Bailout warning went to Lee’s office before Newshub’s collapse
Officials warned the Government it may face requests to bail out media companies if it failed to progress a law forcing digital platforms to pay local media for using their content.
The warning, from officials at the Ministry for Culture and Heritage, came in November last year, months before Newshub collapsed.
The advice to Media and Communications Minister Melissa Lee said any further delay to a law change forcing Google and Facebook to pay local media companies for using their news content could lead to job losses.
“The industry considers the [Fair Digital News Bargaining] bill is the best mechanism to support a free and independent news media that is not reliant on government funding,” officials told Lee.
“The Government may come under pressure from news media entities to consider other more interventionist and costly options for supporting the news media industry, such as bailouts.”
The briefings obtained by RNZ made it clear Lee was on notice about media job losses, months before Warner Bros Discovery said last week it would close down Newshub in June with the loss of about 300 jobs.
It will be at least May before the bill progresses any further, however, as Lee told RNZ she would wait for a report from the select committee considering it before going any further.
Bargaining bill worth tens of millions to media
The digital news bargaining bill, introduced by Labour in August 2023, aims to allow local news publishers to negotiate on “more equal terms” with digital platforms such as Google and Facebook.
The bill creates a bargaining and arbitration process, penalties for not complying, and exemptions for digital platforms who can show they are making a “fair contribution” to the production of local news content.
“The bill is designed to reduce reliance on government funding by providing pathways for local news media to enter commercial deals with digital platforms that are using their content to drive engagement, and make money, but not paying the original content makers," officials told Lee.
The documents said local media would benefit by between $30 million and $50 million each year under the law and that this revenue could triple over time.
While politicians debate the digital news bargaining law, Google has done its own deals with 20 New Zealand media outlets under its Google News Showcase programme, launched in August 2022.
Lee was told that without these deals some of those media companies would have gone bust.
But officials told their minister that Google may pull out of these deals if the digital news bargaining law does not go through.
The documents said most media companies did not support government subsidies and that schemes such as the $55 million Public Interest Journalism Fund was “not financially sustainable” and could “compromise the perception of a free and independent news media industry”.
Officials told Lee that the US, UK, Canada, Australia, the EU and France had, or were implementing, bargaining legislation, requiring digital platforms to compensate media.
The Australian bargaining code was providing about $215 million each year to local news media. In Canada, Google had agreed to contribute $119 million a year and in France $135 million, the documents state.
Meta's threat to block news content
But multinational tech giants are opposed to New Zealand introducing digital bargaining legislation.
Officials told Lee that they were confident that other digital platforms would fill the gap left by Facebook and that Microsoft assured them it would remain in the online news market place.
The documents show that Lee met with Google executives on December 12.
In notes prepping Lee for that meeting officials said Google made “significant revenue” from New Zealand.
“In 2022 Google sent $870 million to its parent company, up from $698 million in 2021. Officials estimate that Google generated approximately $1.18 billion from search engine advertising in New Zealand in 2022.”
It outlined to the minister how the Google business model worked.
Officials said that Google had used this business model to generate substantial wealth.
Media advertising revenue has collapsed in recent years.
Newspaper advertising revenue fell from $533 million in 2011 to $210 million in 2020 and led to a halving of the number of journalists in New Zealand, according to the Ministry of Culture and Heritage.
Lee has been lukewarm on supporting the Fair Digital News Bargaining Bill, previously describing it as like “another tax”.
In Parliament last week Labour MP Reuben Davidson asked Lee whether she would fast-track the bill in the wake of the Newshub shutdown.
Lee said the Government's position on the legislation would “take into account these latest developments in terms of the wider media landscape”.
She declined an interview with RNZ but issued a statement saying she was waiting for the select committee to report back in May.
“Once the report is back I'll consider it and take advice from officials on the best way forward.”