One Question Quiz
Image: Tina Tiller
Image: Tina Tiller

MediaFebruary 29, 2024

Five key questions about the massive layoffs at Three and Newshub, answered

Image: Tina Tiller
Image: Tina Tiller

It was one of the most cataclysmic days in New Zealand media history. Duncan Greive has been working the phones to answer some of the big questions remaining.

How long has this plan been in the works, and how widely known was it?

According to a source familiar with the process at Warner Bros. Discovery (WBD), the mass redundancy process is less than three months old – meaning it happened after the cancellation of The Project, the announcement of Ryan Bridge’s 7pm show and the resignation of former head of Newshub, Sarah Bristow. While the company really is listening to all responses, it has not sought a bailout and believes its new and news-less strategy is the right one for the business in 2024.

At an international level, WBD itself has a massive multi-billion dollar debt load – albeit one it is rapidly paying down – and has made layoffs and cancellations all over the world. So this was a decision made outside of New Zealand and conveyed to the on-the-ground team, which has kept the information very tightly held throughout the process. Just weeks ago, I spoke to a senior source familiar with WBD’s thinking and was assured that there was no risk to Newshub – suggesting that only those staff who absolutely had to hold the information had access to it.

This ultimately impacts 300 staff, or 75% of the roles within the business. This weight has sat heavily with WBD’s local leader Glen Kyne, who was tearful during the announcement and in subsequent interviews. He told media minister Melissa Lee around 5pm on Tuesday, and called prime minister Christopher Luxon to confirm the decision around 30 minutes before staff were told at 11am yesterday.

How is its impact being felt by staff at Newshub and Warner Bros. Discovery?

I spoke to a veteran Newshub journalist yesterday, who only returned my call after ensuring the 6pm bulletin had got to air. It says everything about their character and that of Newshub itself that a key frustration they singled out was that the news about Three – about the end of their job and potentially career – was that it was “such a distraction from some really important stories”, such as the changes to gun law and Adrian Orr’s announcement around the official cash rate.

The day began with a sense of foreboding, as all staff were called off their pre-assigned stories for the meeting. But even during the meeting they kept their heads – a producer joked “we’ve got our lead story for today”, and others started shooting b-roll from the meeting. “The training kicks in,” was how the journalist put it. After assembling a devastating pair of packages to open the 6pm bulletin, staff joined their colleagues at Galbraiths, a pub just around the corner from Three’s Eden Terrace headquarters. 

After commiserating the likely end of an organisation which had shaped their working lives, they went home to talk it through with their families. What comes next? “We’re all going back to work tomorrow.” The news does not stop, even if Newshub likely soon will.

What does media minister Melissa Lee make of this, and has it changed her position on the digital news bargaining bill?

Lee met with WBD’s Kyne on December 21, where a bunch of well-canvassed and substantial issues were tabled. These included: 

  • The fact television is legally prevented from airing commercials on Sunday mornings, while tech companies run them 24/7
  • TVNZ’s ability to end its dividend in a way the private sector’s owners would not tolerate
  • The weight of transmission fees paid to state-owned Kordia 
  • The desire for the Fair Digital News Bargaining Bill to be passed, adding a fresh revenue stream to support news production

These are real problems, collectively adding up to a significant ongoing impact on WBD. However minister Lee and sources at WBD agree that the drop in advertising revenues is so significant that even if all were to be actioned simultaneously it’s unlikely that WBD would have reached a different conclusion. 

While Lee came off as somewhat detached in some of her media appearances yesterday, when reached by The Spinoff late in the afternoon she gave a much more empathic response. “To tell you the truth, it was a shock to me too,” she said. “It was more about concern for the staff… we just didn’t have a lot of time.” 

She defended the level of plurality in TV news, saying “radio and newspapers are doing video” now, and “the media landscape is changing… I just hope that the public support the media that we have.” I pointed out that public support is only very loosely connected to revenue to fund journalism, she acknowledged that as a problem, and continued her track of gently softening her stance toward the digital bargaining bill, currently before select committee. 

“I don’t support the bill in its current form,” she said, noting that it does not specifically address the emerging generative AI space. She then asked an intriguing open question: “how can it be amended if it does go through?” Before the conversation ended, she sounded a note that might suggest more hope than the news media has had cause to have in a while. When asked about how the local news media might avoid more extinction events like yesterday’s, she simply said: “I’m looking at options.” 

Michael Morrah from Newshub reporting on the closure of Newshub

What is the impact on NZ on Air, and for all the non-news local shows that screen on Three?

There was some elegant sleight of hand contained in yesterday’s press release. It focussed so heavily on the loss of Newshub that much of the reporting has failed to note that it’s not the only part of the business in the frame. One source listed off the scope: “marketing, sales, integration, commissioning, legal – the impact is huge”. Essentially the Three we see on the other side will “become something closer to a content database”, as former Newshub head Hal Crawford wrote for The Spinoff.

The company does not want that perception out in the marketplace – the smaller its local identity, the less able Three and ThreeNow are to compete for viewers and advertising dollars with the likes of TVNZ2 and TVNZ+. While it is committed to airing shows it has currently commissioned (so we will get a final season of Married at First Sight NZ), it was explicit about only making shows in future if funded by an external partner. 

In New Zealand, that means NZ on Air or Te Mangai Pāho. While there has been no official announcement from either organisation, it’s hard to imagine that the loss of news won’t lead to a precipitous slide in viewership for Three. If and when that happens, it gets harder to justify major multi-million dollar investment in shows like Double Parked or West Coast Vanishings. Additionally, some of these qualify for further support through the screen production rebate (SPR). With smaller audiences, that could also be called into question.

However this is not uncomplicated for the funding bodies either. Without the presence of a vibrant and substantial Three in the market, the case for simply allocating large chunks of funding directly to TVNZ (for NZ on Air) and Whakaata Māori (for Te Mangai Pāho) grows stronger. The downside of that approach is that it would represent a further swing toward the government favouring its own platforms over the private sector – something it is likely anxious to avoid. 

Is there any chance for Newshub – and is there another shoe to drop at a major news media company?

For Newshub? Almost certainly not, sadly. WBD seems very set on its strategy, and the way it conveyed the decision internally and externally suggests its mind is made up.

As for the rest of the news media, it is worth considering. Former Three staffer-turned filmmaker and Substacker David Farrier yesterday briefly set pulses racing with a passing reference to “rumblings” that news giant Stuff might also be in trouble. The news industry was already anxious enough without such a prompt, and it clearly infuriated Stuff’s owner and publisher Sinead Boucher. “Today’s news has also brought out those who love to take potshots at Stuff,” she wrote in an all-staff email. “They are simply wrong… Stuff is a profitable, debt-free, standalone, independent media business.”

A quick assessment of the major companies would similarly suggest that there is not likely to be immediate contagion, in part because 2023 saw many businesses go through their own right-sizing processes. Here’s a broad overview of each of the major players in a sentence or three:

  • Stuff: being “debt-free” is a huge asset, and the company is already on the other side of a major reorganisation – so despite RNZ continuing to pick off key staff (a number rescued from restructure, to be fair), it seems very unlikely to suffer anything resembling what Newshub just experienced.
  • NZME: the publisher of the NZ Herald and Newstalk ZB cannily scooped up the surging BusinessDesk a few years back, and while it announced slimmed down profits, they’re still profits, and the company did good and well-timed work on its operating model years ago.
  • RNZ: Wholly government-funded, and flush with an eight-figure cash injection less than a year ago, and there have been no signals that its ongoing funding is in jeopardy beyond the same belt-tightening expected across government.
  • TVNZ: it sits in the same market as Three, but from a position of towering strength and adroit investment – along with a $100m or so in cash. It also sharply appointed its well-regarded head of commercial Jodi O’Donnell to CEO recently, probably the single-best person in the country to navigate this very tricky environment.
  • Sky TV: the most tantalising question of all: what will Sky make of all this? It has just announced some strong advertising figures, and is putting a bunch of sport onto its rebranded Sky Open channel. Newshub won’t be making its 5.30pm news product any more, and while The Spinoff understands it has previously explored moving its news production contract to TVNZ, it’s clearly leaving its options open. Is there a play to use a news product to take over Three’s position in our minds and living rooms? There is. A spokesperson for Sky supplied a statement expressing sincere sorrow about events at WBD. Intriguingly, it goes on to leave the door well open to maintaining or even expanding its role in the local news ecosystem. “We know the importance of news to our customers and the importance of plurality of news in New Zealand generally, and as a New Zealand broadcaster we are keen to explore how we might continue to play our part in delivering strong local news.”

For all that, the advertising market for domestic media remains mostly dismal, with digital platforms hoovering up 90c in every dollar of digital revenue. Newsroom co-editor Tim Murphy was not wrong when he pointed out that “just a fortnight ago other media businesses told MPs their firms were also in ‘peril’ and needed help ‘this year’ and ‘now’. Stark. Desperate. So far, no response or action from the media minister. More journalism could go.” 

It’s true. So while no company seems in danger of disappearing, the steady attrition of news media will continue – unless there is some profound structural change to the industry.

This story was updated soon after publication with a statement from Sky TV, and to note that Paddy Gower Has Issues did not receive NZ on Air funding. The Spinoff regrets the error.

Keep going!