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MediaFebruary 20, 2018

The Herald and Stuff are defying the Commerce Commission and getting closer all the time

Senior couple reading on adjacent garden chairs

NZME and Stuff are working together wherever they can, regardless of what the watchdog and high court have to say about it. Update 21 February: Stuff announced further closures and redundancies below – this story has been updated to incorporate this news.

A week before Christmas the High Court stepped in to save journalism from itself. Our two biggest print and digital media companies had been hell-bent on merger, citing an array of competitors from state-owned TV channels to Silicon Valley juggernauts as evidence that it had no shortage of competition, nor its audience any shortage of choice.

Yet the court backed up the decision of the Commerce Commission to deny the pair the opportunity join forces. Thus it came to be that two venerable institutions, combining for over two centuries of wisdom between them and sporting a dazzling suit of armour, were able to prevent New Zealand’s journalism from disappearing into callous monopoly. And we all read about it in broadsheet newspapers over cornflakes and full cream milk the following morning.

In fact, just two months after the decision was handed down – and two weeks after the companies announced an appeal – the change vortex is, if anything, accelerating. What follows is a brief and incomplete catalogue of all that has happened in and around these companies over these normally sleepy summer months.

It was only last week that AAP’s News Wire – twice cited in the High Court judgement, which is twice more than the far more significant competitor Newsroom – shut down, taking 14 jobs with it. The industry has been in a near-constant restructure for years now, with emails leaked to The Spinoff showing Stuff (which was known as Fairfax at the time of the court decision) has another organisational rearrangement in progress, consolidating its news divisions under the stewardship of four new super editors.

There’s more.  As announced last year, regional newspapers from The Press and Dominion Post on down will soon be printed in a tabloid format, with flow-on changes to the make-up of their content. This follows the swathe of redundancies to the stable’s sports reporters last year. Update 21 February: an email came out a day after this story was published, announcing that “Stuff today briefed staff on plans to sell or close 28 mastheads from its print portfolio of smaller community/rural titles and free inserts.” While none are marquee regional titles, they do represent the loss of precisely the kind of community reporting the Com Com feared would be lost.

By contrast the company is rapidly building out ancillary businesses to try and leverage its gargantuan traffic streams, including Stuff Fibre and insurance product ‘Done’. An internal email to Stuff staff talked up a 33% growth in digital revenue, led by both Stuff Fibre and the growth of its social media platform Neighbourly. The latter – a kind of crowd-sourced community news – is also cited as part of the functional replacement for the community newspapers whose closure was announced in the same email.

What is happening within the individual organisations, though, is arguably less significant than what is happening between them. The past few years have seen co-operation on elements like newspaper printing and ad sales (through Kpex, a joint venture which also includes Mediaworks and TVNZ).

More tantalisingly, sources suggest that informal conversations have occurred recently regarding the idea of sending a combined team to cover the Commonwealth Games. The latter is a rare bird – vast, challenging to cover and with large elements of commodity news to it. Talks are said to be far from resolved, but it raises some interesting questions about where this kind of reporting side co-opetition might end.

For example, politics has some similar dynamics to sports reporting – a mixture of results, reporting, previewing and commentary. The companies could argue that the creation of matching versions of stories on, say, Julie Anne Genter’s pregnancy, is a deeply inefficient exercise. One story, appearing everywhere from the Waikato Times to would either A) free up reporters to chase more original stories or B) allow the companies a greater latitude to further trim newsrooms. Delete according to your cynicism.

Regardless, it’s hard to see what, beyond professional pride, is stopping this road being increasingly pursued across areas which might include anything from regional news to complex specialist reporting rounds like science and the environment.

Senior editors at NZME and Stuff/Fairfax have argued passionately and convincingly that instead of the current ‘match story’ culture, the best way to maximise news resources for the public good is to have a single high quality report on an issue shot out through as many channels – social, digital, print, radio, each with their own loyal audience – as possible. A kind of back-to-the-future version of the NZPA model.

The great fear in this scenario is that certain important beats, especially in the regions, would be abandoned – though the scale of job losses already absorbed suggests that’s already happening. And hardly likely to slow down.

There is one entity well placed to help fill the void which might come such enhanced cooperation: RNZ, the resurgent ad-free media company which has up to $38m earmarked for expansion, and just yesterday signed up Scoop as the 14th news organisation to become a content partner.

RNZ is already providing a stream of high quality multi-format news to help fill out the system – and its very able CEO Paul Thompson has already hinted at a willingness to step into a quasi-agency breach. Yet, bafflingly, RNZ’s increasing proficiency in the online space was dismissed by the High Court, who “agree with the Commission that there are grounds for doubting the capacity of… RNZ to materially expand the scope of their online national news coverage”. Given what they have accomplished over nine years of zero budgets it seems shocking to imagine that they wouldn’t be able to do more with a budget anywhere up to twice what they currently operate on – even if there is some TV output required along the way.

This gets at the other part of the court and commission decisions that reads bewilderingly. A future media environment with a beefed up RNZ at its heart would help cement relatively low barriers for entry to new players. Anyone who felt like a combined StuffMe was exerting monopolistic behaviour could buy some distressed digital assets (a large local Facebook audience, even after its recent swing away from news distribution, being the most critical), take RNZ’s local news, purchase international news feeds and a few figurehead opinion writers and investigative journalists and be an instantly credible player. It’s not a fantasy: Newsroom has done something similar and broken multiple national stories in its first year.

In this world Stuff’s National Correspondents and Stuff Circuit and the Herald’s investigations team look like harbingers of the media environment to come – major brand differentiators wrapped across a body comprised of a significant amount of commodity news.

This bedded in reality, along with the fast-growing news efforts from Mediaworks and TVNZ, surely means the digital space will never be anything like as monopolised as, say the Auckland market was for the Herald in the 90s and 00s. As for newspapers, while they’re still around, it’s only really Sunday papers where there is any meaningful competition – and even then there’s significant brand differentiation across the titles.

This is not to say any of the above is preferable to the way things have been historically practised – in fact, having multiple journalists competitively attacking the same story has been a bedrock of our democracy for generations. But in a near-frictionless digital marketplace with a deeply uncertain economic future, this kind of sharing is more than possible. And it’s hard to see where the Commerce Commission has any right to disrupt it – or, failing that, the ability to force the maintenance of the status quo in the still-separate businesses.

Arguably the inability to make the kind of senior executive and real estate efficiencies which would come with a merged corporate entity suggests we will likely see more of this behaviour, not less, as they scramble to cut costs elsewhere. This is already inevitable in the massive legal costs racked up by both organisations – particularly arduous, given that the high court allowed the commerce commission to seek recompense for its costs, too.

Which means that the two venerable institutions, the commission and the court, might end up in position to post a rare double: being both wrong in their assumptions, and in fact accelerating the very consumer harms they sought to prevent.

Update: the original version of this post implied that the announcement of Stuff’s move to compact format for its regional papers was made this year. It was not.

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