TV is tough: Mediaworks
Not much has been heard of Mediaworks’ boss, Michael Anderson, since he arrived from Australia 18 months ago to rebuild a company left traumatised by the reign and sudden departure of Mark Weldon.
So, Anderson’s decision to publicly rebuke Broadcasting Minister Clare Curran over her pet project, RNZ+, signals a change in approach from him and the company’s board.
It is driven by two things.
Anderson now feels that he has “stabilised the ship” at Mediaworks, and the company has some of its old swagger back after the ratings success of programmes like The Block and The Bachelor.
But fear is also playing a part. Anderson’s ship is sailing in rough waters full of submerged reefs.
He wants Curran to change her mind about giving RNZ somewhere in the order of $30 million to spend on a new TV channel and instead make TV1 a public service network because there are too many players for the size of our market.
Three, Bravo and Prime are all losing money and TVNZ scratched out a mere $1.4 million in profit after a big write-down on the value of its foreign programmes.
At the heart of Anderson’s concerns is the potential impact of RNZ+ on the network’s news operation, Newshub.
Anderson sees Newshub as key to Mediaworks’ longer-term prospects.
“News is the greatest local content we have. It is the backbone of Three, it has a great future,” Anderson told Newsroom.
Newshub performed well last year but the total number of people watching 6pm news programmes continues to fall.
Yes, people now watch 6pm stories on demand but the revenue model is still largely dependent on ads sold in the hour-long broadcast.
If RNZ+ and its news bulletins further fragment the audience, it will spell bad news for both Three and TVNZ.
Further adding to Three’s worries is the failure of Family Feud at 5.30pm.
Lead-in programmes to the 6pm news are crucial as a good proportion of viewers will stay on, particularly if a compelling news story has been teased through the 5.30pm show.
Three is currently running American sitcom Modern Family in the 5.30 slot after dumping the locally-produced Family Feud.
The ratings are terrible and change will be forced on the network’s programmers.
Anderson acknowledges there is a problem: “It is not just the programme department's problem it is all of our problem.”
“Trust was almost gone and people had retreated into their tribes.”
What is the answer? “I don’t know, but we need to have a longer-term solution,” said Anderson.
Until he finds one, Newshub will not threaten 1news in the way it is capable of.
Lower news ratings would also hit Mediaworks’ profitability.
A few years ago, Three was losing millions due in part to a flawed “Blockbuster” strategy promoted by ex-board member Julie Christie and supported by Weldon.
Anderson will have pulled that loss back a bit but concedes the network is having trouble “converting” the success of its reality shows into increased revenue.
With The Project being more about providing a “bridge” between news and the prime-time entertainment shows, and giving the network a distinctive “vibe” rather than beating Shortland Street in the ratings, any downturn in Newshub’s audience would be a serious issue for Anderson and the board.
If the news ratings drop off too much The Project, which is licensed from the Ten network in Australia will become a very expensive vanity project.
Anderson said: “The trajectory is in the right direction.” But most nights it lacks a compelling reason to watch.
The programme is a complicated beast and New Zealand might just be too small to deliver the number of quality guests it needs.
Mediaworks is a company that is always for sale and, in the past, this has been a distraction for management.
The company recently spurned an offer for its very profitable radio business from the Australian media company, Southern Cross.
Without naming names, Anderson said there is no shortage of “bargain hunters” looking for opportunistic buys.
The suggestion is that Southern Cross didn’t make a big enough offer for radio but it’s also likely that Mediaworks wanted it to take the TV and digital parts of the business.
Without Radio’s cash flow, Three, Bravo and probably Newshub are dead in the water.
Mediaworks' owner, vulture fund specialist Oaktree, would be struggling to find any buyers for these unprofitable “assets” now that Sky TV has lost interest in the sector and has its own well-publicised issues.
Anderson says he has told his management team to ignore the issue of ownership. “We are letting the owner be the owner. Our job is to do the best job we can at managing the business right now.”
The former director of Fairfax Australia and current Chairman of Ooh media (an ASX-listed company), has been steadily rebuilding the management team at Mediaworks.
“What I found [when I arrived] was that everyone was still working hard but most were asking themselves – Is this still worth it?
“Trust was almost gone and people had retreated into their tribes.”
Anderson is referring here to the various departments in television companies – news, programming, sales and IT etc. – that can become tribal when the culture becomes dysfunctional.
“They have slowly been coming out of this,” he said.
Ironically, Anderson is thought to have missed out on the CEO role when Weldon was appointed.
“It wasn’t quite like that. We talked but I think we both decided the timing wasn’t quite right as I was in the middle of an IPO with Ooh Media in Australia.”
Things may have turned out differently if Anderson, rather than Weldon, had got the job but the Australian says some positive stuff has emerged from the actions of his predecessor.
“It was an incredible learning process at an executive level and a business level. Valuable lessons were learned and it would take something huge to knock this company off its stride now. It has built a great resilience among the staff.”
By all accounts, Anderson is well-liked and his calm demeanour has been a big factor in restoring the morale and confidence of staff.
However, the true test of his leadership will be where he takes the company from here. In other words, what is his strategy?
The question elicits a response that won’t make his PR people happy and may raise eyebrows at the board table.
“There isn’t really one,” said Anderson.
This isn’t a naïve answer, in fact it is an honest commentary on where most of the media industry is at. The future is so uncertain that today’s strategy can be obsolete at the whim of a Mark Zuckerberg or a drop in the cost of a Netflix subscription.
Anderson will instead be counting on the resilience and decision-making speed of his executive team to tack early and fast, ahead of the wind shifts.
The biggest change though, will come when Oaktree finally decides it has had enough. New ownership of Mediaworks is likely to be part of a much wider restructuring of local media in 2018.