Forget NZME, where to now for Stuff and Nine?

China’s quiet cities

Tony Jansen’s letter (May 14) reminded me of how impressed my wife and I were with the quietness of traffic when we visited Xian, Chengdu and Chongqing in China last year. (The latter being the largest city in the world with a population of 34 million.)

At first we didn’t realise why it was so quiet. But, we discovered, millions of Chinese have for years been using electric bikes which are charged overnight at home. Cars can also be charged at kerbside stations.

There was no shortage of electric taxis or small buses, either, hence the only sounds were the ‘‘whooshing’’ of tyres as they sped along modern roads.

Last year China boasted more than 3.4m new energy vehicles (NEVs) with 888,000 manufactured in the country in the first six months of 2019, a rise of 20.9 per cent.

In 2018 China sold almost as many EVAs as the world combined.

I presume the long-term plan is for Chinese cities to eventually ban the remaining petrol-powered vehicles. Can we not do the same?

Nigel Coventry, Ka¯ piti

When Prime Minister Jacinda Ardern took New Zealand down to level 2 she warned us twice that we must not go and party up yet. It will be a huge concern for the Government. Every New Zealander should be concerned as well.

Keeping two metres apart, handwashing, not coughing and sneezing over people is an absolute given.. However, open up the bubbles to the pubs and bars and everything changes. Drugs and alcohol take away inhibitions and good judgment. Frightening. Look at South Korea.

The solution? Could it be to ban alcohol sales? Bars and pubs restricted to selling, say, two alcoholic drinks per customer or only non-alcoholic beverages until a vaccine is available? Unthinkable, but the consequences of a second wave surely are more unthinkable.

Peter Yarrell, Queenstown

Did I hear it correctly? Did I hear that ministers of the Crown are not allowed to answer questions concerning the management of the coronavirus pandemic, but they are allowed to write a short reply to questions asked, but those replies have to be vetted by Jacinda The Great!

Excuse me, are our elected politicians there to serve the country and be accessible or not? Is this country still a democracy? Does the average Kiwi want an ordered state run by an admitted perfectionist/bully? Is that what we want?

Think very carefully when you step up to have your say on election day and remember it is you (the voter) who has the power. Politicians (of whichever ilk) are only in their plush comfortable seats, positions of power and perks thanks to you, the voter. Think very carefully when you tick the boxes or you might find you are put in an increasingly small box yourself!

Jill Phillips, O¯ taki

Dave Armstrong (Schools should educate about drugs, not punish, May 12) misses a surely significant reason why Auckland Grammar was so obstructive in coming clean on the expulsion of 11 students for drug offences during 2019.

The school’s website lists the annual charge for each overseas student at $22,500 plus various other charges which appear to be compulsory. If you consider the marginal cost of enrolling, say, 100 overseas pupils each year it amounts to the school having way more than 2 million reasons not to tarnish its reputation among the parents who can afford it.

Mark Stone, Lower Hutt

Political editor

In yesterday’s Budget no money went to the media sector crying out for support to keep newsrooms open as advertising plummets. So, what next for the under-pressure commercial Kiwi media scene? Particularly after the cack-handed attempt by indebted NZME to browbeat Nine Entertainment into selling it Stuff for $1 blew up in its face on Monday?

Let’s recap: after years of on-again offagain negotiations, Nine terminated talks with NZME last week over the price it was prepared to pay for Stuff (publisher of this newspaper), and the approach to the political and regulatory battle that would be required for the merger to go ahead.

NZME then inexplicably announced to the NZX on Monday that it was indeed buying Stuff for $1 and wanted an expedited Commerce Commission process – and a law change – to force the sale through by May 31. This took Nine, Stuff and the Government by surprise.

Nine had long been sceptical about NZME’s ability to raise the cash required to buy Stuff anyway. Everyone has their price, but as a result of Monday’s amateurish shenanigans it is understood that Nine’s attitude is now that it will sell its Kiwi arm to anyone but NZME.

This is now a problem for NZME. Nine privately considered NZME’s flaccid digital strategy in its publishing business to be such a disappointment that its only real plan was to buy Stuff’s. While its radio assets performed creditably, publishing has struggled. The New Zealand Herald’s premium model has produced unimpressive subscriptions growth.

NZME’s strategy, in turn, appears to have been to talk down Stuff and create enough uncertainty about the company’s future to bid down its value and create the impression in the minds of the public, advertisers and within the Government that the country’s most-read news website is somehow circling the drain.

Add into the picture that, according to The Australian, NZME CEO Michael Boggs was being considered for the top job at oOh! Media, an Australian outdoor advertising firm, before Covid-19.

Activist shareholders are now pushing NZME to break up the business. Given Monday’s debacle, in particular, it is hard to see NZME retaining the same management structure for long.

Stuff made a modest profit last year (about A$28 million operating profit on revenue of A$243m in 2018-19), and does not carry a debt albatross around its neck. Nine is not shutting it down on May 31, as some commentators have claimed. Nine definitely plays hardball – but it knows it has an asset worth something, and gives nothing away for free.

Yet, despite NZME’s clear determination not to waste a crisis and try to talk down Stuff as much as possible to pick over its corporate carcass, both NZME and Nine are pressing the Government for support during the Covid recession.

Let’s back-track for a moment. The basis on which NZME was seeking to get

Government – and Commerce Commission – support for the merger was via a ‘‘Kiwishare’’ arrangement.

This deal would see the Government take a $1 equity stake in the new entity. Stuff’s editorial operations and regional mastheads would be ringfenced from staff cuts for two to three years. Significantly, that deal had the support of NZ First. But it would still have had to be approved by Cabinet, and Broadcasting Minister Kris Faafoi made it clear it would still have to go past the Commerce Commission – which previously stymied the merger.

This is significant, because Faafoi seems to be the other target of NZME’s weird ‘‘announce it and they will sell’’ strategy. On any objective reading of the situation, the minister clearly has little or no appetite to change laws around the Commerce Act to allow a quick merger.

So even if NZME had the money for Stuff (which it doesn’t), and Nine was talking with them (which it isn’t) there would be no chance to fast-track any regulatory approval.

Media has been smashed by Covid, particularly publishers in a small market such as New Zealand where newspapers rely heavily on advertising. The challenge for Stuff, NZME, MediaWorks and every other commercial media operator is not that they cannot create sustainable business models of at-scale journalism, but how and if they can weather the next six months to two years.

That is what makes Stuff’s particular situation more precarious: it has an disinterested owner that wants to sell it. Not because it is a bad business, but because it simply doesn’t fit with Nine’s strategy to be a diversified, cross-platform Australian media company.

Contrary to the rumours, Stuff is not close to trading insolvent. It is understood that pre-Covid it was on track this year to finally halt the long-term revenue decline, and even start on a modest growth phase.

Even with Covid, it is understood that the company’s campaign to sign up paying supporters (in the works prepandemic) has generated a level of revenue Stuff would have been happy with if it had thrown up a paywall – which it deliberately hasn’t done. Stuff also has a stable of regional newspapers, all still profitable in their own right. Its printing presses are relatively modern, meaning no immediate and costly decisions on plant need to be taken.

It is little surprise then that Nine is understood to be talking with other interested parties. A mooted TVNZ purchase seems highly unlikely – if the pseudo-state broadcaster has the money it would be controversial and, if it doesn’t, it is unlikely to get it from the Government.

Another potential buyer could be a company such as Trade Me — a back-tothe-future purchase considering Stuff’s former owner Fairfax bought and sold the online trader. There are clear link-ups and synergies with the Stuff audience reach and brand that could make sense.

There are also likely to be some highnet-worth Kiwis looking at the business, as well as some regional publishers interested in some Stuff regional mastheads. And, as ever, there are other smaller, opportunistic private equity firms looking for a pandemic bargain.

There doesn’t appear to be a scenario under which all Stuff’s current mastheads will stay within the one company. The small community papers, for example, would probably thrive more in the local hands of owner-operators.

For Stuff itself, which has had to put any major restructuring plans on hold while Nine has hung out the shingle, finally being acquired by an interested buyer would be a relief.

So where does that leave Stuff and NZME in the meantime? In much the same position they were before Monday. Both struggling with Covid, and both desperate for Government interventions. But the Government is not in a hurry. Its initial emergency $50m package (about $11m of which would be able to be fought over by private media companies) cannot be accessed yet.

And the commercial firms should not hold their breath for more help. The Government’s second tranche of a rescue package is likely to be along the lines of NZ On Air’s funding of the Local Democracy Reporting programme – putting journalists back into the regions in particular.

The only area where both companies could make some headway is on support for their regional papers. A large-scale closure of regional papers would put the Government – susceptible enough in the regions – under immediate pressure to try to rescue local mastheads. NZ First, which backed the Kiwishare proposal, did so largely out of concern for retaining regional newsrooms. It would exert significant pressure on the Government – but it is still unclear what a rescue package could like.

In response to Covid, the Australian Government announced in April a $50m public interest news-gathering programme for regional publications. While it is difficult to see the NZ Government being so generous, it is the most likely area for significant taxpayer support.

In the meantime, Stuff will troop onward, Nine will try to wrap up a sale as soon as possible, and NZME will likely remain desperate and dateless in the chill winds of the NZX.