Media

Another brick in the Herald paywall

Readers of the nzherald.co.nz website have just four months before free access to content is curtailed and they are asked to pay a subscription for "premium" journalism.

The Herald owner, NZME, confirmed its paywall will launch by June 30, when announcing its 2018 financial results today.

It hopes to attract up to 10,000 subscribers to the paywalled product by June 2020, raising a “modest” amount of money but outlaying $1.2 million in extra costs. A paywall could be profitable in its second year.

NZME also indicated it could be in the market for other media assets, possibly including parts of Stuff Ltd which is for sale, and is keeping its own newspapers under review to ensure they keep contributing to the overall business’ performance.

Stuff.co.nz, the country’s biggest news website, looks set to remain free to readers – but its owner’s chief executive Sinead Boucher seemed to leave her options over a paywall open in a Stuff report today, saying her company is not "currently actively" looking at charging.

The Herald paywall is one of two new sources of revenue NZME is hanging its hat on to improve its business, which suffered a 17 percent reduction in earnings from 2017 and saw its net profit fall by 44 percent.

Chief executive Michael Boggs said the media market was “tough“ in 2018, with falls in business confidence affecting returns, but pronounced NZME’s financial result “not a bad outcome”.

Agency revenue, from the big brand ads which are often placed through advertising agencies, fell for its print and radio businesses. Print revenues were down $10 million and radio $4 million but digital advertising, long seen as the growth part of NZME, rose just $4 million. So for every $1 lost from old businesses just 28 cents is coming in as a replacement from digital.

The paywall is one answer. Another is its OneRoof real estate digital classifieds site. OneRoof was one of three new classifieds sites started in 2018 at a cost of $6.1 million (a sum NZME pointed to in explaining its big fall in earnings) but the other two sites, Driven and Yudu, an employment site, seem to have failed to live up to expectations.

Analyst Arie Dekker, of First New Zealand Capital, suggested on an NZME call with analysts and media that Yudu had already been put on the “back-burner” and company executives didn’t demur. They held out some hope for Driven, the motoring site, to improve its income but acknowledged OneRoof was the big hope.

It claims 66 percent of the listings on the market giant, TradeMe; with the NZME offering possibly benefiting from its editorial content.

A new advertising campaign will start on Wednesday to promote the virtues of the Herald’s quality journalism and NZME has secured content from four "top global publishers" which already operate behind paywalls to add to its paid offering from June.

The company says the Herald “remains a key asset”. Since announcing a year ago it would implement a paywall, NZME had waited until December for its partner, the Washington Post company, to provide it with the technology needed. NZME was still working through the intricacies of marrying a paywall charging regime with the existing subscription charging for print subscribers.

Boggs, asked if the paywall would start “at the front-end or back end” of the second quarter of the year, would not say. “We are really confident of delivering in Quarter 2,” he said. “We look forward to bringing it to market.”

NZME expects redundancies – which cost it $5.3 million last year and $4.3 million the year before - to continue as it stops spending on some roles and diverts money to these two new digital plays.

It also indicated its regional portfolio of newspapers beyond the Herald were being monitored to ensure they kept contributing to the firm’s financial success.

NZME and Stuff failed last year in a prolonged legal bid to be allowed to merge into a mega media business. Today Boggs said: “Media industry consolidation is expected to continue and NZME is actively seeking to take advantage where it meets our strategic objectives and adds value for shareholders.”

The sentiment was repeated twice in presentation slides prepared on the results. The obvious target could be parts of Stuff, which has many newspapers as well as the website and is on the market after its former owner Fairfax Media Australia was swallowed by Nine Entertainment. Another possibility is the troubled National Business Review, which has had technological and staffing issues amid various controversies over its publisher and columnists, but is in the paywall business.

Dekker asked Boggs if the hints about opportunities in market consolidation were over “larger opportunities” or just “mopping up smaller entities”. The answer: “We want to be at the forefront of that….and in the ongoing sharing that might happen in the market as well.”

Radio remains a challenge for NZME, with a difficult agency advertising market. Boggs launched a company-wide project to put its radio business on the right track a couple of years ago and today was saying again that more needed to be done. “There is a significant opportunity to grow shareholder value by improving our radio business.”

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