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NZME feature

MediaDecember 14, 2018

NZME: the media giant still at war after all these years

NZME feature

The owner of both Newstalk ZB and the Herald retains a singular influence in the New Zealand media. But anonymous rival executives have doubts about its ability to pull off a paywall in 2019 – a move which shapes as the boldest in our media, writes Duncan Greive.

If there is a single common theme to the state of media in 2018, it is this: it is an era of radical collaboration. Our media have realised that they need to work together to survive, and that it’s not realistic or even desirable for there to be be one dominant player at the expense of all others – that competition and cooperation is the characteristic of the times.

NZME is the major exception. “They’ve still got that winner-take-all attitude,” said one rival exec. At times NZME can feel like a soldier marooned on an island and who won’t believe the war is over (under this analogy Facebook and Google won this war years ago). It’s not that NZME doesn’t collaborate – it works well with TVNZ and famously tried to consciously couple with Stuff. It’s just the chippiest of the big players, still.

With both the Herald and Newstalk ZB, the company dominates Auckland – and, like most Aucklanders, it assumes Auckland to be the whole country.

The Herald declined to participate in this series. Bear in mind that this is only the assessment of the rest of the media, without any senior exec at NZME making the company’s own case. That said, there is much to admire about the business and its strategy, and the competition is not uncomplimentary about it.

NZME’s boldest move this year was its announcement that it would launch a paywall at the Herald, initially meant to be coming in October, now moved into 2019. Sources familiar with the plans suggest it will be a different kind of model – more on that shortly. It retains a number of other regionally important print titles like the Northern Advocate and Hawke’s Bay Today, most in the upper North Island. The larger metropolitan papers remain viable for the time being – though just this week it announced a round of closures at communities, which remain a tenuous business.

NZME’s other new initiatives this year were fresh verticals – for jobs in YUDU and for housing in OneRoof. They are what CEO Michael Boggs called ‘digital classifieds’ in his annual report letter, and each is impressive in its own way while facing significant entrenched competition.

Its radio division is largely unchanged from a ratings standpoint – which is to say it’s reliably profitable, led by the juggernaut that is ZB. The rest of its radio portfolio trucks along without huge swings (aside from a small decline in Auckland in the last survey, which many are calling an anomaly). Radio is media’s cockroach, retaining its audience and its advertisers while all other mediums are losing theirs.

Given the eerie calm at radio, it’s the Herald which must occupy most of NZME’s attention. It’s this product, once one of the most mighty in media and still the country’s biggest newspaper, which is causing commercial headaches and driving its share price down, from a peak of 90c earlier in the year to just 50c today. That gives it a market capitalisation of under $100m – approximately the same as its debt. This means its bankers have a major interest in its operations, and Stuff’s Tom Pullar-Strecker reported that its lenders were allegedly “cool” on the paywall prospect. Sources at the Herald say it’s still fully intending to launch in the new year, but it has manifestly not been the rollout anticipated when the paywall was announced in February.

It could all have been so different. The Herald had a full paywall set up and ready for launch years ago, and was still publicly invested in the idea as recently as 2015. Yet then-CEO Jane Hastings was not a fan, and eventually it was shelved in favour of competing head-to-head with Stuff for mass audience – a race it ran well but never won, with Stuff ranked fifth biggest website and the Herald eighth in 2018.

It’s tempting to imagine what might have been had the Herald held its nerve and launched then. While it had been producing its share of what is broadly but inaccurately dubbed clickbait for some time, it had not pursued the strategy as fervently by then. And had it launched, it would have three years of incremental subscriber gains.

Instead it took another path. “The website is very aggressive in chasing audience, to put it politely,” said one rival exec, who also suspected it had been spending significantly on Facebook lately to “buy audience”. Gruesome stories from eastern Europe presented on the homepage as if they might be from New Zealand, Spy’s social media hijacks and a vast number of stories written off from the radio brand’s morning shows have peppered the homepage for some time (not that the Herald is by any means unique in this approach).

This doesn’t necessarily mesh well with its hybrid paywall plan. The idea is to differentiate between the ordinary Herald and a ‘premium’ product. Each will sit alongside one another, but premium will be behind a hard paywall. Unlike the New York Times, which grants a limited number of free stories each month before prompting a subscription, the Herald is said to be considering not allowing any premium content to be viewed without paying up front.

On one level the paywall move makes sense. The Herald is “still producing great work”, said one exec, and the Weekend Herald is widely acknowledged as the both the best paper in the country and easily its strongest print advertising location. With the possible exception of RNZ’s Morning Report, it might be the single strongest journalistic product in the country.

This is off the back of an extraordinary array of top-shelf talent: Kirsty Johnston, Simon Wilson, Steve Braunias, David Fisher, Simon Collins, Jared Savage, Phil Taylor, Anna Leask and Natalie Akoorie. There’s a press gallery team led by Claire Trevett and Audrey Young, and an incredibly strong business unit.

The latter was already a powerhouse, with Liam Dann, Matt Nippert, Hamish Fletcher and Fran O’Sullivan; then it conducted an lightning raid on the NBR’s masthead, emerging with former editor Duncan Bridgeman and peerless tech reporter Chris Keall.

This line-up, along with many other strong columnists and beat reporters, will make the Herald Premium a superb product. The issue they have is that it will sit underneath a Herald online brand which has suffered serious damage over the past few years. “People will only pay for something they perceive as having value,” one exec told me. “They’ve got a real issue with clickbait.”

To put it very simply, it appears that they will be trying to sell the New York Times behind the front page of the Daily Mail. “And with all due respect to the Herald, they’re not the New York Times,” said a rival. Another questioned whether the lack of visibility for premium content meant that the Herald had actually fallen behind its free rival Stuff in terms of the prominence of its best work. “Stuff has probably made a more significant move in that direction.”

The other issue rivals raised is whether the New Zealand market is large enough to have sufficient paying subscribers to fund a newsroom at scale. “Even if you’re amazing, and execute your strategy perfectly – New Zealand is just so small.” Another wonders about the dissonance of moving from a model which involves generating stories which help sell advertisements to one which involves stories of maximum value to readers. “We’re good at dancing around like idiots to get your attention,” said one exec of ad-supported media. “We let some other fucker sell [that attention].” Now NZME is asking you to pay for what you give your attention to.

Outside of the paywall, the digital classifieds are the current point of emphasis. OneRoof supplies a steady stream of data-driven stories into the Herald both in print and online, which generates brand visibility and genuinely useful journalism to the Herald. It also helps port the large print audience for its various property supplements into an online world – the kind of joined up brand synergy which is sorely needed in modern media.

Unfortunately online is now a very mature market. TradeMe has done extraordinarily well in the entire digital classifieds game, and property is a big part of that. It also has the virtue of being a national product. So the scale of OneRoof’s challenge is imposing: retraining the Herald’s audience to use OneRoof as a TradeMe substitute won’t be easy by any means, even if the pre-existing relationships with the major real estate agents do help. YUDU faces similarly entrenched competitors – not just TradeMe but Seek and LinkedIn. The strategy is sound, and arguably more logical than Stuff’s forays into electricity and internet. But that doesn’t make it any easier.

Radio is becalmed, not just at NZME but across the whole dial. Gains are incremental, and the medium has a solidity to its audiences that television would kill for. As ever, ZB is the core of NZME’s offering, both commercially and in the authority it wields to open doors across business, politics and sports.

That station is at the start of an overdue modernisation. Last year it farewelled Tony Veitch and today does the same to Leighton Smith – each deeply contentious for very different reasons. Its core remains Mike Hosking, a true genius of broadcasting – yet he bought a house in Matakana this year, and the temptation to follow Paul Henry into the good life must be strong. It also clearly has issues with an audience marching deep into old age: its advertisements are strewn with retirement villages and herbal erection pills, which detracts somewhat from the public posture as the natural place for vital CEO-types to get their news.

Regardless, ZB and the broader NZME radio staff will end the year in high spirits, thanks to the decision to convert its MediaWorks rival RadioLive to the hybrid Magic Talk. This capitulation can only be seen as a huge victory – one that is likely to bring incremental audience gains to both ZB and RNZ National when it beds in next year.

For all the chaos of contemporary media, NZME retains a pleasing solidity. This is due not just to its radio anchor, but to the fact that its circulation losses are not as hefty as those at Stuff. Yet the consistency masks a genuine appetite for risk and corporate bravery. The Herald’s paywall launch is the boldest move in New Zealand media – and will be the most scrutinised. For all the doubts expressed by rivals, there is also an admiration too. Writers and editors everywhere will be cheering them on in their challenge to get readers to pay for quality journalism. No one has been willing to do anything so audacious in the face of all these freaky trend lines. At the very least, the Herald will not die wondering.

The Spinoff’s NZ media in 2018 series: the running order

Monday December 10: introduction and TVNZ

Tuesday December 11: Stuff

Wednesday December 12: Sky

Thursday December 13: MediaWorks

Friday December 14: NZME

Saturday December 15: RNZ

Sunday December 16: Spark, Bauer, Māori Television

Keep going!