The country’s major media companies fear closure as their major source of income, advertising revenues, continues to shrink; a situation accelerated by Covid-19.
Can the government, via taxpayer funding, help media companies survive through the current crisis and in the future? This week, the Epidemic Response Committee, chaired by National Party leader Simon Bridges, heard from the heads of Stuff, NZME, TVNZ, MediaWorks, RNZ, Newsroom, The Spinoff, Businessdesk, Broadcasting, Communications and Digital Media Minister Kris Faafoi, and academic and former Herald editor Gavin Ellis.
Major media companies have asked their staff to take voluntary pay cuts. NZME has requested all staff on a salary of more than $50,000 per year take a 15 per cent pay cut for 12 weeks and has cut 200 positions. Company directors and chief executive Michael Boggs reduced their salaries by 20 per cent from March. In an NZX statement, Boggs said, “With the Alert Level Four lockdown in place, NZME is expecting April 2020 advertising revenues to be approximately 50 per cent lower than April 2019. While it remains impossible to predict with any accuracy the impact of the pandemic on NZME’s full-year financial performance, it is anticipated that revenue will be significantly down on the corresponding period in 2019.”
MediaWorks also asked staff to take a 15 per cent pay cut or face widespread redundancies.
Speaking to the Epidemic Response Committee, Gavin Ellis estimated that advertising revenue could drop between 50 and 75 per cent. The concern is that the revenue will not return, He said, “No medium is exempt from that. I am fearful if the financial standing of the owners of MediaWorks and Stuff decline sufficiently, they may be minded to follow Bauer and simply close New Zealand operations. We must ensure that doesn’t happen.”
While Bauer had refused to take the government’s wage subsidy, its decision to shut down still cost over 200 jobs.
Suggestions during the Committee hearing ranged from allowing the Stuff NZME merger to go ahead to having the government provide immediate cashflow for the media companies and organisations to survive in the short term.
Communications and Digital Media Minister Kris Faafoi said a short-term solution could include moving government advertising towards local companies and reducing the transmission costs for broadcasters. He agreed that the need for a plurality of voices in the media was essential. He also pointed out that Bauer had decided to leave the New Zealand market before the coronavirus crisis hit and he defended the decision to shut down magazines and some community newspapers, saying the government based the decision on public health principles.
He also said the government will make announcements within a week. It has not made any final decisions yet.
This morning on the TV3 AM show, Mark Jennings, head of news at TV3, said that the industry needed immediate help to survive. He mentioned the role that private equity had played in the businesses and how that model needed to change for media companies to successfully move forward.
