New Zealanders are prepared to pay for online news, says NZME chief executive Michael Boggs as the company gears up to launch digital subscriptions.
New Zealanders are prepared to pay for online news, says NZME chief executive Michael Boggs as the company gears up to launch digital subscriptions.
Boggs confirmed to analysts today that NZME would have a paywall for its news sites in the market by the end of the year.
Under NZME's model, day-to-day news and current affairs will be provided free of charge and premium in-depth analysis and opinion will require a paid digital subscription.
NZME - which owns the New Zealand Herald, the Northern Advocate, Hawke's Bay Today, Bay of Plenty Times, Wanganui Chronicle and the Rotorua Daily Post newspapers, and Newstalk ZB - delivered its half-year result this morning, posting a trading EBITDA of $23.2 million.
The company, which also owns radio stations ZM, Radio Sport and The Hits, had performed well in challenging market conditions and has upped its investment in new revenue sources, its chairman Peter Cullinane told the NZX.
The NZ Herald weekly brand audience has grown 10 per cent from the first half of 2017 and engagement on the Herald website (measured as time spent per visit) is up by 8.5 per cent.
New digital classified portals OneRoof, Driven and Yudu had enjoyed strong audience growth and NZME's radio audience was stable, the company said.
The NZ Herald's daily brand audience.
NZME chief executive Michael Boggs said the company had invested $3.1 million in new ventures such as OneRoof in the first half of this year.
"We're absolutely finding that the amazing content that we produce in print, digital and radio every day is actually giving us the opportunity to introduce these new ventures to our audience and they're showing us they like it," he said.
"We've had phenomenal growth in each of those ventures and the audience is coming to them... we think there's something very powerful for shareholder value into the future."
Along with these new revenue streams, NZME is gearing up in the second half of the year to introduce a paywall for its digital news sites.
Just this week, nzherald.co.nz had introduced a new registration portal for readers, allowing them to customise their experience on the website.
NZME is investing in new digital platforms, OneRoof, Yudu and Driven. Photo / NZME
"Our team is really well behind it, they're absolutely committed to continuing to produce quality in-depth journalism and want to continue to do that," Boggs said.
"Externally, we've got our audience saying 'we want you to do a better job, we want to continue to engage in your content and we are prepared to pay for it if you can deliver on that'."
Boggs said that other publishers around the world had converted about 5 to 6 per cent of its audience to paid subscribers over time.
Applying this measure to nzherald.co.nz - which has a monthly audience of about 2 million people - that would snare the company a significant digital subscriber base, although Boggs said that he wasn't expecting to reach that point straight out of the gate.
"We think people's propensity to pay will increase over time as well, and therefore that 6 per cent will be able to increase over time."
NZME - which reaches an audience of 3.3 million New Zealanders, or nearly 80 per cent of the population over the age of 10 - reported trading revenue in the six months to June 30 of $185.7m, down 3 per cent on the same period in 2017.
Trading earnings were $23.2m, down 18 per cent compared with the first half of 2017.
The company posted a trading net profit of $5.5m - down 44 per cent on the prior period - and a net profit after tax of $3.7m, down 44 per cent when compared with the first half of 2017.
The firm will pay a 2c fully-imputed dividend for the half-year period.
Boggs said the company was pleased to have kept first-half trading revenue within 3 per cent of the same period in 2017, given the "difficult market conditions" and a decline in print advertising.
NZME's earnings before interest, tax, depreciation and amortisation of $23.2m for the six months was ahead of rival Stuff, which posted ebitda of $19.9m over the same period.
NZME's revenue for the half was also ahead of Stuff's, at $185.7m versus $143.1m.
The companies went to the Court of Appeal earlier this year, challenging the Commerce Commission's rejection of their merger.
A decision is expected by the end of the year, although it will remain subject to shareholder approval.
NZME said that digital advertising revenue was continuing to grow across all its products, outperforming others in the industry.
"While we are broadly satisfied with our revenue performance, our earnings were lower partly due to our strategy to increase spending in specific areas to pursue medium-term growth," Boggs said.
"These investments are integral to achieving our medium-term growth objectives."
Boggs said that NZME was monitoring economic conditions in the second half of the year and that in the third quarter advertising revenue decline was in line with that for the first half.
