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BusinessMay 25, 2020

Stuff bought by its CEO, MediaWorks announces mass layoffs in historic day for NZ media

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Duncan Greive assesses an extraordinary morning for New Zealand’s media.

In the space of a tumultuous half hour New Zealand’s media landscape has been utterly transformed, with Stuff CEO Sinead Boucher completing an audacious management buyout from its Australian owners Nine, while hundreds of staff are about to be laid off at MediaWorks. The two companies are giants within their sectors, with Stuff New Zealand’s largest newspaper publisher, most-viewed news site and the biggest employer of journalists, while MediaWorks operates New Zealand’s biggest privately-owned TV channel, along with a huge network of radio stations, digital properties and outdoor advertising sites.

Boucher’s move to buy Stuff for $1 will send shockwaves through the industry, with it representing a brutal setback for NZME and its CEO Michael Boggs, who made an extraordinarily aggressive and public move to force a purchase through two weeks ago today. That ended in a humiliating defeat in court, and a savage column from Stuff political editor Luke Malpass which said that Nine’s posture now was that it was willing to sell Stuff to “anyone but NZME”.

During court proceedings subsequent to NZME’s bid, it became clear that another bidder had emerged, with speculation mainly focusing on external parties. Sky TV, NBR owner Todd Scott and TVNZ were among those floated, but most missed the possibility of Boucher reviving the management buyout option she had contemplated last year.

“I am pleased to confirm that I have agreed a deal with our owners, Nine Entertainment Ltd, to purchase Stuff Ltd, bringing the business and all its mastheads back to local ownership,” said Boucher in a statement.

“Our plan is to transition the ownership of Stuff to give staff a direct stake in the business as shareholders. Local ownership will bring many benefits to our staff, our customers and indeed to all Kiwis, as we take advantage of opportunities to invest in and grow the business.”

The prospect of staff becoming shareholders gives it a real point of difference, in a New Zealand media market where the scale operators are either publicly listed, government-owned or held by offshore private equity-style funds. It will make it a far more attractive proposition for government support, whether through subsidy or loan, than its previous status as an unloved element of an Australian conglomerate. Its ability to either sell off local papers, or mount a more convincing campaign for reader support, will also change radically with this new ownership structure.

MediaWorks CEO Michael Anderson, who told employees today’s announcement was ‘one of the hardest things I’ve had to do in my professional career’ (Image: supplied)

Meanwhile, the scene at MediaWorks, jointly owned by vulture fund Oaktree Capital and Australia’s QMS, could not be more different. CEO Michael Anderson held an all-hands meeting to inform staff that 130 jobs were likely to go in a restructure across the company. “As of today, we must begin reducing the size of our business and we are now entering a restructuring process across our sales, out-of-home and radio divisions,” wrote Anderson in a follow-up email. “It’s proposed that in the region of 130 of our friends and colleagues will have to leave our business.”

This was particularly shocking as outdoor, sales and radio represent the previously profitable parts of the business, and pointedly exclude television – the arm which was put up for sale late last year. There was also a suggestion that the news division had its own announcement coming, with an all-hands meeting scheduled for 10.30am, though sources have told The Spinoff that news is unaffected by the layoffs, and that while TV remains for sale the intention is to spare it from layoffs.

MediaWorks’ situation is particularly troubling, as it was the company most directly impacted by the government’s $50m media bailout package. The fact it is laying off more than 100 staff less than a month later suggests that the forecasts for the whole advertising-funded side of the industry remain very bleak.

For today though, Stuff will be ignoring that to focus on the positive of finally having local ownership and a CEO with complete control of her company. The sale brings to an end a four year long saga, during which rival NZME – publisher of the NZ Herald, along with multiple digital and print assets and a radio broadcasting giant – attempted to first merge with, then acquire Stuff. For years it was a joint process, with both parties appealing to the Commerce Commission, then ultimately to the court of appeal. As recently as December, NZME began agitating for a law change and “kiwishare” arrangement to allow it to complete the merger, a possibility deputy prime minister Winston Peters voiced support for.

The process cooled, with the government focusing instead on a proposed merger of its own entities in TVNZ and RNZ, until Covid-19 and the associated lockdown hit the New Zealand media with a savage blow. Advertising disappeared from almost all outlets, with one issue of Stuff’s flagship Sunday Star-Times having just four paid advertisers in its pages.

That changed with a shock announcement two weeks ago, when NZME CEO Boggs announced publicly that he was seeking to purchase Stuff for $1, and requested emergency commerce commission approval to do so. Nine responded with fury, saying that their exclusive sale talks had broken down the previous week, and successfully fighting an attempted injunction from NZME trying to force it back to the negotiating table.

Today’s announcement sets the stage for New Zealand’s most long-running media rivalry to be maintained, if not strengthened. Nine CEO Hugh Marks said in a release that the company was happy to be releasing Stuff back to New Zealand ownership.

“We have always said that we believe it is important for Stuff to have local ownership and it is our firm view that this is the best outcome for competition and consumers in New Zealand,” said Marks.

News of the buyout and layoffs swept aside a release from Sky saying that it had successfully raised around $120m through a new share offer. Between the three announcements, it amounts to something like a reset of New Zealand’s media market. Yet given the ongoing stresses of Covid-19, this is unlikely to be the last historic day we see from the embattled sector.

NZME and Stuff have been approached for comment.

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BusinessMay 25, 2020

What the cycling boom means for Auckland independent T. White’s Bikes

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As Covid-19 continues to force an immense shift toward online shopping, the kind of authentic, face-to-face experience offered at one Auckland bike shop is becoming all the more valuable.

When you walk into T. White’s Bikes on central Auckland’s Symonds St, you’re left in no doubt that bike riding is a serious business. Above every window, on every wall, vintage BMXs and racing bikes hang. Helmets, seats and all manner of arcane parts fill the cabinets and shelves like offerings to a two-wheeled deity. While most stores these days go for the minimalist, polished look, T. White’s is unashamedly cluttered. Tools fill the workshop behind the counter – the contraptions of craftsmanship on display. The air is heavy with the scent of work grease.

“It’s a bit of a mess,” says Anae Brown, shop owner. “We’re still tidying since the lockdown.”

Along with co-owner and partner Gabrielle Stannard, Brown has had little time to establish order on the shop floor – such has been the clamour for bikes and parts that started the day before New Zealand went into level four lockdown.

“We didn’t know it was going to be such a fluster,” says Brown. “All of a sudden people wanted their bikes and we sold out that day. They were panic buying bikes and parts, the 700c tube became the toilet paper of the industry. It sold out everywhere.”

While the constraints of the lockdown precipitated a biking boom, Brown says the demand continued after the store reopened for contactless trading. In the second week of level two, Symonds St is quiet and foot traffic is nowhere near its former heft, leaving some of the street’s cafes and restaurants with few customers. However Brown says the renewed interest in recreational cycling has seen T. White’s trade under level two pick up to its pre-lockdown volume.

“The increase in local bike riding meant that when we did open again, the wheels kept turning. We still made a loss [during lockdown] but the wage subsidy was gold and we used our savings to pay our creditors. So we’re about where we were before the lockdown.”

The shop floor of T. Whites Bikes. (Photo: Michael Andrew)

T. White’s is the kind of shop that thrives on face-to-face interactions. As Brown puts it, it’s a place where bike enthusiasts pop in for a chat, or to browse for parts, or simply to watch bikes being built. With the store closed, Brown, Stannard and former owner – now part-time employee – Tim White used the time to find other ways to stay connected with the biking community. Rather than pushing online sales, the team focused on support, revamping the website and setting up a “messenger mechanic” to help locked-down customers with their bike issues and DIY repairs.

“The website was a bit messy, and we weren’t getting many visits, so this really forced us to get in the back end and clean it up,” says Stannard, who manages the online and admin side of the business. “I just looked last night and web traffic was up 160%.”

The closing down of Bike Barn, a longstanding competitor on Khyber Pass Road, was also a factor. While the two stores were friendly and collaborated often, the closure means that T.White’s is now the only player in the uptown bike game.

It’s not all smooth riding however. After such a long disruption, parts of the business are still straggling and Brown and his three mechanics are frantically working through a five-day backlog of orders. Although parts and accessories are selling well, Brown is reluctant to overstock the shop with bikes just in case demand starts to wane.

“The other thing is there hasn’t been many secondhand bikes for sale, so we cant buy any. We’ve also seen a price increase in the rest of the market, so we’ve had to rely on parts and accessories and new bikes.”

The couple are in their second year at the helm after they purchased the shop from Tim White, who’d owned it for 10 years. In fact, the offer to take ownership of T. White’s came up when Brown interviewed for a temporary part-time position. Bikes were always a part of his world (many of the ones now hanging in the shop used to hang in his lounge) and the couple had always wanted to own their own business. Two months later the shop was theirs, although the name stayed the same.

After a first year learning the ropes, they were expecting 2020 to be a period of growth and they invested in a new marketing campaign and hired another employee. Despite the Covid-19 setback, they count themselves lucky that the store is well placed to capitalise on renewed interest in bike riding and a national push to support small local businesses.

“It was just a natural progression for people to just jump on their bikes and go,” says Brown. “We’ve just been changing everything on the fly and we’re lucky enough to be independent and to be dynamic and change things and make it work as best we can. It’s been well received by the public – people have been stoked with what we’re doing.”

Owners of T. White’s, Anae Brown & Gabrielle Stannard. (Photo: Michael Andrew)

Although in recent years they’ve been invited by the big mall companies to set up in huge urban shopping centres like Westgate and Albany, they know that what distinguishes T. White’s from the chain retailers is its independent ethos and location, across the hallway from equally popular indie record store South Bound Records.

“I think that’s our point of difference as a local, stinky workshop as opposed to a strip mall kind of brand. It’s the look and the feel that makes this place unique, the workshop is right here and everything’s done by hand. And long gone are all the other independent bike and mower shops in the city,” says Brown.

It’s a unusual location for such a business, but the neoclassical building that T. White’s sits in has a rich history as a place of tools. In the 1920s it was the home of John Andrew And Son’s Ford’s workshop and showroom.

The world has changed since then, and both Brown and Stannard know how vital the internet has become in the running of a business. Having been forced by Covid-19 to shift online in recent months, they’ve seen first hand the benefits from social media promotion and customer engagement. Yet for an old-school shop like T. White’s, the internet isn’t the ultimate destination.

“It is a bit nerve racking with the online thing. We’ve tried to capture everything on a website but you can’t list secondhand parts,” says Stannard. “For that, you come in and you have a rummage. So we’re encouraging people if they’re looking for a part to come on in and look around.

“I think people crave the realness, the connection and the hands on approach that the shop provides. It’s what sets us apart from our competitors so I think in these times we should stick to what we know and love and double down on our unique offering.”

Customer service. (Photo: Michael Andrew)

Even now, with the world frantically reinventing itself in the Covid-19 furore, that offering is exactly what customers get when they walk into T. White’s. Once past the table with the sanitiser and clipboard, it’s just the bikes and the parts and the chats – a sensory and human experience that you only get when you’re there. The couple know that it’s something that can never be replicated on an app, no matter how advanced it is.

“Although it’s absolutely key to keep up with the times, I think it’s important that we stay true to who we are as a brand and as a family as well,” Brown says. “We care more about the experience we give customers than we do the transaction.”

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