Media-Communication Ownership In Aotearoa-New Zealand
Legacies And Contemporary Trends
- Wayne Hope & Merja Myllylahti
For Left intellectuals and political activists media-communication ownership is a matter of strategic importance. Under capitalism the means of communication are inseparable from the means of production and financial circulation. Media-communication industries are a growing sector of capital accumulation while media-communication technologies provide the infrastructures for economic, political and social life. In this article we evaluate the history of media-communication ownership in Aotearoa–New Zealand, with reference to three interrelated concepts. The first of these is the public sphere. The idea of a public sphere is made possible by the guaranteed freedoms of association, expression and publication. Citizens, groups and intellectuals are able to confer without restriction on matters of shared interest. In principle, public sphere activities should proceed independently of State prerogatives, religious authority and commercial influence. In practice, public sphere activities may fall short of these underlying principles. Thus, the Western, 18th Century bourgeoisie saw itself as the bearer of Enlightenment reason and constitutional freedoms. From the mid 19th Century, however, trade unionists and the early women’s movement demanded a fully franchised electoral system. Furthermore, early industrial capitalism and the bourgeois public sphere were vulnerable to oppositional challenge from socialist points of view. In Western societies the subsequent formation of representative political parties, trade union organisations and tax funded institutions of health, education and social welfare were the outcomes of political struggles for universal rights and entitlements. With the arrival of neo-liberal policy regimes in the 1980s, bourgeois and oppositional public spheres came under siege.
Capital; Globalisation; Convergence
Clearly, State and religious prerogatives threaten mass mediated public spheres. However, concentrations of private media ownership can also have malign effects. Today, the mainstream print and broadcast media are capital intensive. A few major players dominate each medium and this narrows the range of discussion on economic, political and social issues. News and current affairs journalists, for example, shape stories and programme formats around elite sources (e.g. business organisations, Cabinet Ministers, senior public servants and military personnel). Media moguls themselves may influence media constructions of public issues by hiring and firing news editors or pulling stories. More routinely, mogul influence is reflected in the deferential behaviour of media managers and the self-censoring journalist. Notoriously, media moguls may actively and collectively advance causes which are conducive to their commercial and ideological interests (e.g. neo-liberalism, foreign wars, anti-immigration prejudice). Additionally, corporate media reliance on advertising revenue perpetuates a climate of consumerism rather than one of public reason and reflection. Across mainstream media the need to render audiences to advertisers precludes content which might be unnecessarily complex or controversial in areas of cultural expression, aesthetic appreciation, scientific and sociological knowledge.
The second concept which informs our analysis is globalisation; the growing interconnectedness of human activities across geographic space. From a “top down” perspective corporations with global reach fragment national political economies, while supra national institutions such as the International Monetary Fund (IMF), World Trade Organisation (WTO) and World Bank strongly influence national policy settings. In these circumstances political public sphere formations are no longer reliant upon national communication infrastructures. National media systems incorporating print, film and broadcasting have been hollowed out by global media-entertainment corporations. Robert McChesney notes that “whereas media systems had been previously national before the 1990s, a global commercial media market had emerged in full force by the dawn of the 21st Century” (McChesney, 2000, p. 7). Similarly, national telecommunication infrastructures have become incorporated within the balance sheets of transnational telecom conglomerates.
Our third influential concept is convergence. The digitisation of voice, data, sound and image into binary code has effectively conjoined the technological capacities of mass media, telecommunications and computers. Correspondingly, these domains are blurred by evolving patterns of ownership convergence. This process is exemplified by the growth of commercial ventures across the fields of computer hardware and software, computer-mediated communication, broadband satellite transmission, mobile telephony, electronic games and social media. With these concepts in mind we will now provide a chronological account of media-communication ownership in New Zealand.
From Colonial To National Media
From 1840 to 1880 colonial capitalism was established in each New Zealand province. The provinces were then nationally coordinated through a central Government strategy of overseas borrowing for public works and infrastructure. The early modern political economy was directed by a ruling landowner oligarchy and shaped by the contradictory pressures of national development and dependence upon Great Britain. In the absence of an urban-industrial bourgeoisie, public communication was dominated by the pronouncements of regionally based businessmen-politicians.
Early daily newspapers such as the Otago Daily Times, the Christchurch Press, the Evening Post and the New Zealand Herald were entrenched family monopolies tied to insular business communities. Politicians, businessmen and newspaper owners were often the same people. Readerships were informed about the virtues of colonial advancement, moral rectitude and deference to the monarchy. Editorials contained occasional outbursts against Maori, vagrants, unions and politicians from other provinces. Telegraph installation enabled the birth of the United Press Association (UPA) in December 1879, the forerunner of the New Zealand Press Association (NZPA). The resulting formats and news gathering practices turned newspapers into dry annals of record rather than forums of political debate.
After the 1880s’ depression, manufacturers, small traders and small farmers mobilised against major landowners, bankers and merchant-financiers to elect a succession of Liberal-Reform governments. Their long term achievement was the introduction of a modern pastoral economy. Large estates were sub-divided; rural credit was Government guaranteed and technological innovations such as refrigeration diversified farm production (Simkin, 1951, p. 169–71). Politics became more democratically inclusive. Landowner multiple voter rights were abolished in 1889 and women gained the vote in 1893. As the franchise widened, previously excluded economic and social perspectives began to inform Government policy. A raft of labour and social reform legislation throughout the 1890s signified the beginnings of a Welfare State and an industrial relations system (Martin, 1981, pp. 14–18).
The impact of the depression undermined previously dominant discourses and gave social resonance to the views of Liberal politicians. In 1890, as Editor of the Lyttelton Times, William Pember Reeves expounded the philosophy of benevolent State socialism (MacIntyre and Gardner, 1971, pp. 191–94). The election of the Liberals changed the prevailing climate of opinion. Reeves’ controversial opinions became institutionalised as the New Zealand political economy was transformed. This allowed other newspapers such as the New Zealand Times to further articulate Reeves’ philosophy. However, under later Reform governments dominated by farming interests, editors of major daily newspapers espoused anti-socialist opinions and drove opposition papers out of business. Thus, the New Zealand Times was finally squeezed out in 1927 by the Dominion and the Evening Post (Scholefield, 1958, p. 20).
From 1900 to 1910 the expansion of pastoral capitalism spawned small towns, rural communities and papers of different kinds. Publications declined as road and bridge construction brought rural populations within the orbit of commercially focused regional papers. From 1910 to 1920 25 new titles were founded but 30 ceased publication. In the four main centres the only successfully established daily paper was Wellington’s Dominion. It was founded in 1907 and, as already noted, absorbed its major opposition the New Zealand Times 20 years later (Scholefield, 1958, pp. 19–20). Urbanised economic growth reshaped the ownership and management structures of provincial dailies. Politically involved proprietors gave way to staid newspaper companies with new divisions of labour.
In small and medium size towns printer-editors were succeeded by managing editors who in turn gave way to a new strata of production executives. Central city newspaper buildings became staffed by printers, reporters and sub-editors along with departmental managers of production, circulation and advertising. Although these local divisions of labour were not elaborate, mass produced newspapers did resemble their overseas counterparts. The old broadsheet style was succeeded by pictorial lithographs, classified pages and a contents column. Modern news formats relied upon the UPA (later the NZPA). These organisations were staffed by the owners and executives of newspapers rather than professional journalists. These were men of commerce who regarded the press as a paternal institutional voice. Individual columnists were thus expected to contribute to newspaper identity rather than to journalism as a profession distinct from the news industry. Most NZPA news copy emphasised fact over argument and this became the house style for reporters nationwide.
From 1916 unions in larger cities and mining areas rallied behind the Labour Party. Labour politicians, economists and their supporters confronted a conservative press and a nascent radio broadcasting system which proscribed innovative journalistic practices and general public discussion. Official broadcasting regulations were gazetted in 1923 and policed by the Post and Telegraph Department. From the outset all radio content was subject to official restrictions and ministerial approval. In January 1932 it was announced that control and operation of a National Broadcasting Service would be vested in the State (McKay, 1953, p. 31). Thus, official broadcasting was basically an arm of Government with no independent status. National regulations authorised an institutional voice that equated the public with public service and public service with protection of the so-called public good. This precluded the idea that public information might be a resource for social reflection, popular argument or intellectual dissent. In this regard Reform-Coalition governments of the 1920s and 1930s initiated broadcasting policies which reflected the conservative, “respectable” values of agrarian property owners and the lower middle class.
Meanwhile, newspapers such as the Maoriland Worker, the Weekly Herald, the Transport Worker and the Transport Worker defined the contours of a marginalised oppositional public sphere embedded within the developing culture of working class activism, socialist thought and Labour politics. During the 1930’s depression such perspectives entered the mainstream via churches, women’s groups, literacy journals and the less regulated, more populist ‘B’ radio station programmes. Widely felt experiences of unemployment and working poverty dislocated the governing orthodoxies of patriotism, social respectability and fiscal austerity. However, in the 1935 election year, conservative, family-owned dailies railed against the Savage-led Labour Party and ‘B’ station operators were harassed by the Government’s Broadcasting Board. No election candidates were allowed to broadcast between June and November. When the Reverend Colin Scrimgeour broadcast “The Christian Road To Socialism” on 1ZB, it was jammed by the Post and Telegraph Department (Day, 1994, pp. 200–205).
State Radio Versus Tory Papers
The newly elected Government, led by Michael Joseph Savage, introduced exchange controls, import licensing and protective tariffs for local manufacturers. Agricultural production for export was supported by overseas Government marketing and a guaranteed price scheme for dairy farmers. Labour’s philosophy was that if all available resources were used to create public goods and services this would expand employment and widen the tax base needed to fund the macro-economic system. The consequent redistribution of income from taxpayer to beneficiary combined with housing and public works programmes underwrote the “Kiwi” version of the Keynesian Welfare State. From the 1940s this historic accomplishment became the framework for economic growth, aggregate demand, redistribution of revenues and national value consensus. The Labour government also integrated unions within the State machinery. In 1936 compulsory arbitration was re-established and union membership was legally compulsory. Subsequent legislation entrenched the principle of the eight hour day and the 40 hour week. Such measures formed part of a historic class compromise between capital and labour.
Labour’s Broadcasting Act of June 1936 replaced the New Zealand Broadcasting Board with the National Broadcasting Service (NBS). All but two of the regional ‘B’ stations were purchased by the Government and absorbed within the National Commercial Broadcasting Service (NCBS). Prime Minister Savage perceived radio as a counter-balance to the anti-Labour press. From 1936 the non-commercial YA stations provided regular Parliamentary broadcasts. This enabled Labour politicians to publicly argue for their legislative programme against conservative opponents. By 1938, two thirds of Parliament sitting time received broadcast coverage. However, Labour’s egalitarian ideas did not extend to the structure of the communication itself. Neither the NBS nor the NCBS employed independent news staff. National news, produced in the Prime Minister’s Office, was to be broadcast as received, without alteration or omission (Day, 1994, pp. 213–215, 219, 233).
In August 1936 Professor James Shelley was appointed Director of the NBS. He styled himself as a cultural and educational administrator of national radio. Listeners were introduced to drama, art commentary, live and recorded music. Shelley’s apolitical conception of public communication stressed the ideals of social cohesion, individual tolerance and aesthetic refinement (Day, 1994, p. 220). Meanwhile, Savage allowed Colin Scrimgeour sole administrative charge of the NCBS. He could hire his own staff, broadcast his own programmes and was beyond day to day Ministerial censorship. Such autonomy disappeared after Savage’s death in March 1940. In 1943 new Prime Minister Peter Fraser dismissed Scrimgeour for contravening wartime censorship regulations. Scrimegeour had helped initiate a nationwide commercial radio network. Rural and urban listeners were brought together to form a common audience. Over the post-war period the familiar ‘ZB station format included soaps, serials, popular music, sport commentaries and household product promotions. From April 1946 the NBS and the commercial divisions were merged into the New Zealand Broadcasting Service (NZBS). The Prime Minister’s Office retained the right to produce New Zealand news content and to veto controversial material (Day, 1994, p. 247, 283). In 1950, newly elected National Prime Minister Sidney Holland announced that news would not be prepared by his officials but by the Tourist and Publicity Department (a portfolio he subsequently assumed). In an era of Cold War consensus and cultural conformity, critical questioning of politicians and their policies was never countenanced. Indeed, during the 1951 waterfront lock-out, printing presses were confiscated, private radio broadcasts banned and pamphleteers arrested. In these circumstances, it was not surprising that the principle of journalistic autonomy developed no professional voice and cultural authority.
From Family To Corporate Ownership
From about 1960 old family configurations of agrarian and mercantile capital became transformed through corporate ownership. Among New Zealand’s 12 largest listed companies in 1962, individual shareholders accounted for 57% of the holdings and 40% of the capital (Simpson, 1984, p. 61). By 1974 individually held shares accounted for only 22% of the capital in large holdings (Pearson and Thorns, 1983, p. 57–58). The Stock Market consequently saw a trend toward interlocking directorates culminating in the Fletcher-Tasman-Challenge merger of 1980 (Jesson, 1980, pp. 38–39).
Political debates and conflicts played out across a nationally constituted public sphere subjected to growing corporate and commercial pressures. Thus, the 1960s saw a shift from family to corporate press ownership. By 1969 about 75 of the 100 publications registered in New Zealand were owned and operated by nine major firms of which three later dominated; New Zealand News, Wilson and Horton and Independent Newspapers Ltd (a partly Murdoch owned subsidiary) (Street, 1983, pp. 14–17). By 1980 they owned 70% of all daily papers. Over the same period the growth of print-based news journalism strengthened public sphere principles. Thus, in the 1960s the Parliamentary Press Gallery supplemented NZPA news gathering. Gallery correspondents provided day to day coverage of Parliamentary proceedings along with head office material from commerce, industry, agriculture, finance and public service departments. Although this dependence upon primary news sources did not necessarily foster critical journalism, the available range of commentary and genres was extended. Whereas the NZPA simply recorded the facts of a given event or situation, senior Gallery journalists sought to convey understanding by interpreting “accepted” facts. By 1976 45 journalists were accredited to the Press Gallery. The major metropolitan newspapers each had between one and six journalists reporting daily (Garnier, 1978, p. 150).
Meanwhile, the emergence of a semi-independent broadcasting system also contributed to the national public sphere. The 1961 Broadcasting Act and the birth of the New Zealand Broadcasting Corporation (NZBC) ended formal Ministerial control of the airwaves. Although NZBC bureaucrats were deferential to Government authority and fearful of public opinion, broadcast journalists could interpret political issues. In the context of news and current affairs, the prevailing notion of “balance” reinforced the primacy of officially sourced facts over contesting points of view. When controversial policy matters were addressed, senior politicians could reserve the right of reply. By the late 1960s, however, the NZBC had conceded that all available viewpoints need not be aired on a single programme. This allowed radio programmes such as In the News, Checkpoint and Viewpoint to provide political commentary. On television, the first series of Gallery in 1969 introduced Brian Edwards as an all-purpose interviewer who could challenge Ministers and other representatives of official authority on the public’s behalf. Journalistic autonomy was given further institutional support by the 1973 Broadcasting Act. Under the 1972–75 Labour government the old broadcasting portfolio was abolished in favour of an administrative structure similar to the independently chartered BBC model. Radio New Zealand and the newly established two channel Television New Zealand were established as separately run organisations.
With National’s election victory of 1975 New Zealand broadcasting became re-centralised. The 1976 Broadcasting Act integrated Radio New Zealand, TV1 and TV2 under a single board which was answerable to the Minister. Despite these changes, the traditional order did not return; governments could no longer administer news organisations and “manage” news independently of media professionals. As Prime Minister Muldoon threatened broadcasting revenues and vilified the likes of Simon Walker, Tom Scott and Ian Fraser, current affairs journalism itself gained further national profile. On television the stock figures of journalists and politicians were at the foreground of public life. This was especially evident in the interview format whereby audiences became accustomed to the adversarial dimensions of economic and social policy debate. Occasionally, the format was widened to include representatives of trade unions and various “protest” groups. Programmes such as (the original) Close-up, Dateline Monday and News At Ten combined interview and studio discussion formats with investigative pieces. These developments reflected the growing centrality of television to Kiwi culture. All the major issues of the time – equal pay for women, Maori land rights, Vietnam, forest conservation and sporting contact with apartheid South Africa – were played out on screen. Urban newspapers changed their style and format accordingly. Televisuality and the inter-media competition for advertising forced press editors to run large news photos and bold type headlines. On some newspapers and magazines such as the Auckland Star and the Listener, journalists tackled volatile topics such as race relations, gang culture, drug use, student protests and police corruption.
Neo-Liberalism, Capitalist Restructuring & Media-Communication Ownership
From July 1984 Labour’s election victory over the Muldoon-led National government facilitated major changes in the structure of New Zealand capitalism. Directorial elites, institutional investors and shareholders were already caught up in an unprecedented wave of mergers and acquisitions. Corporate creditors used local or global markets to activate passive shareholders against target companies through buyouts and offers of higher dividend returns (Jesson, 1987, pp. 74–81). From 1984 to 1987, the fourth Labour government accelerated this process by cutting tariffs, deregulating the finance sector and floating the New Zealand dollar. Consequently, banking, finance and finance related investment expanded and industrial activity declined. These changes in economic structure subsequently transformed the role of the State. Under Finance Minister Roger Douglas and with Treasury backing, Government departments such as telecommunications, lands and survey, forestry and mining were transformed into commercial enterprises. These measures prefigured a full scale privatisation programme after Labour’s re-election in 1987 and National’s first term of government in 1990. Directors from New Zealand’s major public companies administered newly formed State-owned enterprises and presided over their subsequent absorption into the corporate sector.
Takeover activity throughout the corporate economy led to further concentrations of press ownership. From 1984 to 1987 three major players – New Zealand News (Brierley), Independent Newspapers Ltd (INL) and Wilson and Horton – dominated the newspaper market. In March 1987 Murdoch’s News Corp assumed a 40% interest in INL. During 1989 its holdings increased to 49% (McGregor, 1992, p. 34). In August of the following year the Commerce Commission approved a rapid expansion in INL holdings. This resulted from the NZ News (Brierley) decision to sell off its Auckland suburban papers along with the Auckland Star and the Sunday Star. New Zealand was moving from a triopoly toward a duopoly of newspaper ownership. Over the same period cross-media ownership started to assume a transnational configuration that stretched into the telecommunications domain. Four pivotal events initiated this process; the deregulation of broadcasting (1989), the entry of TV3 and pay television (1989), the sale of Telecom (1990), and the lifting of restrictions on foreign media ownership (1991). In July 1987 a report prepared by Treasury and Trade and Industry officials recommended that broadcasting should have its entry barriers lowered, its ownership restrictions freed up and a value placed on the use of the airwaves. In this environment Television New Zealand (TVNZ) faced competition from private television within a finite advertising market at the same time as the broadcast licensing fee was declining as a proportion of annual revenue (Bell, 1995, pp. 182–183). In these uncertain commercial conditions TVNZ executives extended their holdings to include Sky Television (16.3%), Clear Communications (15%), a Singapore-based Asian business news channel (29.5%) and a Fijian State-owned television channel (15%). The entry of TV3 was initially unprofitable as local shareholders went bankrupt. As of 1994 the new principal shareholders were Canadian media conglomerates Canwest 10%), Westpac (48%) and an official receiver (32%) (Rosenberg, 1994, p. 6). The sale of Telecom in June 1990 enabled American buyers Bell Atlantic and Ameritech (34.2% each) to enter the pay television market. Together with Time-Warner and Telecommunications Inc they bought 51% of Sky (Dominion November 21, 1997, p. 13). Correspondingly, in 1996 Radio New Zealand’s 41 station commercial network was sold to a consortium of Wilson and Horton, Australian Provincial Newspaper Holdings and the United States radio giant Clear Communications.
Concentrations and convergences in corporate media ownership along with the marginalisation or disappearance of publicly-funded media organisations met with little resistance. These parallel developments thinned out news and current affairs journalism and foregrounded neo-liberal constructions of economic and social policy. The demise of Brierley-owned NZ News, for example, precipitated the closure of the Auckland Sun, the Auckland Star and the Christchurch Star. Auckland and Christchurch joined Dunedin and Christchurch as one paper towns in which neo-liberal editorial opinions framed public policy reportage. After 1989 Radio New Zealand management received 15% salary cuts; other staff either took pay cuts or were placed on part time contracts. At TVNZ competition with TV3 for the advertising dollar resulted in major layoffs for news desk and production staff. In December 1990 regional news services in Christchurch and Dunedin were removed as were late Sunday night news shows (Scott, 1995, pp. 47–48).
Radical economic restructuring was administered through a supervening State-corporate network insulated from traditional pressure groups and representative institutions. Consequently, a small cluster of primary, legitimated news sources framed mainstream news reportage. Thus, as a result of their growing influence on New Zealand’s political economy, the major corporations were able to multiply their sources of media authority. High profile directors and investors made authoritative announcements about economic conditions and prospects. During the late 1980s corporate leaders publicly appeared on behalf of State-owned enterprises and became involved in the activities of powerful lobby groups such as the Business Round Table. As each set of “reforms” was completed such organisations identified for journalists the next stage of the “free market” agenda. News coverage would focus only upon the “reform” package of the moment. Over time, this made the policy course being followed appear necessary and inevitable.
Promoting Neo-Liberal Agenda
Promotion of the neo-liberal policy agenda was abetted by a changing television news culture. Content analysis of prime time TVNZ news undertaken by Joe Atkinson for the period 1985–1992 demonstrated a marked decline in item length and a preponderance of brief sound bites (Atkinson, 1994, p. 152). Over the same period the emphasis shifted from issues relating to politics, economics and industrial relations towards those of crime, human interest and natural disaster. These findings were confirmed and updated by Daniel Cook’s analysis of One Network News from 1984 to 1996. Over this period the average news item length fell from 90 to 70 seconds and commercial breaks increased from 12 to 23% of the entire bulletin (Cook, 2001, pp. 140–44). These trends reflected commercial objectives. Advertisers favoured a fast paced bulletin covering many subjects rather than a few issues in depth. Longer commercial break time maximised the obtainable revenue within each broadcast.
It is important here to recall and appreciate the unfolding choreography of the mass mediated public sphere. In the afterglow of Labour’s July 1984 election victory, Prime Minister David Lange occupied centre stage. His rhetorical tone and gestures generated a sense of public confidence. At the same time, Finance Minister Roger Douglas imbued the news culture with the sense of a new age. The widely used shorthand term Rogernomics implicitly affirmed the appositeness of the new policy direction. In this environment the convergent neo-liberal perspectives of Labour and National generated intra-party opposition. Between 1989 and 1993 disenchanted National members (Liberals) and Labour members (New Labour) joined the Greens, Mana Motuhake and the Democrats under the Alliance Party banner. They mobilised popular support for a referendum in which a winner take all electoral system was replaced by a mixed member proportional (MMP) alternative. Media opposition to the neo-liberal policy agenda was inchoate and fragmented. Beyond the mainstream media domain, the Republican, Monthly Review and various trade union broadsheets documented the growing influence of corporate capital and the effects of economic restructuring upon working class communities. From 1992 to 1995 the Political Review, Wellington’s City Voice and Alliance newspapers informed and mobilised activists during local body elections, general elections and the campaign for MMP. Broadsheet magazine detailed the impact of neo-liberal policies on working women, beneficiaries and their families. Radio Aotearoa, provincial iwi stations and publications such as Mana magazine continued the Maori cultural renaissance of the 1970s.
Global Absorptions Of Economic Sovereignty And Media-Communication Ownership
Over the last two decades nation political economies and communication systems have been reconfigured by the globalisation of capitalism, and the spread of neo-liberal policy regimes. Within Aotearoa–New Zealand this situation is obscured by the superficiality of mainstream news reportage and by commercialised depictions of national identity. From the early 1990s New Zealand domestic business activity was routinely incorporated within the flows and networks of global capitalism. Between 1989 and 2008 foreign controlled share market value increased from 19 to 41%. From 1989 to 2006 foreign direct investment increased from $1.9 billion to $82.7 billion. These funds were focused on the purchase of existing assets rather than the creation of new productive capacity. Between 1997 and 2006, for example, transnational corporations made $50.3 billion in profits from their New Zealand operations; yet only 32% of this sum was reinvested domestically. This trend reflects a marked decline in manufacturing output as a percentage of gross domestic product (GDP) (from 19% in the early 1990s to 16.2% in 2004 and 15.1% in 2006) (Gould, 2008, p. 27). Financial activity is no longer nationally coordinated. By 1996 six of the seven major banks and mine of the top ten insurance companies were overseas-owned (Rosenberg, 1998). As of 2008 Australian-owned banks within New Zealand were repatriating approximately $2.5 billion per annum (Gould, 2008, p. 28).
At the same time global and pan-regional media communication conglomerates have proceeded to colonise remnants of the mass mediated public sphere. Recent press ownership trends exemplify this process. From 1995 to 1998 Wilson and Horton, local owners of the New Zealand Herald, relinquished their shares to Independent Newspapers Plc (later to be called Independent News and Media, INM). In April 2001 INP sold its shareholding to Australian-owned APN News and Media (Rosenberg, 2008).
In June 2003 Fairfax holdings paid $1.88 billion for Independent Newspaper Ltd’s press and magazine titles. This was to have a major impact upon journalism and news culture. At that time Fairfax was Australia’s largest print and media group with a $10.2 billion valuation. In 2006 they paid $700 million for Trade Me in order to increase online holdings, exploit electronic commerce and to capture the migration of classified advertising (Thompson, Hope, Mollgard and McCullagh, 2009). Fairfax’s strategy has been to insulate, centralise and restructure New Zealand newspaper operations. During 2006 they withdrew from the NZPA’s pooling system whereby member newspapers would share news content with each other (Kiwiblog 7 April, 2011). In June 2008 Fairfax announced a new Auckland-based Website www.businessday.co.nz. Content was drawn from the Australian sister site the Independent, www.stuff.co.nz, the Sydney Morning Herald, the Melbourne Age and other non NZPA sources (Rosenberg, 2009, p. 200). In July 2008 Fairfax announced the establishment of hubs in Wellington and Christchurch to centralise the sub-editing of features, world and business news across all major titles. In August of the same year they announced 160 New Zealand redundancies and introduced a new editorial management structure to oversee both the Sunday Star Times and the Sunday News (Rosenberg, 2009, pp. 201–202).
Fairfax’s commercial strategies are not unique. Sky Network Television has weakened and partly colonised New Zealand’s television domain. For most of the 1990s Sky’s corporate ownership structure was complemented by TVNZ’s 16.3% holding. In 1999 most of this share was brought out by News Corp-controlled Independent Newspapers Ltd which then owned 49% of New Zealand’s daily newspaper circulation along with holdings in national weeklies, magazines and Websites (Rosenberg, 2002). This substantially weakened TVNZ’s commercial position relative to its competitors (Sky and Canwest, then owner of TV3). In November 2001 the Labour–Alliance government allowed Sky to broadcast TV1 and TV2 through its newly established digital network (Rosenberg, 2002). At that time INL controlled 66% of Sky shareholdings. In June 2003 INL used cash from the sale of print holdings to Fairfax to purchase Sky’s remaining shares. Effectively, therefore, INL’s majority owner News Corp increased its commercial influence over Sky operations and its commercial share of Sky revenues. News Corp’s dominance was extended when INL merged with Sky in 2005. Commercial returns were generated by News Corp’s exclusive live coverage rights to rugby league, Australian and British rugby league, test and one day cricket, premier league soccer, majors tennis and majors golf. In February 2006 Sky paid $30.26 million for the free to air channel Prime Television New Zealand Ltd (Thompson, Hope, Mollgaard and McCullagh, 2009). This allowed Sky to monopolise rebroadcast rights for live sports while competing for free to air television ratings. Additionally Sky channels and networks were regularly promoted to Prime viewers. By 2007 Sky had over 600,000 residential subscribers (Thompson et al., 2009).
Transnational Corporate Colonisation
Colonisation of New Zealand’s audio-centred public domain forms part of a similar cross-media ownership pattern. Recent inter-corporate manoeuvres undertaken by Canwest, MediaWorks, APN and Ironbridge Capital have reshaped television and radio markets simultaneously. Canwest was Canada’s largest media conglomerate with film, television and other offshore holdings in Ireland, Northern Ireland, the United States and Australia. Between 1994 and 1996 they assumed control of the consortium which was running TV3. In 1997 Canwest established TV4 (six years later this was relaunched as the music video channel C4). Also in 1997 Canwest began to make further, extensive radio acquisitions. In July they purchased More FM’s eight station radio network for $33 million. By December 2000 Canwest had purchased More FM’s parent company Radio Works. Their stable included Radio Pacific, The Edge, The Rock and Solid Gold networks plus 22 other local stations. Future acquisitions of Gisborne Media (February 2005) Queenstown’s Q92FM; including six frequencies (February 2006) and two Marlborough stations (late 2007) further expanded Canwest’s New Zealand holdings under the rubric MediaWorks (Mollgaard and Rosenberg, 2010, pp. 89–91).
Opposing Radio Works is another branch of transnational corporate capitalism, The Radio Network. It originates from the 1996 sale of Radio New Zealand’s commercial ZB stations to The Radio Network Ltd (then owned 33.3% each by Australian Provincial Newspaper Holdings, Wilson and Horton Ltd and Clear Channel Communications). In November of that year their holdings expanded with the purchase from British Media Company GWR of Prospect, a network of companies which included 12 stations and the Independent Radio News and Sports service. This initial colonisation process was completed in April 1997 when The Radio Network discontinued its use of Radio New Zealand’s news service. By 2002, after further acquisitions, the Radio Network had established itself as a second, transnational commercial radio operator with 53 stations with over 50% of national advertising revenue (Mollgaard and Rosenberg, 2010, pp. 87–88). These developments have entrenched the commercialisation of New Zealand radio broadcasting. The duopoly identified here controls approximately 85% of national audiences and jointly owns The Radio Bureau; a research and sales agency which provides a single source of services for advertising agencies. Advertising campaigns and promotions across stations nationwide are built around demographically targeted formats such as rock, easy listening, coast, classic hits, newstalk and radio sport. Listeners are positioned within market segments and addressed as proactive consumers. Those wishing to escape commercially driven radio formats can listen to Radio New Zealand, Concert FM and/or local clusters of community access stations.
In 2007 Canwest’s 70% stake in MediaWorks was sold to HT media as a subsidiary of Australian private equity group Ironbridge Capital for $790 million. Ironbridge Capital’s media investments within New Zealand are complemented by holdings in environmental waste management and a major rest-home chain. Since the 2008 financial collapse, global recession and falling advertising revenues have raised concerns about Media Works financial position. In the year to 2009 they posted a $314 million loss (Mollgaard and Rosenberg, 2010, p. 100).
Commercial colonisation of media institutions occurs at a time when the very nature of media communication is undergoing historic change. Within New Zealand, convergent advances in computer, media and telecommunication technologies has produced new communication fora centred upon networked personal computers and mobile telephony. These fora can, potentially, be shaped by public sphere principles or by corporate commercial imperatives (Hope and Hoar, 2002; Dahlberg, 2005; Goodwin, 2007). Amidst these developments, the fifth Labour government, between 2005 and 2008, introduced a national digital strategy, announced a shift from analogue to digital television, launched two free to air digital channels and proposed two reviews of regulation in the context of convergence (via the Ministries of Culture and Heritage and Economic Development). The digital channels, comprising advertising-free programmes across news, current affairs, sports documentaries, drama and children’s programmes contributed to Freeview; a free to air digital platform initially supported by TVNZ, Radio New Zealand, Canwest, Maori Television and The Racing Channel against Sky’s subscriber-based model of digital transmission.
By the 2008 general election the following questions remained unanswered. In a converging communications environment should a supervening regulator coordinate the operational fields of the Telecommunications Commissioner, New Zealand On-Air, Te Puni Kokiri, the Broadcasting Standards Authority with the media-related functions of the Commerce Commission and the Ministry of Economic Development? Should TVNZ 6 and 7 receive a further funding instalment after 2012? Should the Government direct resources and regulatory support to Freeview as a public service digital platform? A newly elected National government answered all of these questions in the negative. All Ministerial reviews of supra-regulation, digital broadcasting and content were abandoned (Thompson, 2009). As we will detail later, TVNZ’s digital 6 was discontinued and replaced with a commercial channel focused on youth reality television formats. The “Kidzone” component of TVNZ 7 was redesigned as a subscriber-only channel on Sky’s digital platform. And, TVNZ 7 itself was denied further funding by the Government (Dominion Post 25/3/11, pB7).Together these measures subverted the public sphere potentialities of the emergent communications environment. This may appear to be a bleak one-sided narrative. An opposing point of view might regard the Maori Television service, for example, as a successful instantiation of a long standing, oppositional public sphere. In addition, a newly formed blogosphere has, arguably, displaced mainstream media as a fora of critical journalism and strident debate. Thus, New Zealand Scoop, an extensively linked on-line news outlet, operates within a cyberspace populated by an array of political blogs. From the Right, the likes of Cactus Kate, Whale Oil, No Minister and Not PC stand off against various shades of Left polemic; The Standard, Boalley Road, Ethical Martini, Liberation and No Right Turn. Green, feminist and Maori perspectives, respectively, are to be found on Frogblog, Handmirror and Maui Street. These and other blogs inhabit a world where public sphere articulations transcend neat national boundaries. In this regard Left campaigning groups such as the Campaign Against Foreign Control of Aotearoa (CAFCA) and the Action Research and Education Network of Aotearoa (ARENA) contribute to the transnational opposition against transnational corporations and supranational institutions such as the IMF, WTO and World Economic Forum.
Media-Communication Ownership Convergence: Global Context
Since the 1980s companies such Time-Warner, Bertelsmann, Disney and News Corporation have become media-entertainment conglomerates with worldwide holdings. For example, in 1985, News Corporation merged with Twentieth Century Fox, Disney acquired the ABC network in 1995 and CBS merged with Viacom in 1999. During the early 21st Century, advances in Internet applications, digital television, and mobile telephony blurred traditional separations between broadcasting, computing, telecommunications, and consumer electronics. Recently, we have witnessed major changes in the ownership structures of the media-entertainment industry and the information and communications technology (ICT) sector. In January 2011 Comcast, the largest cable TV company in US, completed its takeover of NBC Universal “cementing one of the largest media mergers in recent history” (Pew Research Center, 2011). The deal gives Comcast 51% control of NBCU for a cost of $US14 billion. In February 2011 the Web service company AOL bought online news and blogging site Huffington Post for $US315 million. According to Pew Research Center, before the purchase AOL was the 3rd or 4th most visited news site in the USA (Pew Research Center, 2011).
Ownership convergence between hardware and software providers was also evident during 2011. In May, the global software company Microsoft bought Skype – which offers free phone calls over the internet – with a cash offer of $US8.6 billion (Bright, 2011). According to Arthur (2011), the acquisition reflects Microsoft’s ambition to expand within the consumer and smart phone market. Before that, in February 2011, Microsoft publicised its strategic partnership with Nokia, the worldwide mobile phone manufacturer (Microsoft, 2011). Nokia’s President and Chief Executive Officer (CEO), Stephen Elop, stated in a joint press conference: “Today, developers, operators and consumers want compelling mobile products, which include not only the device, but the software, services, applications and customer support that make a great experience. Nokia and Microsoft will combine our strengths to deliver an ecosystem with unrivalled global reach and scale. It’s now a three horse race” (Microsoft, 2011).
The global search engine firm Google, announced in August 2011, that it would buy Motorola’s mobile phone operations for $US12.5 billion. As the media reports point out, Google’s acquisition is “a major change for a company that until now put its focus entirely on smartphone software rather than hardware” (“Google Buys Motorola for $12.5 Billion, Moves Into Hardware”, 2011). In recent years, both Microsoft and Google have expanded their presence in the social media sector. In October 2007, Microsoft bought a 1.6% stake in a social networking site Facebook for $US240 million (“Microsoft buys stake in Facebook”, 2007). Google was also interested investing in Facebook after purchasing video sharing site YouTube. Google bought YouTube in 2006 for $US1.65 billion (“Google buys YouTube for $1.65 billion”, 2006).
At the same time Rupert Murdoch’s News Corporation has decreased its exposure to social media. In June 2011, the company sold by its social networking site MySpace to the advertising targeting company Specific Media for £35 million. In 2005, News Corporation had paid $US580 million for MySpace (Brown, 2011). In February 2011, News Corporation entered into a partnership with Apple by launching its first newspaper designed specifically for the Apple’s iPad platform (“News Corp., Apple Join to Launch iPad –Exclusive News App ‘The Daily’”, 2011). The iPad newspaper – The Daily – is based on a subscription fee of US99 cents per week. The Chairman and CEO of News Corporation, Rupert Murdoch, is convinced that The Daily revolutionises global news business and brings it to the digital age. “New times demand new journalism. So we built The Daily completely from scratch – on the most innovative device to come about in my time – the iPad. In short, we believe The Daily will be the model for how stories are told and consumed in this digital age” (News Corporation, 2011).
NZ Context
In New Zealand, one of the most noticeable changes in the broader communication structure is Telecom NZ’s decision to pull out of Yahoo!Xtra. In April 2011, Telecom NZ announced that after four years it was selling its stake to its majority owner Yahoo7. After the sale the Yahoo!Xtra business was rebranded to Yahoo!New Zealand – somewhat of a misnomer since the company is owned by the American Yahoo and Australia’s Seven Network. Earlier, in May 2010, Telecom NZ launched free mobile browsing on the Facebook site to its customers (Telecom NZ, 2010).
Otherwise, owners of New Zealand media companies have been busy expanding their operations to group-buying sites. In February 2011, MediaWorks launched its own group-buying Website to compete with those of Yellow Pages, Yahoo7 and APN News & Media (“MediaWorks site adds to competition”, 2011). The site, called Cudo, offers customers discounted products and services each day. It is a joint venture among MediaWorks, Microsoft, Australian media firm Nine Entertainment and Cudo Australia. Stuff quoted MediaWorks director of interactive services, Siobhan McKenna, saying: “The group-buying model is just a new way of paying for advertising and whoever can give you most bang for your buck will win.” (“MediaWorks site adds to competition”, 2011)
In March 2011 media group APN increased its ownership of New Zealand based GrabOne from 50 to 75% (Apostolou, 2011). According to Apostolou, the move is a sign that APN has jumped onto the “hyper-local bandwagon” by targeting audiences in communities which are matching its regional radio and newspaper footprint (Apostolou, 2011). In August 2011 APN announced that it had bought a New Zealand sports tipping site Jimungo, and that it was intending to buy a controlling stake in Australian online catalogue digital distribution business CC Media (“APN buys NZ sports tipping site”, 2011). According to APN Chief Executive Brett Chenoweth, these deals were “a clear pointer to APN’s strategy in terms of connecting its existing media assets with high growth digital businesses.” (“APN buys NZ sports tipping site”, 2011).
In March 2011 Fairfax bought Occupancy, which operates Australian Websites listing holiday rental properties (Canning, 2011). It already owned a holiday rental site Stayz, and online travel operations Holidayhomes.co.nz and Bookit.co.nz. According to Fairfax’s CEO Greg Hywood, Occupancy matches well to the company’s business model: “Occupancy is an online transactional business that is growing strongly and has huge market potential” (Canning, 2011).These recent buys exemplify the company’s strategic push into online and digital businesses. In 2009, Fairfax purchased an Australian babysitting website FindABabySittter.com.au, and it took over New Zealand’s online tender notification service provider TenderLink in 2010. As anticipated, Fairfax announced in August 2011 that it would sell 30–35% of its online trading site TradeMe in order to reduce its debt and increase dividend payments. The partial flotation of TradeMe is expected to raise more than $200 million for the company (Chessell, 2011a).
Ownership Concentration And Financialisation
In 2008 Bill Rosenberg’s last media ownership report (Rosenberg, 2008) contained the following observation: ”Four companies, all overseas owned, dominate the New Zealand news media. There is a near duopoly in two of the three main media – print and radio – a monopoly in pay television, and only three significant competitors in free to air television including the State-owned channels. (Rosenberg, 2008). In 2009 Rosenberg noted that his earlier observation was still valid: “It is remarkable that ownership of the media has remained largely stable during the year. This is as much a result of the credit crunch as despite it: one of the major owners tried to sell and failed. The ownership continues to be highly concentrated with further acquisitions and centralisation by the major owners” (Rosenberg, 2009, p.186).
In 2011 there are still four major players in the New Zealand media market: APN News & Media, Fairfax Media, MediaWorks and News Corporation/Sky. New Zealand news media is dominated by overseas companies and these companies are primarily owned by international financial institutions and a handful of foreign media moguls: Australian/American Rupert Murdoch (News Corporation), Irish Tony O’Reilly (Independent News & Media) and Australian mining billionaire Gina Rinehart, who in 2010 bought an $A50 million stake in Fairfax Media, equivalent to 1.5% of the company’s stock at the time (Lee & Kruger, 2010). Fairfax’s Chairman Roger Corbett commented on the share purchase: ‘‘The company welcomes the interest, investment and show of confidence from all our shareholders’’ (Lee and Kruger, 2010). Under the Stock Market rules Rinehart doesn’t need to flag her ownership unless it exceeds 5% of the company’s shares.
The biggest shareholder of APN News & Media is Irish Independent News & Media (INM) which owns 31.6% of the company’s shares (APN, 2011). In 2009 the Irish owner tried to sell its majority stake in APN, but failed to do so (“INM can’t find buyer for its APN stake”, 2009). In June 2011 APN’s owner hit the headlines after a “dramatic” annual general meeting in Ireland (O’Carroll, 2011). According to media reports (O’Carroll, 2011), Denis O’Brien who is a majority shareholder of INM and the company’s CEO Gavin O’Reilly (the son of Sir Tony O’Reilly) had a very public “war of words” after O’Brien’s nominee was removed from the INM board (O’Carroll, 2011). As O’Carroll remarked “the peace that existed between the two camps over the past two years is well and truly over”. After this public arm wrestling the Irish press speculated that O’Brien was getting ready to make a full takeover bid of INM which had seen its value badly damaged after the global financial crisis. In early 2007, the company had a market valued at €2.4 billion, but in June 2011 it was just over €310 million (“Split down the middle at INM”, 2011).
The following tables reveal the major ownership stakes within Fairfax Media and APN News & Media and Sky TV NZ. Any owner of 5% or more of the company’s shares is required to disclose this information to the Stock Exchanges. Nominee share holders are normally companies which hold shares for a group or groups of shareholders.
The media ownership discussion in New Zealand is often centred on media moguls, but it is increasingly important to realise that the moguls are accountable to their investors, shareholders, international investment banks, funds and venture capitalists whose primary objective is to maximise their return. As the preceding tables suggest, financial institutions and especially private equity firms, show an increasing interest in media companies. These institutions are not bound by the same disclosure rules as stock market listed companies and, as a result, are not required to be as open and transparent. According to Canadian media researcher Dwayne Winseck, banks, equity and other financial firms are no longer simply backers of media companies; they also have “positions on the boards of directors at media companies” (2008, p. 40).
Ownership Of Fairfax Media
| National Nominees Ltd | 18.75% |
| JP Morgan Nominees Australia Ltd | 16.75% |
| Marinya Media Pty Ltd | 9.68% |
| HSBC Custody Nominees | 8.81% |
| Citicorp Nominees Pty Ltd | 6.08% |
| Substantial owners (5% or more of total number of shares) | |
| Marinya Media | |
| National Australia Bank | |
| Commonwealth Bank of Australia | |
| Maple-Brown Abbot Ltd |
Ownership Of APN Media
| Independent News & Media Australia | 21.7% |
| News & Media | 9.9% |
| Orbis Investment Management | 8.4% |
| Perpetual Investments | 8.3% |
| MLC Investment Management | 5.9% |
| Paradice Investment Management | 5.9% |
| Maple-Brown Abbott | 4.9% |
Ownership
Of MediaWorks
| Ironbridge Capital | Around 87% |
| Goldman Sachs JB Were | Not disclosed |
| ABN Amro | Not disclosed |
| Royal Bank of Scotland | Not disclosed |
| BOS International | Not disclosed |
Ownership Of Sky TV NZ
| Nationwide News Pty Ltd | 43.65% |
| Todd Communications Ltd | 11.11% |
| Commonwealth Bank of Australia and subsidiaries | 4.43% |
| AXA Asia Pacific Holdings Ltd. | 5.15% |
| ABN Amro Asset Management | 5.11% |
Recent Events And Developments
NZPA: End Of A 130 Year Old Institution
Shock waves went through the New Zealand media sector in April 2011 when Fairfax and APN, the biggest shareholders of the New Zealand Press Association (NZPA), announced that they were pulling out. The doors of the news agency closed on August 31st with a loss of 40 jobs of reporters, sub-editors and editors. For 130 years NZPA provided tailored news services to New Zealand’s media markets. It was founded in 1880 as the United Press Association, but adopted its present name in 1942. The Engineering, Printing and Manufacturing Union (EPMU), which covers journalists, described the closure as a “huge loss for news journalism in New Zealand” (NZPA, 2011a). As the EPMU National Industrial Officer Paul Tolich commented: “A national news agency is an essential part of a healthy democracy... The loss of so many journalistic positions means there will be less news gathering and researching in New Zealand… This represents a decline in diversity in New Zealand’s news media” (“NZPA closure a huge loss for news journalism – union,” 2011).
The conservative author David Farrar’s Kiwiblog raised particular concerns about the NZPA closure. “I think the decision is a disaster for Parliamentary reporting, and bad for the overall news industry. NZPA is the news agency in Parliament that covers every Bill before the House” (“Fairfax kills NZPA,” 2011). The agency’s other perceived strength was 24 hour news coverage with a non-commercial focus: “The other agencies naturally focus on stories which sell – which will make for good television, can run on a front page etc. but NZPA is not about ‘sexy’ stories” (“Fairfax kills NZPA,” 2011). NZPA was 60% owned by the Australian Fairfax Media and 40% by the Australian APN. Fairfax Media’s Chief Executive Allen Williams justified the withdrawal by emphasising Fairfax’s investment in its own live news services (“News agency under review,” 2011). He also argued that the NZPA was not providing the content required by Fairfax: “News should not be treated as a commodity – media companies can and should establish points of difference with their coverage… Fairfax has made a choice to concentrate on development of its own unique content rather than subscribing for non-exclusive content from NZPA” (“News agency under review,” 2011).
APN stated publicly that it was keen to keep NZPA going, but couldn’t do it without Fairfax’s backing. Radio New Zealand quoted APN’s CEO Rick Neville as saying: “We’ve been working quite hard around the Board table for many, many months to try to persuade Fairfax that the NZPA model is a good one and should be supported. But it was becoming more and more apparent that Fairfax was expanding its own content resources” (“Media giant says it wanted to save NZPA”, 2011). NZ Scoop claimed the Board of NZPA asked the news agency to stop selling some of its news services to all clients, which led to the poorer financial situation and the agency’s increased reliance of Fairfax and APN (“Probable NZPA closure sends media shockwaves”, 2011). Scoop warned that the closure of the national news agency threatened news coverage and democracy: “The biggest risk to the national news discourse – and the democratic process – of NZPA closing down will be that readers will be dependent on news sources that are not truly national. Both Fairfax and APN have blind spots in their national coverage, provincial regions where they don’t own newspapers to feed into their internal news networks” (“Probable NZPA closure sends media shockwaves”, 2011).
In May 2011 media commentator John Drinnan (2011b) observed that APN and Fairfax were planning to launch their own news services after the closure of NZPA. In August 2011 the Australian-owned media companies were ready to start new services to fill the gap. On September 1st, APN launched APNZ, its news service for 50 New Zealand newspapers including its own news papers and the Otago Daily Times, Greymouth Star, Ashburton Guardian, Westport News and Gisborne Herald. The agency employs 17 people, some of them hired from the former NZPA (Stone, 2011).
The new Fairfax service is called Fairfax New Zealand News, or FNZN, which is run through its existing newsrooms. It has hired one senior NZPA journalist as its national content editor. In early September 2011, the Australian news agency AAP started its own new service, NZ Newswire (NZN) with ten journalists in Wellington and Auckland (Stone, 2011). Taking all this into account, it seems fair to state that the New Zealand news media is being further absorbed by Australian media, and especially by APN and Fairfax Media. In his final story, the senior NZPA journalist Max Lambert wrote: “The closedown means the newspaper industry has lost a truly independent source of New Zealand news. NZPA has a proud tradition of producing straight-up-and-down news stories unflavoured by bias, comment or opinion” (Lambert, 2011).
MediaWorks: Government Backs The Venture Capitalist Owner
MediaWorks is a New Zealand-based media company which owns television, radio and interactive media outlets such as TV3 and FOUR and ten radio networks including RadioLive, The Rock and Kiwi FM. It is owned by a foreign venture capital firm and other financial institutions. The Australian private equity group, Ironbridge Capital, gained full control of MediaWorks in 2007, after which the company was delisted from the New Zealand Stock Exchange, NZX (MediaWorks, 2011a). In June 2011, chief of the MediaWorks television, Jason Paris, resigned after a year in the position – a move that surprised the media and the markets. Quoting unnamed sources, Bond and Nippert (2011) claimed that there was a rift between Paris and Ironbridge Capital over the funding for programming. Outsiders commenting on the departure claimed that Paris had lost his confidence in the company, because there was no money for programming (Bond and Nippert, 2011). In 2009 MediaWorks was heavily indebted and forced to recapitalise. After getting $70 million of new capital, new investors stepped into MediaWorks: Goldman Sachs JBWere took a 12.9% stake in the company as a part of the new arrangement (Vaughan, 2010). After restructuring MediaWorks’ debts, its Chairman, Brent Harman, stated that the media company was in good shape financially: “The recapitalisation, combined with the restructure of the Company’s banking arrangements, has placed the Company on a sound financial footing. This, together with the improving ad market conditions, places the Company in an excellent position for 2010 and beyond” (Ironbridge Capital, 2009).
In light of this comment, it was not surprising that the New Zealand government was criticised for deferring the $43million debt MediaWorks owed for its radio licenses after “some serious lobbying” from the media company (“Govt lends MediaWorks $43m against advice”, 2011). Critics attacked the Government’s decision mainly because MediaWorks is principally owned by a venture capital company. Media commentators and politicians have found it hard to understand why the New Zealand government was assisting MediaWorks’ venture capital owner. Labour MP Trevor Mallard voiced displeasure on his blog: “At a time when many Kiwi companies are struggling, taxpayers will want to know why a private company was given a $43 million low interest deferred payment scheme for radio licensing agreement, and so far ICT Minister Steven Joyce has failed to provide any reasonable answers to that question” (Mallard, 2011).
Bailing Out Its Mates
New Zealand First’s Leader, Winston Peters, also called on the Government to explain why it was using taxpayer’s money to back a privately and foreign-owned enterprise. “The Government is running around telling New Zealanders how public expenditure has to be slashed while at the same time it is bailing out its mates in the media industry…There seems to be a different set of standards for private enterprise under this Government. We are sure there are far more worthy causes to support in New Zealand at present” (“Winston calls on Govt to explain ‘bail-out’ of MediaWorks, owned by Johnny Foreigner”, 2011).
Prime Minister John Key defended the Government’s decision to use taxpayer’s money to help MediaWorks and insisted that the Government’s loan scheme was tailored to help the whole radio industry, not just MediaWorks. “Frankly I’d rather see people paying over a longer period of time if it means they stay in business.” (“Prime Minister defends loan to MediaWorks”, 2011). The Prime Minister first publicly denied that he had talked with MediaWorks or its representatives - including MediaWorks former head Brent Impey – about the deferred payments, but later admitted that: “In early August 2009 I ran into Brent Impey at a social event in Auckland where he briefly raised the issue with me. I passed his comments on to the responsible Minister.” (Key, 2011)
The Government insisted that MediaWorks was not the only beneficiary of deferred payment. In his answer to a Parliamentary Question, the Minister of Communications and Information Technology, Steven Joyce, revealed that the Government had decided, in October 2009, to offer all New Zealand radio broadcasters deferred payment terms on their spectrum license renewals (2011). The deal allowed radio companies to pay 20 year leases to frequencies in five instalments rather than in one lump sum. It is interesting to note that Joyce was the founder and owner of Radio Works for 18 years before the company was bought out by CanWest and became MediaWorks (Kedgley, 2011a). In his answer to a Parliamentary Question Joyce insisted that the Government was not bailing out MediaWorks (Joyce, 2011) since the company was paying 11.2% interest on its loan. “All I can say is that it is a deferred payment for frequencies, and the Member needs to understand that. I point out too that, ultimately, if the Government had not offered it and radio broadcasters had gone broke, then the member and his friends would have been accusing us in the House of not doing anything to help save jobs in the broadcasting industry” (Joyce, 2011).
Keown claims that Joyce first rejected the loan proposal after receiving advice from Economic Development officials, but that MediaWorks then asked the Cabinet to push the decision through to help the company recapitalise (2011). Cabinet looked at the proposal in early October 2009. After further representations were made to the Prime Minister John Key, the Broadcasting Minister Jonathan Coleman and the Economic Development Minister Gerry Brownlee, it was decided to support MediaWorks and other radio stations. It appears that the Government’s arrangement with MediaWorks was against the advice received from the Treasury and the Ministry of Economic Development. Documents released under the Official Information Act reveal that the Treasury was against the Government decision because it feared that the other license holders might request similar treatment (Keown, 2011). Treasury noted that based on the modelling by Deloitte, the radio license prices for MediaWorks and The Radio Network were affordable and were not unlikely to undermine network viability.
It should be noted that MediaWorks is not the only broadcaster who has benefitted from the Government’s initiative: Overall nine broadcasters have made use of the deferred payment scheme since it was introduced in October 2009. The scheme allows broadcasters to pay their licenses over a period starting 2011 and finishing in 2031 (“MediaWorks whacked with 11.2% interest on deferred payments to govt”, 2011). The significance of this episode concerns the relationship between the New Zealand government, a privately owned company and its venture capitalist investors. As Drinnan remarks, the loan deal between the MediaWorks and the Government gives the latter unusual powers over the company (2011c). If the owners of MediaWorks decide to sell the company, the Government can decide if the agreed loan arrangement is passable to the new owner. If the company’s ownership structure changes without Government’s approval, the media company would default on the loan and be obliged to pay the outstanding balance. If it failed to do so the Government would be able to take back the frequencies. This could mean Government ownership (at least for a short period of time) for networks such as RadioLive, More FM, The Edge, The Rock, Solid Gold and The Breeze.
After recapitalisation and deferred payments, MediaWorks indicated in 2011 that it was in a sound financial state and in no need of Government money. In March 2011, the company published a press release with the heading “Statement On A Misleading NZ Herald Article Re MediaWorks.” (MediaWorks, 2011b). In a press release, signed by Ironbridge Capital’s Operating Partner Kerry McIntosh and Partner Mike Hill, the company states: “… the financial position of the Company is good, earnings have improved and debt has been reduced… MediaWorks generated Earnings Before Interest and Tax and Depreciation (EBITDA) of $50.1 million in FY10. That represented an increase of 11%. We consider this to be a credible result in a tough market and compares favourably with our peers” (MediaWorks, 2011b).
Closing Down TVNZ7: Commercial Imperatives Overrule Public Broadcasting
Around the world, publicly owned and managed television companies are under cost-cutting pressure. In Britain, the British Broadcasting Corporation (BBC) is considering closing down its BBC3 and BBC4 channels and has already restructured its radio services. The BBC Trust chairman Sir Michael Lyons warned in January 2011 that the Corporation had to find £300 million of savings after changes to its license fee policies (Plunkett, 2011). In New Zealand, the Government has put an axe to the public service channel TVNZ7 after three years of operation. Funding will end in June 2012 with the loss of 20–30 fulltime positions. After this date TVNZ7 can apply for the NZ On Air funding if it wants to continue broadcasting its programmes, such as Media7 and Talk Talk (Cheng, 2011), but will have to compete with other broadcasters including commercially run TV3, Prime and Sky TV. NZ On Air is a Government broadcast funding agency which invests in local TV, radio and new media content.
TVNZ7 was launched in March 2008 as a commercial-free digital channel and with 24 hour news and information coverage. This is currently available via Freeview and Sky platforms. The channel’s annual running cost is $15 million (Cheng, 2011). The New Zealand government spends around $231 million a year on all forms of broadcasting, including Maori Broadcasting, Radio New Zealand, community radio and television stations, Freeview and NZ on Air (which received about $81 million last year) (Watkins, 2011).
In a statement confirming the closure of TVNZ7, the Chief Executive of TVNZ, Rick Ellis, stated that TVNZ7 has been “providing New Zealanders with unique perspectives on the issues of today in ways that we cannot otherwise provide through our core channels of TV ONE and TV2” (“TVNZ7 to close as Govt confirms no more funding”, 2011). The Broadcasting Minister Jonathan Coleman said that the Government would continue its support for New Zealand-based programming through the NZ On Air. While defending Government’s decision he commented: “Sinking money into a public broadcasting infrastructure which continues to suck up money in the long-term doesn’t make sense ... It’s important to fund the content, not some monolithic public broadcaster” (“TVNZ7 to close as govt confirms no more funding”, 2011).
In response media academic Peter Thompson (2011) criticised the Government for having double standards on broadcasting policy. He referred to the fact that the Government had been involved in funding privately owned MediaWorks, as it announced a funding withdrawal from commercial-free public service television. He also stated that the National-led government had a “less sympathetic approach” to public broadcasting. “The Government’s failure to continue funding for TVNZ7 is underpinned by a long history of tensions between Ministerial policy priorities, with details often misrepresented by politicians and news media” (Thompson, 2011).
Re-establishing Profit As Primary Objective
In April 2011 a group of 60 New Zealand academics wrote an open letter to the Government in which they opposed the closing down TVNZ7 and TVNZ6, and expressed concern about the Government’s intention to “dismantle the little that is left of public broadcasting in our country” (“Open letter on NZ public broadcasting policy”, 2011). The letter warned the Government against relying on Sky to fill the gap left in programming after the closure of TVNZ7. It observed that public service television was crucial to a small country like New Zealand because commercial channels could not provide the whole range of programmes “that viewers want and should be able to access in the interests of democracy as well as cultural identity. Pay television cannot satisfy the same needs. It would be wrong to assume that Sky provides a range of programming that can replace the role of a public service channel. Sky provides relatively little in the way of local content other than sports, Sky having effectively monopolised the rights to the latter” (“Open letter on NZ public broadcasting policy”, 2011).
The signatories pointed out that TVNZ7 and TVNZ6 had provided the public with content which the commercial channels could not provide. For example, TVNZ7 and TVNZ6 had produced local, advertising free, high quality programmes for children as well as in-depth news and current affairs programmes. The Government was urged to reconsider its funding withdrawal from TVNZ7 and to reassess broadcasting policy priorities. The fate of TVNZ7 and broader broadcasting policy was debated in Parliament in May 2011 as politicians pondered imminent changes to be made for the TVNZ Amendment Bill. The Bill will replace the current TVNZ Charter and will give the company powers to determine its own priorities. Anticipating changes to TVNZ’s mandate, Forsyth Barr analyst Rob Mercer commented that: “The new TVNZ, under National’s leadership, will have a clear mandate to re-establish profit as its primary objective and for the senseless taxpayer-funded projects to be axed” (Keall, 2011). On the other hand, Green Party MP Sue Kedgley described the Bill as “shocking” (Kedgley, 2011b). “It will turn TVNZ into a nakedly commercial broadcaster that is focused solely on chasing ratings and advertising revenues and is indistinguishable from any other commercial broadcaster. Once this Bill is passed, TVNZ will exist for the sole purpose of returning a dividend to the Government, and it will not be expected to deliver anything other than a profit to the Government” (Kedgley, 2011b).
Coleman, in his response to the Parliamentary Questions, pointed out that TVNZ was a State-owned enterprise with over 90% of its income already coming from commercial revenue. Yet at the same time he admitted that TVNZ had not been able to keep its obligations to its main shareholder – the Government. “TVNZ has struggled to return a consistent dividend to the Government. This has been due, in part, to the uncertainty created by the Government’s long-term expectations of it. Removing the Charter is being honest and not trying to pretend that TVNZ is something that it plainly is not” (Coleman, 2011). Coleman gave assurances that TVNZ would continue to provide relevant, local content to the New Zealand public. However, he also said: “TVNZ will have the flexibility it needs to effectively pursue commercial objectives and to continue its transition from a traditional broadcaster to a multi-platform digital media company with diverse income-streams and services” (Coleman, 2011).
The Government wants to save taxpayers’ money, but the decision to close down TVNZ7 and TVNZ6 is beneficial for one operator: Sky TV and its shareholders. Rob Mercer, an analyst at Forsyth Barr, regards the news of the TVNZ7 closure as good news for the long term success of pay TV (Keall, 2011). Evidence to support Mercer’s argument is mounting. In March 2011, Sky TV New Zealand announced that TVNZ was launching a 24 hour Kidzone channel on the Sky platform (Sky TV NZ, 2011b). The popular pre-school children’s Kidzone programme is publicly available on TVNZ7 until June 2012, but already the new TVNZ Kidzone24 is “available as part of the Sky Basic Digital Package” (Sky TV NZ, 2011b). The TVNZ Chief Executive, Rick Ellis, commented on the partnership deal: “Kidzone has been an increasingly popular block of programming, providing educational and entertaining content for young New Zealanders, with a significant amount of locally produced programming. It is fantastic that we are now able to offer a commercially-viable, expanded Kidzone channel, on the Sky platform” (Sky TV NZ, 2011b).
TVNZ7’s sister channel, TVNZ6, has now been discontinued and replaced with U, described by TVNZ as “a ground-breaking new channel which integrates online social networking with broadcast content for the first time on New Zealand screens”. In general, U is said to be a commercial, free to air digital channel which features a mix of real life and factual entertainment programming and is aimed at all Kiwis aged 15–24” (TVNZ, 2011). U is broadcast on Freeview and Sky TV and as a commercial channel, its main purpose is to sell advertisements and attract a young audience.
There are some signs that media ownership matters to New Zealander’s. In May 2011, the Save TVNZ7 site on Facebook had 1,683 people “liking” it and Save NZPA had 180 supporters on this social networking site. The founder of the Save TVNZ7 group, Myles Thomas, claimed that the Government’s decision to close down the TV channel would reduce New Zealand’s public broadcasting to third world levels (“Abandonment of public service TV ‘tragic’ for New Zealand”, 2011). “Next year there will be no such thing as public service TV in New Zealand. Not only does that put us behind the rest of the developed world, it also puts us behind much of the third world. Every other developed nation can provide it – even Estonia, and many third world countries” (“Abandonment of public service TV ‘tragic’ for New Zealand”, 2011).
Dominating Sky Seeks Growth On Internet
At the time of writing, there is speculation that Sky TV might buy TV3, owned by MediaWorks. According to an article published by the NZ Herald, the Australian owners of TV3 are looking for “a way out of the channel’s crippling $560 million debt” (Glucina & Hurley, 2011). MediaWorks’ owner, Ironbridge, has not confirmed reports of an imminent sale. According to the NZ Herald article, Ironbridge partner Mike Hill “indicated it would be willing to sell if the right offer came along”. Sky on the other hand issued a five word statement: “We don’t comment on speculation.” (Glucina & Hurley, 2011).
Sky TV’s satellite services already cover 51% of New Zealand homes. As the Chief Executive of Telecommunications Users Association of New Zealand, Paul Brislen, observes, Sky “appears to be a monopoly” (Drinnan, 2011d). He also states that “on the other hand I do not know of any country that only has one unregulated pay TV provider and one that also owns a free to air-channel” (Drinnan, 2011d). In February 2006, Sky expanded its activities into free to air television by purchasing the business of the free to air broadcaster Prime Television New Zealand Limited for approximately $30 million.
Sky’s dominant position has benefitted company’s shareholders. In August 2011, Sky TV said it will pay a special dividend to its shareholders after reporting a 17% increase in full year profit to $120 million. Sky’s advertising income rose almost 17% and subscriptions were up 3.4%. They had a record number of 829,421 subscribers at the end of June 2011 (Sky TV NZ, 2011c). In a press release Sky Chief Executive John Fellet said: “Sky has had another excellent year, continuing to show gains across all key areas including growth in subscriber numbers, increased average revenue earned per subscriber and a continued reduction in churn*. We have also been pleased with the performance of our free to air channel, Prime, which has continued to increase its share of advertising revenue” (Sky TV NZ, 2011c). * Churn – turnover in subscribers leaving and joining. Ed.
Sky launched iSky in 2010 in partnership with a number of New Zealand Internet service providers including Vodafone, Orcon, Slingshot, Woosh, Xnet and Farmside. iSky is the company’s new online TV service which gives its subscribers access to online content streamed directly to personal computers including PCs and Macs (Sky TV NZ, 2011d). With the Government intending to build an ultra-fast broadband network covering 75% of New Zealand’s population, iSky is aiming to be the first delivery choice for the content. Sky TV has also utilised popularity of the iPhones and iPads by launching its own application. Four weeks after its Sky TV-app launch, in May 2011, the company announced that 50,000 New Zealanders had downloaded its application, making it the most popular free application for iPad and iPhone (Sky TV NZ, 2011e).
To date, Sky TV has been able to operate in an unregulated market environment, but as Drinnan points out, this might change. The Commerce Commission will be looking to see if Sky’s dominance is likely to restrict the activities of other pay TV providers once the ultra-fast broadband network is operational (Drinnan, 2011d). “A big reason for Sky’s success is unwillingness by successive governments to examine the broadcasting market – let alone regulate it – protecting a listed company while ignoring warnings it is undermining competition” (Drinnan, 2011d).
Fairfax And APN – Economising, Digitising And Monetising
The two leading New Zealand media companies – Fairfax Media and APN News & Media – are in a process of economising, digitising and monetising. There is a clear pressure on both companies to economise: cut costs, close down their non-profitable businesses, sell non-core assets, outsource expensive work and reduce their overall workforce. Both companies warned in May 2011 that a drop in advertising income was hitting their profits. Advertising revenues of printed newspapers were certainly falling overseas. In the first quarter of 2011, the advertising revenue for US newspapers was the lowest in 27 years. According to Huffington Post, the weak economy and a shift by advertisers to Internet-based outlets had damaged US newspapers revenue streams (“Newspaper Ad Revenue Falls to Lowest Level in 27 Years”, 2011).
In August 2011 the notes to the company’s accounts showed that APN had suffered an $A98 million loss in the first half of the year. According to Nippert, APN had to write down 20% of the value of its New Zealand metropolitan print assets including the NZ Herald (Nippert, 2011). Also in August 2011 Fairfax reported an $A400 million loss for the financial year ending June 2011. This compares to a net profit of $270 million the previous year (Chessell, 2011a). The CEO of Fairfax Media, Greg Heywood, commented on the results: “We have a new model in place that covers culture, revenue and now costs. This represents a step change in approach and pace of change. Will you see massive movements in revenue really quickly? No, it will take some time to move up” (Chessell, 2011a).
In June 2010 Fairfax Media decided to close down the Independent – the Auckland-based business newspaper – after 20 years of existence. The eight journalists working for the paper were transferred to work on the company’s “Businessday” brand. In a press release entitled “Best in the Business at Business” the company said that the announcement meant “further strengthening the business journalism in both its daily newspapers and online through Businessday.co.nz” (Fairfax, 2010). Fairfax Group Executive Editor, Paul Thompson, argued in a press release that the move strengthened the media company’s business coverage to the larger audience online. Thompson stated: “We believe it is particularly important to provide stronger business coverage online as that is where most readers of business news go first for reliable and agenda-setting stories” (Fairfax, 2010).
The closure of the Independent made only a few headlines, but Fairfax Media has since been in the media spotlight for other reasons. In April 2011 the company confirmed that it was withdrawing from the NZPA, and just a month later it appointed John Crowley as the Editor of Fairfax New Zealand News to oversee its “journalism development” as the company started to plan ahead before NZPA’s closure in August 2011 (“Fairfax appoints NZ News head”, 2011). In a separate appointment, Timaru Herald Editor David King was named as General Manager for Editorial Services. Fairfax Media NZ Chief Executive Allen Williams said the appointments reflected the company’s commitment to deliver high quality news: “Our priority is to invest in our respected, independent journalism. As part of his new role, John Crowley is recruiting new reporters and editors who will significantly strengthen our editorial ranks. We are also focused on improving the effectiveness of the staff who produce our newspapers and Websites” (Fairfax appoints NZ news head, 2011).
Fairfax’s publishing portfolio in New Zealand includes metropolitan newspapers the Dominion Post, the Press and the Waikato Times; Sunday papers Sunday News and Sunday Star Times; magazines such as NZ Life & Leisure and NZ House & Garden as well as online news site stuff.co.nz. In a press release, published in February 2011, the company claimed that its media brands reached 85% of New Zealand’s population aged over 15 years (Fairfax, 2011a). The press release reads: “CEO of Fairfax Media, Allen Williams, said that the positive results reflect the significant ongoing investment into quality journalism and a ‘content first, channel second’ approach.” In its own press release, also released in February 2011, APN went on to claim that its brand portfolio gives the “company unrivalled reach into the important Auckland market” (APN, 2011b). According to the release, 80% of Aucklanders connected at least once a week with at least one of its brands. The press release also said: “APN is hitting the ground running in 2011 with strong results in both readership and circulation for its portfolio of newspaper, online and magazine brands”. APN claimed that more than two million New Zealanders read its newspapers “on a typical day” (APN, 2011c). APN is the publisher of the NZ Herald and Sunday title the Herald on Sunday, online news site nzherald.co.nz, ten regional newspapers and magazines such as Woman’s Weekly. It also owns The Radio Network in New Zealand.
Despite their very positive readership statements in early 2011, both Fairfax Media and APN claimed later that their profits were partly hit by the Christchurch earthquakes, Queensland floods and the strong Australian dollar (BusinessDesk, 2011). The squeeze on each company’s revenues has forced both groups to cut costs. In a trading statement Fairfax CEO, Greg Hywood, said that the “revenue declines have been experienced in Australian metropolitan and NZ publishing businesses” (Fairfax, 2011b). In the same trading statement he promised that despite the cost cutting the company would invest in journalism: “Fairfax will be investing in more high calibre reporters and writers, an expanded trainee program and multi-media training and equipment. Quality journalism and content will be key to maintaining and developing new markets and audiences” (Fairfax, 2011b).
Restructuring & Redundancies
A few weeks after this statement, it was reported that Fairfax was planning 100 redundancies in its New Zealand operations and a further 160 in Australia, including regional pre-press centres and national printing, distribution and advertising operations (Jackson and Sinclair, 2011). On May 12th 2011, Hywood confirmed in a staff email that Fairfax was outsourcing its Melbourne and Sydney based sub-editing production to Pagemasters with 82 job losses (Chessell, 2011b). Also in May 2011 Fairfax Media decided to sell its radio assets in Australia to pay down debt and increase corporate flexibility (“Fairfax to sell radio stations”, 2011). The stations for sale included metropolitan newstalk stations: Sydney (2UE), Melbourne (3AW), Brisbane (4BC) and Perth (6PR), and three metropolitan music stations in Melbourne, Brisbane and Perth along with nine regional radio licences in Queensland and South Australia. For Fairfax’s CEO, Greg Hywood, the sale reflected strong demand for the assets at a time that required a “review of opportunities to maximise shareholder value and the mix of assets we own,” (“Fairfax to sell radio stations”, 2011). According to Ahmed there has been strong demand for Fairfax’s radio assets from private equity groups, particularly Archer Capital and Ironbridge Capital – which owns MediaWorks – as well as from Lachlan Murdoch’s private investment company Illyria (2011).
Although, Fairfax and APN are fierce competitors in a cost cutting environment, they are also exploring ways to converge their operations. According to Chessell and Ahmed the companies are seeking to combine their New Zealand printing operations, where they mutually dominate the newspaper market (2011). The two companies have not officially confirmed this, but APN Chief Executive, Brett Chenoweth, has confirmed that the company is looking for a lighter business model: “The industry is changing. In a digital world it makes sense for media companies to look at infrastructure-light business models. We need to focus on content, editorial, sales and marketing through a range of different platforms” (Chessell and Ahmed, 2011).
APN News & Media had already begun streamlining its New Zealand printing operations in 2010. In that year it announced the closure of its Manukau printing plant with the loss of 150 jobs (“APN to close printing plant, 150 jobs lost”, 2010). The company admitted then that its New Zealand gloss printing operations were no longer core to its business strategy. APN has also announced that it was planning to restructure after earnings for the first half of 2011 were substantially less than in the previous year. The company’s Chairman, Gavin O’Reilly, told investors at their Annual General Meeting that APN would implement “a round of restructuring initiatives” in response to the earnings fall (“APN to restructure as earnings slashed”, 2011). At the time of writing, the company had not publicly announced what kind of restructuring policies it would implement. In his presentation at the APN News & Media Annual General Meeting the CEO, Brett Chenoweth, could only state that “building robust digital capabilities is critical to APN’s success” and as the media landscape is rapidly changing, “all decisions are made from a digital perspective” (Chenoweth, 2011).
In a press release published in February 2011, Fairfax announced that its publications in New Zealand held a 57% market share of the domestic online audience (Fairfax, 2011c). Fairfax’s CEO Allen Williams attributed the result to cross-channel platform integration across its newspapers, online, mobile and digital TV. In the release, Williams stated that the company would continue to invest and develop its digital offerings as well as invest in social media: “More Apps are in the pipeline, and our investment is also in social media. We have New Zealand’s first Social Media Editor and have a large Facebook presence with 130,000+ followers with a further 38,000+ via Twitter” (Fairfax, 2011c).
Developing new applications and offerings isn’t cheap, and in June 2011 Fairfax stated publicly that it would introduce paywalls for some of its Australian publications later on the year. Fairfax’s Australian Financial Review is already charging for its content. Earlier in June, Rupert Murdoch’s News Corporation had said that it would start charging for online access to national broadsheet the Australian from October, although it was anticipated that some content would remain free (“Fairfax says online paywalls ‘needed for business’ – Greg Hywood “, 2011). Fairfax’s CEO, Greg Hywood, argued that paywalls were needed purely for business reasons: “We’ve said that our new app will be a paid product. We will have payment... perhaps behind some paywalls for very special material...What we do with our business now across print and online and tablets is that we use our content, our journalism to create audiences. And the new model is about creating those audiences and creating advertising, not just in print, but across audiences” (“Fairfax says online paywalls ‘needed for business’ – Greg Hywood “, 2011).
In July 2009, National Business Review (NBR) – the New Zealand business daily – put around 20% of its online content behind a paywall. Some bloggers, including Lance Wiggs, argued that after the paywall was introduced, NBR’s pages impressions fell, and people spent 38% less time on the site. Wiggs concluded that: “38% is extremely worrying given that competition has grown in the meantime, and thus NBR’s overall share of media attention has fallen away sharply. Advertisers care about that sort of stuff, so the revenue from advertising should be expected to fall accordingly,” (Wiggs, 2009).
NBR’s publisher, Barry Colman, responded to Wiggs in an open letter. He stated that after the paywall was implemented, 7,500 customers signed up for the paid services and that “number was growing,” (Keall, 2009). Colman wrote: “The real access number based on the computer-enabled employees among the corporate subscribers is in the region of 21,000. But the access rights purchased are being heavily used by the senior executives and partners and not the by junior staff, which make up the majority of the employees. Hence our internal estimate is 7,500” (Keall, 2009). NBR, which is privately owned, has not recently announced any readership or subscription numbers, and therefore it is difficult to judge if the introduction of its paywall has paid off.
Tapping Into Local News Markets
The US Federal Communications Commission (FCC) delivered an interesting report in June 2011 about the information needs of communities (FCC, 2011). In the report, the FCC warned that there was a shortage of in-depth local journalism in the US. The FCC claimed that the absence of local journalism had left a hole in news reporting about local issues including Government waste, health dangers and local elections (FCC, 2011). In a recent publication by Nieman Reports, Skoler claimed that the future business model for news was in community reporting. He writes: “We have long known communities are powerful and that local media thrive when they bring together and serve their community. Somehow though, when it comes to the challenge of online media, we forget this. We search for new business models that involve paywalls, more video, the iPad, and wealthy donors, while the most powerful emerging business driver in the new economy is community” (Skoler, 2011).
According to Skoler, news outlets need to “support and empower people”, not just gather and produce news that people will consume (Skoler, 2011). He argues that public radio is a good example of media which has created “a huge virtual community of people who feel they have shared interests and values”. As Harman (2011) notes, so far hyperlocal news sites based overseas have failed to make enough money to make them sustainable as a business. For example, AOL invested $US40 million into its network of hyperlocal news sites in the first quarter of 2011, but “it will almost certainly lose well in excess of $US100 million on the venture this year” (“AOL to Lose $100 Million on Patch, Forbes Says”, 2011).
In New Zealand, big corporates entered the local news markets in 2011 to secure their share of local advertising income. The new entrants, Yellow Local and Localist, are providing local news as well as business and community information. According to Keall (2011b), Yellow Local is spending around $8 million for hiring extra staff and launching its services, and Localist has hired over 100 staff to launch its services. The first New Zealand hyperlocal site, Locally Informed, was founded by Kiwi entrepreneurs Shane Redlick and Andrew Ross. The site started its operations in February 2010; and it searches and organises news and local knowledge from existing Internet sources, updates content and offers users a platform to share news stories and information. Redlick explained the idea: “From the get-go, Locally Informed presents two compelling opportunities for everyone in New Zealand to earn extra income and become more locally aware and connected … If it’s online and has something to do with your neighbourhood, city or region, our aim is to provide access to it” (NZ “Local Knowledge” Website Launched, 2011).
The second entrant – Yellow Local – is owned by directory services group Yellow Pages Group NZ and its private equity holders CCMP Capital and Teachers’ Private Capital (“Telecom gets $2 billion for Yellow Pages”, 2007). Yellow Local, launched in May 2011, is offering news, information about events, community, shopping and restaurants into 205 Auckland geographic areas. As Yellow’s digital director Peter Crowe observes: “YellowLocal.co.nz is where locals can talk to local,” (Fahy, 2011). The third entrant is Localist – launched in June 2011 – another directory service which is owned by New Zealand Post. The Localist website combines listings and content which is mainly generated by its users. As Harman (2011) observes, Localist is the underdog in the marketplace, because it is “starting without the benefit of an existing advertising business and with a large cost base that already includes around 100 staff.” In July 2011, Fairfax launched its dedicated Auckland news, sport and entertainment website Auckland Now. In a press release, Fairfax Media CEO Allen Williams stated: “We are without peer in the Auckland market in terms of having the largest network of editorial staff to provide high quality content for the Auckland Now Web site audience” (Fairfax, 2011d). As Localist and Yellow Local are mainly operating in the Auckland area, they are competing for the same advertising dollars in already competitive markets.
Ownership Regulation And Media Futures
In July 2011 News of the World – a 168 year old newspaper – was closed down by its owner, Rupert Murdoch’s News Corporation. The decision was taken after it emerged that journalists had been illicitly and systematically hacking into the voicemail messages of prominent people to find stories. In the aftermath of this scandal, the British government decided to examine ways to measure the influence of media owners, and to determine whether ownership should be limited (“UK to look at media ownership after hacking scandal”, 2011). As the phone hacking scandal intensified, in July 2011, News Corporation withdrew its bid to control the remainder of the pay TV channel BSkyB including Sky News. News Corporation had been trying to purchase the 61% of shares it didn’t own, but the hacking scandal brought this attempt “down in flames” (Long, 2011). The British government is now planning to introduce a new Communications Act by the end of the current Parliamentary term in 2015. This may introduce many ownership and privacy restrictions.
In Australia, the phone-hacking scandal triggered complaints from politicians that News Corporation’s control of media assets was excessive (“Australia to investigate media after UK phone-hacking scandal”, 2011). News Corporation owns 70% of Australia’s newspapers, and has significant interests in television and online. The country’s Green Party favours an official investigation to News Corporation activities in Australia. As the Party’s Senator Bob Brown states: “We have the most concentrated newspaper ownership of any similar democracy: that means that two thirds of the metropolitan newspapers [and] two thirds of the suburban newspapers are owned by the Murdoch Empire. And it does not allow for the plurality of views that is healthy for a modern democracy” (Mercer, 2011).
On September 14 Senator Stephen Conroy – the Australian Minister for Broadband, Communications and the Digital Economy – announced an independent inquiry into the Australian media (Cole, 2011). The Australian government is already investigating issues related to media convergence in its Convergence Review, due in March 2013. The new Media Inquiry will expand the scope of this review. Pertinent issues include the effectiveness of the current media codes of practice; the impact of technological change on media businesses and the independence and effectiveness of the Australian Press Council (Cole, 2011). The Media Inquiry will consider the need for a new supervening regulator which would combine the Australian Press Council – funded by newspapers – and the Australian Communications and Media Authority.
In New Zealand, the Government has sought to maintain the current system of unregulated markets. In May 2011 it told the New Zealand Press Council to consider closer cooperation with the Advertising Standards Authority, the Broadcasting Standards Authority and the Office of Film and Literature Classification (“Press Council faces Govt review”, 2011). After their negative response, the Government seems to have given up on their proposal (Drinnan, 2011). As noted earlier, the National-led government has eschewed any supervening regulation of the broadcasting and telecommunications markets. In the context of broadband development and content provision, Communications Minister Steven Joyce regards regulation as a last resort. Such is evident in a recent interview for Computerworld magazine: “You never say never because sometimes things take longer than they do. But it stands to reason that content owners have many more channels to distribute their content on and many more ways to do it, where they own the content more and they control delivery of it. Regulation should always be something you hold in reserve as much as you can until you are confident the market can’t work it out” (Putt, 2011).
The Labour Party’s ICT and media policies were released in October 2011. They proposed significant regulatory changes including the establishment of a single broadband and broadcasting watchdog under a new Ministry of Communications and Information Technology based within the Ministry of Economic Development (Labour Party, 2011). Clare Curran, Labour’s broadcasting policy spokesperson, wrote in her blog: “Labour’s ICT policy also sets out an ambitious forward thinking strategy to draw together the policy and regulatory environments for ICT, telecommunications, broadcasting and the Internet realm Labour’s ICT policy is a converged policy with broadcasting. Many other countries including the United Kingdom, Malaysia, the EU, the UK, Korea, Japan, Taiwan, South Africa have already taken this approach” (Curran, 2011a). According to the National Business Review, Labour’s single watchdog policy is a potential worry for Sky TV which is 43% owned by News Corporation (Keall & Walls, 2011). If the regulation of broadcasting and telecommunications converge, Sky’s television-internet-broadband strategy could come under scrutiny.
Public Broadcasting Under Threat
The 2011 election campaign sharpened debate about the future of public broadcasting. Labour’s plans if in Government included the creation of new independent public broadcaster covering Radio New Zealand and TVNZ7 with the possible addition of a new nationwide news service (Curran, 2011b). Broadcast Minister Jonathan Coleman claimed that Labour’s package “would add tens of millions of dollars a year to the $16 billion hole Labour already has in its spending plans” (Walls, 2011). National reiterated its decision to support broadcasting through NZ On Air’s contestable funding mechanism: “We have been very clear with where we are going with broadcasting. We are focusing public money on getting the best possible local content onto our television screens, through NZ On Air’s competitive funding mechanism while continuing to support Radio New Zealand. It’s a realistic fully funded plan, unlike Labour’s” (Walls, 2011).
The future of TVNZ7 is far from certain. In November 2011 the Save TVNZ7 lobby group sent an open letter to members of Parliament and election candidates. In a press release the group wrote: “No crime. No celebrities. Just intelligent local programming. Is it too much to ask?” (Save TVNZ7, 2011). According to the press release, TVNZ7 has almost doubled its viewership. In four weeks starting April 18, 2011, viewer members were 1,210,400 compared to 663,300 for the same period in 2010. The press release argues that: “Keeping a viable TVNZ running, and some small amount of Kiwi public service television, could be achieved for only $16.25 million a year. It’s not much when you consider the $43 million loan the Government spent to bail out MediaWorks” (Save TVNZ7, 2011).
The future of Radio New Zealand (RNZ) is also uncertain after the National-led government froze its funding “for the foreseeable future” (Save Radio NZ, 2011). Under a continuing funding freeze, RNZ has estimated that it might be able to operate until June 2013. The National Radio broadcasting network has already made some deep cuts to its budget by closing its Palmerston North office; removing its $200,000 external advertising budget; saving $240,000 from changes in linking programmes to transmission sites and by limiting travelling and recruiting (Barton, 2011).
During 2011 the Save Radio NZ campaign gained momentum with public demonstrations and thousands of Kiwis supporting the cause on Facebook. John Barnett, the Chief Executive of South Pacific Pictures, has suggested turning RNZ into a new multi-media operation or turn it into “a radio with pictures” meaning that its content could be turned into televised versions (Beatson, 2011). As Beatson notes, “it sounds like a major cultural shift for Radio New Zealand” (2011). At the time of writing, there were no details of how a new multi-media RNZ might be funded. Currently, RNZ is the only commercial-free broadcaster in New Zealand. These recent developments confirm the central thesis of this article; global concentrations of media-communication ownership threaten mediated public spheres in Aotearoa–New Zealand.
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