Pattrick Smellie: Merger talks mean state of media landscape has Govt worried

The number of reporters, editors and sub-editors in 2018 have halved since 2006. Photo / File

COMMENT:

As 2019 draws to a close, it can sometimes feel as if journalists might go the way of wheelwrights, blacksmiths and chimney sweeps – just another job minced by technological change.

In the 2006 census, there were 4284 reporters, editors and sub-editors. By 2018, there were fewer than half that, with a total of 2061 print, radio and TV journalists or "other writers".

The reasons for this are well-rehearsed. Newspaper publishers globally failed to realise the threat to their traditional advertising revenues of social media platforms like Facebook and the search behemoth, Google.

Instead of valuing news, they gave it away as they moved their titles online, assuming those traditional revenues would follow. It went to Facebook and Google – and other online platforms – instead.

Meanwhile, television advertising is eroding fast as audiences defect to online streaming.

While large, valuable audiences remain for daily TV news bulletins, producing news is a high-cost, daily activity compared with re-runs of Seinfeld or sponsored reality shows.

Deep pessimism grips large parts of the news industry as a result of these entrenched trends.

While there may yet be a buyer for MediaWorks' loss-making TV3, those assets have been on the market literally for years.

And in traditional print media, NZME and Stuff have spent three years so far attempting to secure permission for a merger which they say is the only way they can hope to survive commercially, while stopping just short of describing themselves as distressed assets.

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Had they done so, the Commerce Commission could have ignored the impact of fewer news sources on the reading public. However, the financial vulnerability argument was never put and the courts backed the commission's view that "media plurality" - a range of media voices – was more important for New Zealand than the publishers' commercial challenges.

This, after all, is what makes journalists different from wheelwrights, who disappeared because wheels changed. The replacement for journalism is a vacuum ripe for propaganda, fake news, rumour, and rampant falsehood, all super-charged by digital platforms.

The chart (below) shows the stark nature of the traditional news publishers' challenges, with the decline in operating earnings far steeper for Stuff than NZME.

While both companies maintain positive cashflows, that comes from their traditional print businesses, which are shrinking. New revenue streams are not emerging quickly enough so far to make up the difference.

As AUT media researcher Merja Myllalahti noted in her latest New Zealand media ownership report, news publishers' shareholders these days are an unsentimental bunch.

"Private financial entities regard media companies not as structured wholes but as assemblages of business units that ought to be continually restructured to maximise profit rates."

Gone are the old family enterprises with values beyond commercial.

Hence, the merger bid is being revived with a new twist – an offer to the Government of a KiwiShare that would guarantee two competing news services under one roof, maintain regional titles, and employ certain numbers of journalists, reviewable every couple of years.

The fact that the Government is listening to what sounds like no more than a stopgap measure indicates just how concerned politicians are about the potential loss of big chunks of the traditional news media.

For a start, no government wants to preside over the wholesale closure of media titles, particularly in the regions. New Zealand First leader Winston Peters went so far last week as to claim the loss of a local newspaper as being akin to the loss of a local hospital. There would be political fallout.

And while politicians may be perfecting the art of going "over the heads" of the old media using new digital channels, they also know that political communications are not intended to inform but to persuade and lack credibility accordingly. They still need impartial news outlets, no matter how imperfect and irritating they may be at times.

NZME and Stuff have spent three years so far attempting permission for a merger. Photo / File

The new methods of outreach also carry insidious threats to open, democratic societies from malign foreign influence, whether from Russian trolls on social media or Chinese government-funded media filling the void left by waning local news publishers.

So, while politicians accept that what's happening to news media is the "creative destruction" of capitalism at work, the current Government is unwilling to let the chips fall where they may. Nor are they confident that existing mass media will be replaced in any timely way by the coterie of entrepreneurial news publishers that is now emerging.

Hence the proposal to restructure TVNZ, Radio NZ and NZ on Air into a public interest broadcasting entity more in the mould of Australia's ABC, and the willingness to hear NZME out on a revamped Stuff merger.

None of this is a guarantee of the robust, contentious local news media, whose importance to democratic norms is being recognised only as its loss looms.

News publishers must know that seeking government assistance to survive is a double-edged sword.

But the fact that the conversation is even happening shows how threatened the traditional media landscape has become.