MediaRoom column: Stuff will ask readers in three regions to pay for its local news; NZME's subdued annual meeting; plus The Detail podcast turns four
Four years after NZME banged up a paywall, and three years after Sinead Boucher bought the business for $1, Stuff has finally taken the plunge into asking readers to pay digital subscriptions.
But it will be no like-for-like competitor for NZME's NZ Herald Premium subscription, despite being broadly the same standard weekly cost of $5.
In 2019, the NZ Herald added senior journalists, a greatly expanded business team and high-calibre international syndication rights to produce extra, in-depth journalism for the people it was asking to start paying for the privilege of reading stories on its website.
It made much, correctly, of adding more for your money.
Stuff has gone the other way. Instead of competing for subscriptions by deploying its charges around the work of its substantial team of senior and national correspondents, investigations and high-profile contributors, it is putting its $5 paywall up around local or regionally gathered news.
That will come from its three remaining substantial newspaper newsrooms, The Press (Christchurch), The Post (Wellington) and The Waikato Times, with new websites under each of those brands being live from Saturday April 29, and subject to paywalls for readers to access local and regional news. There is some suggestion The Post's site might aspire to be a political news leader, beyond its Wellington catchment.
In a way it will be a battle between premium (NZ Herald) and sub-premium (Stuff) content.
The Herald's paywall has been a remarkable success under head of premium content Miriyana Alexander, with more paying subscribers at the end of 2022 than all NZME's print products and now raising about $14.6 million a year. Its digital subscriptions bring in 25-30 percent of the revenue of all its print newspaper subscriptions combined.
For a long time, Stuff attempted to make a virtue of not charging, serving the public for free, and retaining its position as the news website with the largest audience (about 2 million unique visitors a month on the Nielsen measure).
Now it will seek money on an unashamedly geographic basis. Targeting those interested in Wellington, Christchurch and Waikato news, and their environs, has its limits. As much as it could be theoretically possible, as one Stuff executive mused, that a reader might want to subscribe to more than one of the three, or all three, it seems unlikely many people will seek a news feed from those three disparate regions.
More importantly, by charging those interested in news from those areas only and keeping the existing big-platform Stuff website free to all, Stuff in effect cedes the potential value of Auckland and charging for Auckland news to NZME and the Herald. And everyone knows the scale and potential revenues of that market.
Stuff's chief executive, Sinead Boucher, was unavailable for interview on Friday to discuss the rationale, but it appears the business will judge how the three-legged paywall goes before considering extending the charging to other, smaller regional titles. There has been no word on a potential charge on the Stuff site further down the line.
So Stuff starts well behind its major print and digital news competitor, and even after smaller regional titles like the Otago Daily Times and Gisborne Herald, both with ever tighter paywalls for content they feel they have a lock on for their districts.
There should be millions of dollars in prospect if Stuff can get the sell right. But there could be blowback from Wellington, Christchurch and Waikato readers (or followers of politics if The Post is the home for Stuff's gallery stories) if news they have been used to viewing for free on Stuff suddenly disappears to the paywalled sites. And Stuff's press release on the new paywalls did not specify if people who are currently part of Stuff's membership donations scheme will get access to the gated content.
As Stuff launches its paywalls, NZME has responded with a 50c-a-week subscription to nzherald.co.nz Premium and is already basking in a big response this week.
As one critic pointed out on Twitter, it is a gutsy play for Stuff to start charging for content during a cost-of-living crisis, as many households review their TV and other subscriptions, and when trust in media is under fire for all titles. But with advertising revenues down and the economy verging on recession, something had to give.
(Anyone wondering why two of the three new mastheads being paywalled are The Press and The Post, but the third from the Waikato is not The Times to be consistent, might be interested to know that the Howick and Pakuranga Times independent local newspaper has long ago sown up the times.co.nz web address – once, at the turn of the century, even winning a trans-Tasman news website award.)
Meanwhile, at NZME
Stuff's main 'publishing' competitor, NZME, had a pretty sombre message for shareholders at its annual meeting this week.
The business had a relatively good result for its calendar year 2022 financial year, citing growth in digital subscriptions and digital advertising offsetting falls in other revenue lines.
But it showed graphics of its final quarter of 2022 and first quarter of this year that would have done little to excite a share price marooned on the NZX at about $1.06 before and after the meeting.
Here's a slide shown to shareholders by its chief executive, Michael Boggs:
The big dip shows, on the left, that NZME's advertising income has been in negative territory since around last October, is still off, and is tipped to just make it into positives in May.
On the right, the real estate market listings, which collapsed from September, are still 15 to 20 percent below last year. Boggs revealed the lost revenue from its real estate advertising pillar amounts to 60 percent of the company's revenue drops this year.
And though he said the forward advertising bookings for May "reflect an improving trend for NZME", that wording is sufficiently vague and inconclusive to drive an unsold house through.
It is common for businesses, particularly in media, to tell shareholders that though things have been bad and the economy has smothered revenues, the forward bookings hold out hope.
Boggs' own full-year results presentation in February did exactly that, telling shareholders March 2023 was "tracking to deliver growth over March 2022".
His graphic above shows that March, in fact, saw the business' advertising revenue fall behind March 2022 by about 5 percent.
So how much can be read into the May forecast and its "improving trend" is moot.
That didn't stop the Herald headlining its coverage of the annual meeting with "NZME upbeat on advertising market". A journalist from its BusinessDesk subsidiary, which contributed the article beneath that headline, subsequently tweeted that the original BusinessDesk headline was the rather more sanguine "NZME sees glimmer of hope in sluggish ad market".
Even then, that glimmer was there in February when its CEO held out hope for March.
The company does point out that in the first quarter of 2022 it had the one-off benefit of Ministry of Health Covid-related advertising.
And Boggs was hardly glimmering about the big hulking housing market in the room. "We expect it might be some time before we see an improvement in this market."
Like all advertising-dependent media businesses, NZME says "we are mitigating cost pressure through disciplined cost management across the business" to offset revenue falls.
"We have been operating in what has been a challenging economic environment, with inflation leading to increases in operating costs across the business. This is not unique to NZME."
Despite the weaker economic environment and lower business confidence, NZME expects its 2023 gross profit or EBITDA in the range of $59m-$64m for the 2023 full year. In 2022, that figure was $64.7m, so it could either get close or be about 9 percent lower than a year ago.
In 2021, amid the ravages of Covid and lockdowns, NZME achieved a $62.4m EBITDA and in 2020 it chalked up $66m.
Stephen Mayne, an Australian shareholder and analyst, asked chair Barbara Chapman if the company's low market capitalisation of A$175m left it vulnerable to a takeover bid from a big Australian player like Nine Entertainment or News Corporation. Chief financial officer David Mackrell replied there would theoretically be no impediment other than Overseas Investment Office approval. Boggs noted that Nine had bailed out of New Zealand just three years ago when it sold Stuff to Sinead Boucher.
Chapman agreed with another shareholder that the company's share price was too low. "I think we would agree with all of you that the share price could be better and should be better … We are not travelling too badly, but there is a definite sentiment in the market on all shares, but particularly on the media sector as well."
Happy birthday to us
Not to Newsroom, which turned six in March, but to our daily podcast, The Detail, produced for RNZ, which reaches its fourth birthday on Saturday.
The Detail is a market leader, consistently producing top-class explainers and in-depth news podcasts for RNZ and newsroom.co.nz. It is rightly among the finalists for the Voyager Media Awards podcast of the year (recurring shows) to be announced on May 27.
Here's our current team at The Detail, standing proudly before a glorious RNZ billboard noting the podcast has had 15 million downloads.
Happy birthday, team, and hugely well done.
