Where to now for Government media support - if any

Thursday, 29 February 2024

Prime Minister Christopher Luxon talking to reporters after the announcement that Newshub is planning to close at the end of June.

ANALYSIS: The news that Newshub is shutting its news operation has suddenly brought the Government’s role in media regulation to the fore.

New Zealand now faces a situation where the state-funded broadcaster has a monopoly on broadcast TV news.

It also highlights the precarious state of the news media more generally.

There was a bit of of a feeling from the current Government that news organisations were crying wolf about their commercial circumstances. Although Newshub’s financial problems were long-standing, crying wolf it was not.

Newshub political reporter Amelia Wade questions Media and Communications Minister Melissa Lee about the Newshub closure as ministers and members make their way to the House for Question Time.

Although the 6pm news and broadcast status of Newshub is the most remarked upon thing, its website does significant traffic and it is a significant employer of journalists.

Enter Melissa Lee, the new broadcasting minister, who has made a name these past few years out of being consistently ambivalent about the Government’s role in the situation the industry finds itself. Wednesday was no exception.

In part that ambivalence comes from a more general National Party point of view that it is not the Government’s job to bail out or support media companies. After all, the state has two of its own and one, RNZ, got a big budget boost last year.

Both Prime Minister Christopher Luxon and Finance Minister Nicola Willis basically said there was plenty of variety in the industry and places to get news nowadays. Willis also gave a pep talk, helpfully pointing out that New Zealand does have a welfare safety net for anyone who was facing a job loss and that everyone at Newshub should “back themselves”.

Newshub had made representations to the Government about the Kordia fees it had to pay, and had (quite reasonably) made the point that TVNZ enjoyed an effective subsidy by not having to pay a dividend to the Government in more recent years.

“I think there's a question mark around whether the Government's ownership of one TV channel and the poor returns it’s demanded as a shareholder has actually contributed to an uncompetitive market, and as I have some responsibility, I've actually requested some advice about that very issue this morning,” ACT leader and Minister of Crown Entities David Seymour said.

“It may well mean that they have to make a return on equity just like every other business in New Zealand is required to do so.”

Ironically, much of this could have been avoided if the previous Labour Government had approached the TVNZ-RNZ merger differently and taken the new entity fully public, thereby freeing up advertising across the rest of the media sector. In the end, the merger, which Chris Hipkins jettisoned on becoming leader, chose a model that was neither fish nor fowl.

So TVNZ continues, a state-owned commercial broadcaster. As does RNZ a directly Government-funded broadcaster. Out in commercial land the big players - listed NZME and the privately owned Stuff (publisher of this masthead) as well as Mediaworks are not hanging their hats on trying to get to Government to agree to pass the new Fair Digital New Bargaining Bill.

This is the bill that would attempt to “to enable fair bargaining between New Zealand news media entities and operators of digital platforms to support commercial arrangements for news content,” according to the Bill’s general statement.

In other words, it is targeted at Meta and Alphabet (owners of Google and Facebook) to pay for the content they use. The rise of generative AI has also been a challenge. There are more consumers of news than ever, but the business model - here and around the world - is under severe strain. The current patchy recession, high interest rates and inflation has also seen advertising revenue hit hard.

There are differing views within the National Party on this bill - from tepid support to outright opposition. NZ First is in favour of the bill. It is often forgotten that the $55 million Public Interest Journalism Fund which became a touchstone for a lot of nonsense about for Government buying off media (including by NZ First) was heavily influenced by NZ First’s desire to see regional journalism jobs protected. The ACT Party is opposed to it on principle and practicality.

The question will now be whether more political pressure comes on the Government to pass the bill in the wake of Newshub’s collapse.

Unless something happens in the next three months to save Newshub, come July the New Zealand news industry will be a lot smaller, with a lot less variety. Regardless of the cause or responsibility, that can’t be good for democracy.