
“It’s a newsroom brimming with talent & enthusiasm, and I just feel so incredibly sad for everyone today,' 6pm news host Samantha Hayes said on Wednesday. 'For now though, see you at 6pm.”