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BusinessMay 11, 2020

NZME and Stuff’s merger saga just reached a bizarre new peak

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NZME asked the commerce commission for urgent approval to buy Stuff for $1. Minutes later, Stuff’s owner said it was no longer in talks with NZME.

In the space of a chaotic few hours, the long-running courtship between print media giants NZME and Stuff dramatically escalated, as NZME informed the sharemarket that it was seeking urgent government permission to buy its rival. A hour later Stuff published a story in response, in which its owner, Australian media conglomerate Nine, said that talks between the two had broken off last week.

It didn’t stop there, with NZME posting a follow-up announcement just after noon, asserting that it remained”in a binding exclusive negotiation period with Nine” and “does not accept that exclusivity has been validly terminated”.

The episode began through a story on the NZ Herald site, one of a large number of media properties owned by NZME, which stated that it had filed an urgent application with the Commerce Commission to be given permission to buy its rival. It cited a price of $1, which would exclude certain non-media assets, but include all its liabilities, and a date of settlement of May 31.

The story was published at 9.34am. When the NZX opened at 10am, NZME shares jumped nearly 5% in early trading. Just over an hour later, Stuff published a story emphatically rejecting the idea that any such deal had been struck. In fact, a spokesperson for Nine said that talks had broken off last week, and that a statement would be forthcoming.

As well as through their media properties, the spat played out in announcements to the share markets in Australia and New Zealand.

These are the last twists in a saga which has run for five years, with permission twice denied by the Commerce Commission, and an unsuccessful case at the Court of Appeal in 2018. Late last year NZME once again raised the spectre of a merger, after Stuff was unsuccessfully put up for sale by its owner Nine early in 2019.

NZME, which owns a large number of radio stations in addition to its print assets, revealed in its market announcement to the NZX that it entered an exclusive negotiation period with Stuff’s owner, Australian-based Nine Network, on April 23. A letter signed by CEO Michael Boggs and chair Peter Cullinane laid out the case for the merger to be allowed to go ahead despite the ComCom’s resistance.

“NZME believes that the New Zealand media sector is too small for the current number of quality participants and consolidation is urgent in the face of dramatically declining advertising revenue and current general economic conditions,” they wrote.

“The significant obstacle we face is that there is insufficient time to do so given the extraordinary conditions the industry finds itself in. We are mindful of what happened to Bauer Media and we are focused on saving hundreds of jobs and regional mastheads which may be lost if we do not act with this urgency. Time is of the essence and we seek your urgent assistance to allow completion by 31 May 2020.”

The situation comes with no small amount of urgency, as the fallout from Covid-19 and the lockdown has seen print advertising revenues, the lifeblood of both newspaper chains, fall away drastically. This led to a $50m government “triage” package of support for media in late April which significantly weighted its support towards broadcasters like MediaWorks and the state-owned TVNZ.

While most industry CEOs believe some form of consolidation is inevitable, there remains significant disquiet about the prospect of a merged NZME and Stuff, given that the duo represent around 90% of all online news traffic in New Zealand. Allied Press, publisher of the Otago Daily Times and the third-largest publisher in New Zealand, has publicly stated its opposition to the move. NBR publisher Todd Scott has persistently talked about his desire to purchase Stuff, saying he has private equity backing for such a move. However sources at Stuff say Nine has refused to engage with Scott on the matter.

Stuff’s situation is precarious, because Nine has already signalled it does not want to own the New Zealand business, and its own revenues have also been significantly impacted through its print, digital and television assets in Australia. There are fears within the industry that should Nine see Stuff as a loss-making operation for the foreseeable future, as the economy enters its greatest downturn since the great depression, it might not be willing to put cash into Stuff to fund its operations. That is the kind of disorderly event which saw Bauer NZ collapse in early April, leading to the loss of nearly 250 jobs.

With Stuff being New Zealand’s largest employer of journalists, and its chief news source from Hamilton to Christchurch, there is a desire from all parties not to see it collapse. The question is whether NZME is the best available operator, or whether another acquirer – possibly the government through TVNZ – might appear to try and prevent such a major consolidation within a single medium.

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(Photo: Getty Images)
(Photo: Getty Images)

BusinessMay 8, 2020

The website that helps you give back to your favourite businesses

(Photo: Getty Images)
(Photo: Getty Images)

One of the success stories of the level four lockdown, SOS Business has provided a channel for incapacitated communities to send support where it is needed most.

In the frenzied 48 hours before level four took effect, when packs of Cottonsoft were being ripped off supermarket shelves like the last lifejackets on a sinking ship, David Downs went online to buy a voucher from his local cafe.

A concerned resident of Devonport on Auckland’s North Shore, he knew how badly a month of no trading would cripple the small local cafes and restaurants, and that any extra cash would not only help them get through the month ahead, but also show that their customers were thinking of them. But when he realised that few of the businesses could sell online, he did something better. He created a website that would do the selling for them.

Six weeks later, SOS Business, the ecommerce platform that enables customers to buy vouchers from their favourite businesses, has seen $1.3m worth of sales and 2500 businesses register on the platform. In a stressful time, when physical avenues of kindness have been barred, it has become a symbol of impromptu innovation, providing a tool for New Zealanders to give small businesses a cash injection when it is needed most.

The enthusiastic reception of SOS Business revealed to Downs the true value people place on the small businesses in their communities.

“We’re really seeing incredible results,” he says. “We’re getting all sorts of cool stories coming through, people saying, ‘This is making a huge difference and we’re going to be able to pay our rent through the period that we’re shut.’”

“The cool thing is it’s their customers doing it. No one is forcing them to do this, it’s the loyal customers of these places… we’ve got coffee shop owners coming back and saying, ‘It’s so lovely that our customers love us and are thinking about us during these tough times.’”

In the two weeks after the platform launched, it expanded far beyond the Devonport businesses that inspired the concept, signing up not only cafes and restaurants but also massage therapists, hairdressers and tattoo parlours across the country. The name changed from SOS Cafe to SOS Business to reflect the diverse range of clients. And the team of volunteers running the website grew from three to 12.

SOS Business co-founder David Downs (Photo: Supplied)

However, as it grew so did the workload – and the costs. For Downs, who was managing the project alongside his regular job at New Zealand Trade and Enterprise, the aim was to ensure that all the cash was passed on to businesses as quickly as possible.

“It’s a pure not for profit, but it was actually costing us a reasonable amount of money to run,” he says.

That’s when one of the SOS team had a chat with the Kiwibank team, who loved the idea and offered to help.

“So they signed up as a partner, paying some of the costs of the website so that we can continue giving all the money to the businesses. It really aligned with their values.”

Partnership meant the platform could continue to expand, and the resultant media attention connected more of those businesses forced to close under level four with those wanting to help. While the shift to level three has allowed many businesses to reopen in some capacity and customers to purchase directly through contactless orders, Downs says hundreds of vouchers are still being purchased daily, often as donations or gifts.

“We’ve seen $120,000 which is just pure donation from people who want to support without expecting anything in return. We’ve also had some large companies buy big orders from us to give to their staff as motivation gifts. One organisation bought 1,000 vouchers and gave them to their staff.”

The owner of Wellington pub Little Beer Quarter (LBQ), Maura Rigby, says people have been buying vouchers as donations to essential workers so they can enjoy a free drink once bars are allowed to open again.

“Customers are coming up with their own ideas about how to give back and help people.”

Little Beer Quarter, pre-lockdown (Photo: Supplied)

Rigby, who also owns the Beach Babylon Cafe in Oriental Bay, says that while the wage subsidy has kept her staff paid, the vouchers have helped cover other fixed costs over the past seven weeks.

“It’s just been great to have some turnover with a lot of our continued fixed costs going out, so we’ve been quite overwhelmed with the generosity of some people. We had one customer buy a $1,000 voucher for our cafe and we’ve had $600 from a business for our bar. At least $3,000 has come in total for each business.”

On-licence alcohol businesses like LBQ have faced a costly dilemma during alert level three, unable to physically host customers because of public health measures yet also restricted from selling takeaway alcohol. With on-licence businesses having up to 80% of their revenue unavailable, Rigby has been lobbying the Wellington City Council and central government for some sort of leniency. In the meantime her customers have been delaying redeeming their vouchers until the bar is back up and running.

“I think the vast majority bought them to support us and will hold off until we can get back onto our feet and they can come back into our premises.”

Along the Kāpiti Coast at Raumati Village, owner of Reddin’s bar and restaurant Barney Shiels-Reddin says vouchers are still being purchased but not many have been redeemed, a sign the community is continuing to rally around his business.

“Even our friends around the corner at Paraparaumu Pak’NSave called us up and wanted to buy some vouchers to give to their customers. Everyone’s getting behind everyone else and supporting local businesses.”

Like other employers enduring six weeks of severely limited trade, Shiels-Reddin was able to get the wage subsidy for his staff, while the SOS vouchers helped cover some costs and his bank was on hand to cushion the impact of the lockdown.

“The ingenuity of things like SOS just starting up from scratch have been really handy. We also had to have a number of calls with Kiwibank early in the piece, switching our merchant account which enables us to take Eftpos payments over the phone. They were absolutely brilliant and could not have done any more for us.”

Barney Shiels-Reddin at the taps at Reddin’s (Photo: Supplied)

Now open for contactless orders, Reddin’s has put public health measures in place and is offering free deliveries to the local community. They’ve even been hosting online quiz nights that can attract up to 100 participants.

“It was a learning curve – there were people that found a way to cheat – but it’s been fun and word has spread.”

For Shiels-Reddin, this type of community engagement made all the difference during the long spell the restaurant was closed to the public. It’s what David Downs set out to do when he created SOS – allowing people to connect and contribute virtually, even though they couldn’t physically.

“It’s not so much the money, although it always helps,” Shiels-Reddin says. “It’s the fact that people have taken the time. It gives us a nice feeling when we see people doing that for us.”

This content was created in paid partnership with Kiwibank. Learn more about our partnerships here

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