MediaJune 3, 2016

Engage, then see: Tim Murphy reads between the lines of the NZME-Fairfax merger bid

Guest writer

Former Herald editor-in-chief Tim Murphy has now read the 130-page media mega-merger application to the Commerce Commission three times. Here he examines the central argument, along with the long bows, flying pigs, and echoes of Napoleon.

They must have smiled at times in the flash headquarters of NZME and the “character” K Rd digs of Fairfax NZ as they wrote their merger application to the Commerce Commission.

The drafting would have started a long time ago. You don’t, as media commentator Gavin Ellis observed this week, write a 130-page document and commission an economic study in the space of the couple of weeks since the public learned of the plans.

Someone must have been given the challenge of arguing Less is More; someone the assembling of the The Internet Ate My Company lines and a committee would finesse the Everything is Awesome theme for the future.

aweseome3

The biggest laughs would have been when the people charged with listing “competitors” for the new company came up with their 13 pages of creative thinking.

Each entry, from the Wairoa Star and the bimonthly Bay Buzz from Hawkes Bay through the Auckland University of Technology’s AUT Briefing Papers and Ian Wishart’s Investigate magazine, to TradeMe, Pinterest and YouTube is offered straight-faced.

Whaleoil, Chris Trotter’s little blog, and Bomber Bradbury are listed.

Even a potential new news website I proposed with Mark Jennings last week, the day before the application was submitted, gets a reference.

Newshub’s new app is praised with great faintness for having taken the market by storm in its first 18 hours on the market. TVNZ On Demand is lauded for its growth. The Spinoff is mentioned 11 times. Competitors all.

Spinoff, Scout, MurphJen: the brave new world

Which might be arguable. Kind of. If you were chucking everything at a non-media body charged with approving the merger of New Zealand’s two biggest news websites, vastly dominant newspaper duopoly and twin megaphones of media influence.

The application wanted to show that

a) it is too tough out there with Facebook and Google hoovering up all the advertising revenue

b) no one can “dominate” the news and advertising market or limit competition substantially because so many platforms, multimedia companies and new entrants have emerged and

c) a merged entity won’t be able to whack up prices, or reduce journalistic quality because readership would fall and ad revenues would drift away.

Indeed it showed the two big social and search platforms win agency-booked advertising revenue at a factor of five to one against NZME and Fairfax combined. The 13 pages of competitors were intended to prove point c. And a tenuous few pages tried to make the case that journalistic quality would have to improve under a combined company.

The application promises that after “synergies” from bringing the two operations together there will be benefits for advertisers, readers and even the plurality of voices in the country’s media.

You can almost feel the debate among the drafters of the application when someone said they needed to get on the front foot about quality journalism and enhancing the plurality of voices.

“Can we seriously suggest that?”

“Yes, why not? By putting two into one we preserve voices that are there already that might otherwise go, and we leave space for other voices to rise up.”

It is the longest of some pretty long bows in the document.

Undoubtedly the merging of these two companies will allow them to “de-duplicate” many things that they both do – and probably reduce overall headcount by something like 750 people from the current 3300. It is difficult to estimate from the outside what the number will be – for example the NZME radio operations could be unscathed as there is no Fairfax equivalent, and the GrabOne daily deals site is in a similar place.

The application says a merger will provide “a sounder financial foundation to address the rapid and long-term structural changes affecting the industry”.

In order to support the investment required to continue to deliver high quality local and regional news, life and style, sport and entertainment content to New Zealanders, both companies must continue to restructure/adapt their businesses, to deliver advertising customers a more targeted, lower cost, more data-rich, higher ROI [return on investment] and more diversified multi-product offering.

It hesitates to “quantify the quality benefits” – “however from a qualitative perspective they are a key driver for the transaction”.

The qualitative stuff on quality is where the document is at its weakest. The “transaction specific efficiencies” (the merger and necessary restructure and job losses to reduce costs) are claimed to enable coverage of a greater number of issues/stories.

By de-duplicating coverage so that journalists’ time can be freed up to cover a broader spectrum of issues for example:

(i) Having one journalist at a particular accident scene rather than two

(ii) Having journalists freed up to cover a greater number of issues, including minority interest issues

(iii) Having journalists freed up to cover greater number of sports, including minority sports

(iv) Being able to diversify the offerings of the various platforms and publications

The claims that fewer journalists will cover more issues, and that there will be more coverage of minority sports and minority interests deserve an emoji of a flying pig.

None of this might concern the Commerce Commission unduly. It will be looking at the effect on markets, on advertising and on consumer choice.

Even here, though, there is an understandable gloss put on the deal by the parties.

If the StuffMe entity keeps two big websites, and “diversifies the offerings”, there will likely be one piper calling the tune for advertisers.

And, in some areas such as the real estate advertising market in Auckland there is an undeniable dominance of realtor-placed ads for houses for sale in print newspapers. Putting aside the Property Press for a moment, the Herald and Fairfax’s suburban newspapers have a lock on agents’ print advertising in delivered papers.

There may well have to be carve-outs, where the Commission gives approval for the overall deal but tells the companies they will need to sell certain geographic or Sunday-specific titles.

The bigger question, which isn’t explained in the public version of the application, is whether the merged entity will really be much stronger and for how much longer might its combined size make it a robust competitor to Facebook and Google.

Neither company does what Facebook and Google do – mass social and search – and the merged company won’t either. If that is the problem, then this is not really the answer. Merging buys time.

If approved, jobs will be lost, plurality within these existing mastheads and sites will diminish. If not approved, the two companies will battle each other in what many see as mutually assured destruction while the juggernauts take their revenues and audiences. Jobs will be lost. Titles will close. Plurality will diminish.

The former is probably the preferred path. Combine, rationalise, compete for now and preserve what you can. Napoleon Bonaparte used to exhort his troops before battle: “s’engager puis voir” (engage, then see). That’s a bit hit and hope. But it does have hope.

Keep going!

Xero’s Anna Curzon. (Photo: Supplied)

Business is BoringJune 2, 2016

Podcast: Business is Boring #5 – new(ish) Xero managing director Anna Curzon

Simon Pound

Business is Boring host

Xero’s Anna Curzon. (Photo: Supplied)

‘Business is Boring’ is a new weekly podcast series presented by The Spinoff in association with Callaghan Innovation. Host Simon Pound will speak with innovators and commentators focused on the future of New Zealand, with the interview available as both audio and text. This week: Anna Curzon of Xero.

What’s it like to lead up one of New Zealand’s biggest and most high-profile companies? That’s the challenge facing Anna Curzon, the new(ish) managing director at Xero. She comes to the role from a background working with Spark and 18 years at ASB doing things like running internet banking and innovation, so is well placed to fill the big shoes of Victoria Crone, who recently departed for a tilt at the Auckland Mayoralty.

Xero gets a lot of press. Being a listed company it has to release a lot of information, its share price has become a cypher for those that like to question the growth model of modern software as a service (SaaS) business, but while some question how a company yet to make a profit can be worth the best bit of 3 billion dollars, many of the world’s most sophisticated SaaS investors line up to invest, giving it a huge cash balance and a licence to spend it pursuing growth.

Xero is a standard bearer for the new economy, and is an inspiration for many tech and future focussed businesses, and with new feet under the desk I was keen to chat to Anna to learn about her leadership style, business heroes, the steps along the way to get to her role and her views on how diversity increases the perspectives and so the richness of a country, in all senses.

Have a listen below, or download here on iTunes, or here on Stitcher – or read on for a transcribed excerpt.

What’s your leadership style leading up the New Zealand business?

For me it’s about really making sure people have clarity about what they need to do to succeed. Because within Xero we’ve got a real culture of meritocracy and so we have open communication platforms, we use the Yammer all the time, we’ve got Jostle, we have Google Hangouts. So we can remain connected all the time and we know that the next great idea can come from the 21 year old that’s just joined us. So we need to make sure we’re constantly listening and engaging with our people to harness their ideas and their thoughts. Because if we’re not, we can very quickly become disassociated from our community. For me, my leadership style is very much around the idea of being super clear about where the north star is and allowing people to go forth and get the job done. Very collaborative. Understand that we need lots of lenses into a decision and so for me, diversity is super important. Having different styles sitting around the table. I get a bit worried when we’re all high-fiving each other and saying how fantastic we are. I think, well, where’s the person in the room that’s gonna just add a different perspective because we might trip ourselves up if we’ve got too many people thinking and swimming in the same lane. So for me, clarity is super important. Ensuring we’ve got the right tools to empower people. Getting the very best of people and then setting them free to do the things that we’ve asked them to do.

Do you have a motto or words to live by?

It’s interesting, a really great mentor of mine once said to me when I was clasping my hands and fretting over a situation, “You know, Anna, stuff them if they can’t take a joke.” Actually it was probably a bit more profane than that. Don’t take yourself too seriously, don’t take others too seriously either. Be really focussed on, again, what you’re setting out to achieve. I think one of the other things I often say is, the truth will set you free. Just ask why? Why why why why why? And whatever it is, embrace it, even if it’s not what you wanna hear.

That’s interesting. Linking that and also the idea of bringing the information up from the new 21 year old that started at the company, how do you do that? And make sure that you hear them when they’re telling you that you’re not on the right track?

A great example is through our Yammer platform. So it’s an open platform that we use at Xero. anyone can post anything. Look, we’ve had Barneys (fights) on Xero as a company because we’ve disagreed but I love that. I absolutely love that because it means we’re having the conversation and we can get onto it quickly. It doesn’t fester and we can move on. Sometimes it’s okay to agree to disagree, if you like. I think one of the other things that I’ve done throughout my career, especially in the last ten years where I’ve been sitting in meetings and I’m very proud of the fact that I’m focussed on digital and I’m up to the game with all the new trends etc. So many times I’ve gone into a meeting and gone god, these guys are talking a different language. What’s this algorithm on Google they’re talking about?

For me, leadership has become quite a humbling experience and often I’ll reach out to someone who’s 10-15 years younger and say hey can you just mentor me for a half day on this because you’re talking about it and that’s new to me. Can I shadow, can you just whiteboard that out for me, can we catch up again for a coffee, can you take me through that? Because I know that I’m never going to be able to keep across all the new trends and sites that are happening in our business, let alone the digital world. So I think as a leader in today’s age you really have to be humble about that and go “I didn’t understand a thing you just said, can you teach me please?” And often that will be the 21 year old in your business. I’m starting to think about that reverse servant leadership but also youth as mentors to leaders, which is challenging and hard. I think as leaders you want to have all the answers sometimes. You’ve got to take a sharp intake of breath sometimes when someone says “hey, no you don’t know what you’re talking about. This is the course I think we should be going on.” But again it’s just about keeping that open mind and being really committed to seeking out the truth.