Crisis claims first big NZ business scalp in Bauer

Magazine publisher to close NZ titles permanently

EARLY studies have shown that, if they do not recover, it takes patients around 14 days to die once they start displaying Covid19 symptoms.

It appears the timeline is similar for businesses. And the virus has claimed its first big scalp in magazine publisher Bauer.

With advertising revenue falling off a cliff and the lockdown rules precluding magazines from essential operation under Alert Level 4, the publisher made a quickfire decision to pull out of New Zealand.

An internal email broke the news yesterday morning, denying staff the consultation we usually see with such major decisions.

If this shows us one thing, it is that a crisis functions as a powerful accelerator. It is a ferocious shove into the back of business that was steadily moving in that direction step by step anyway.

The magazine industry has been in trouble for a number of years. We have seen a steady stream of closures, even among titles that once ruled the magazine aisle.

Cosmopolitan, Cleo, FHM and Zoo Weekly were just some of the casualties we have seen in recent years. And there have long been rumours circling around many of the other publications in the company's portfolio.

A crisis also gives company owners the leverage to make a call that would be tremendously controversial under any other circumstances.

Bauer's owners have used Covid19 as an opportunity to put aside the carving knife and opt instead for a sledgehammer and put the entire thing to bed.

Letting go at this time also makes sense in the context of last year's rumours that Bauer's owners were looking to offload the business to private equity fund Mercury Capital.

The closure here is not just quantified in the business numbers or the about 250 jobs that have been lost.

This also marks the demise of a platform for some of the most talented and creative designers, writers and editors working in the New Zealand publishing industry.

The cultural currency lost here counts more than we can even begin to understand right now.

Take, for instance, the important role Metro has played for years in giving a voice to Auckland, or The Listener's essential duty in digesting the week's big events with thoughtful journalism.

These losses are not felt in the moment an allstaff email hits an inbox. They are felt in the silence that comes afterwards.

The only hope now is that an independent financier or other business with some cash to spare picks up a few of these publications and gives them new life. But there are no guarantees here.

Bauer, of course, is not alone in facing these challenges right now.

On Wednesday, MediaWorks boss Michael Anderson gave a frank assessment that asking his staff to accept a 15% pay cut was part of the company's ‘‘fight for survival’’.

These are not the cool, confident words we have become accustomed to from executive ranks during years when the economy was doing well. They ring of the panic that workers throughout New Zealand are feeling right now.

And Mr Anderson is not wrong in expressing this level of concern.

The advertising business is often seen as the canary in the economic tunnel. Once businesses start to feel the pinch, the marketing budget is the first thing to be put on ice.

The businesses that rely on those advertising dollars are therefore the first ones to feel the brunt of that impact.

Which is to say that this might be the first business to succumb, but it will not be the last. And every additional week in the lockdown will only bring more companies closer to the brink.—