Govt’s good news for the media

More details emerge of a Government rescue package for media firms hit hard by the evaporation of advertising revenues caused by the pandemic and lockdown

Struggling media companies look likely to win business relief in two ways from the Government - for television broadcasters the waiving of multi-million dollar transmission fees, and for all mainstream media some rapid public spending on advertising campaigns.

Communications Minister Kris Faafoi told MPs on the Epidemic Response Committee in a session on the effects of the pandemic and lockdown on news companies that the media could expect initiatives to bring forward government advertising and on transmission costs.

"The short-term package will hopefully give them some of the cashflow and certainty they need for the next six to 12 months," he said.

Television broadcasters MediaWorks and TVNZ and radio companies would be big beneficiaries of the change to transmission charges, predominantly a charge from state-owned enterprise Kordia. In the case of the loss-making MediaWorks, the saving could be millions of dollars a year - crucial as it seeks a buyer for its Three television network. TVNZ would reap similar benefits if the Kordia charge was discontinued.

TVNZ chief executive Kevin Kenrick, in a punchy and direct briefing for MPs, alluded to the importance of cutting that Kordia charge, when discussing the risks of a business failure in the industry and the costs in welfare and other costs that would entail.

"The more value that is captured by Kordia, the less likely Kordia's customers are to survive and the more money the Government will ultimately spend on unemployment benefits. It's just a question of where you want to count the cash."

Faafoi's strong hint that Government advertising spending could be brought forward - perhaps paying in advance for ad space or guaranteeing to take slots - was later echoed by Prime Minister Jacinda Ardern at her Covid-19 press conference. 

But she firmly rejected one prominent media appeal yesterday - from Stuff, NZME, TVNZ and expert witness Gavin Ellis - for the state to move its advertising dollars with global platforms Facebook and Google to local media firms.

"We need to be present where people are," Ardern said, of Government messaging on Facebook. Asked if it was right to spend with social media that has been home to disinformation and fake news, the PM said: "All the more reason to make sure that there are trusted sources of information on those platforms..."

"Whether we like it or not, it is where the public are.

"We cannot stem the tide of people's new behaviour. What we can do is to ensure journalism survives in spite of that."

So, the Government's money will still flow to the global platforms. It plainly gets results for its targeted messaging that even the biggest media sites like Stuff and cannot match.

"We we are behaving in the same way that many private enterprises are," Ardern said. "There is advertising on those social media platforms but that has not been at the expense of advertising on the traditional media platforms that we’ve used in the past.”

Another possible solution involving the tech platforms is to levy a 'digital news tax' on them and direct the money raised back to New Zealand media companies. However that is unlikely to advance now, partly because government officials are looking at a multilateral solution with other OECD nations and partly for fear the US administration might look dimly on actions against its companies.

The immediate assistance for media could be announced by the end of the week and a second tranche "some weeks" away.

Ardern said: “What I do want to really signal early on is there will be more than one tranche. There are things that we want to do with some immediacy, but there is some longer-term work that will be at a different scale to that first tranche that will be further down the track.”

Another central theme from media leaders yesterday was for the Government to allow mergers in the industry, and to look at the plurality of voices in media rather than plurality of ownership or entities.

NZME wants politicians to change the law to allow it to purchase rival Stuff without prolonged Commerce Commission arguments over the plurality issue which doomed the two companies' joint application for a merger three years ago.

The companies believe permission to join the businesses would give them an "extended runway" in the face of the challenges from the global players and digital disruption. NZME's managing editor Shayne Currie told MPs: "I do think we should be allowed to merge and I think that will sustain us well into the future."

The runway analogy does raise the issue of what aircraft the firms would be putting together and if a refurbished domestic Jumbo can then compete with state of the art global competition. Throughout the failed StuffMe application in the past, NZME and Stuff failed to explain how a merger would provide them with a solution to the key services sucking away their revenues - search and social media.

Both companies told the committee advertising revenue was down 50 percent since the lockdown and the impacts on their businesses had been swift and serious. 

And their urgings for clearance to put the businesses together won support from TVNZ's Kenrick, who urged Parliament to "help media help themselves... by encouraging and embracing consolidation of existing traditional media". Consolidation was already happening worldwide, with Disney and Fox in the US, Comcast buying Sky TV in the UK and Nine Entertainment buying Fairfax in Australia. "The runway is important because it buys the time to build these future digital businesses, to get them to a scale as viable businesses."

But, asked later in the session for his view on the merger, Newsroom co-editor Mark Jennings said, bluntly: "I think it's too late. If that was going to happen, it needed to happen 12 months ago. No disrespect to Stuff or the Herald but I don't think merging those two groups now is going to save them unless a lot of other things happen."

Ardern said the Government was conscious of not intervening too late. It was working on tight timeframes, in contact with media outlets, to discuss their relative positions and “to make sure that we’re not doing anything too late to be able to play a role in the ongoing journalism that we require right now”.

The immediate rescue packages would not consider the proposed merger of the public broadcasters TVNZ and RNZ. “When it comes to public service broadcasting, that I see as a different space, that is feeling obviously different pressures ... These are things that we’re seeing as separate packages to the work we’re already doing around increasing and supporting public service broadcasting.

“What we’ll be coming out with won’t come as a surprise to some of those outlets because we are in conversation with them around what is necessary for us again not to create a false environment where some of the new realities don’t exist, but to ensure that we still have robust journalism and access to information for the public.”

MediaWorks chief executive Michael Anderson told MPs the media industry needed to change post Covid-19. "It cannot come back looking like it does, because it was already stressed."

He said the sales process for the MediaWorks TV business was "about trying to find a sustainable model for TV. Whether we are on sale or parts of our business are for sale it is still about keeping MediaWorks as a vibrant part of the [media] ecosphere".

On the arguments about plurality, Anderson believed it was possible to retain plurality of voices within a single entity, but, "how do you codify that, protect it and ensure it from a position no matter what ownership structures occur down the track. These are complex issues. They can't be solved in two to three or four weeks."

In the short-term, his company needed clarity for any staged return to business for its clients around the country. "We are coming off the cliff in advertising. It's a cliff we cannot see the bottom of. It's dark

"We need the level of certainty to understand what is coming next."

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