Disrupted by the shift to digital, New Zealand’s leading newspaper companies may have little choice but to merge.

But that would create the world’s second-greatest concentration of newspaper ownership, behind only China.

By John Power
Splice Australia

It’s no secret that newspapers across the Asia-Pacific region are struggling. From Singapore to Sydney, legacy media outlets have been forced to slash coverage and staff amid collapsing advertising revenues. But even against this backdrop, the situation facing New Zealand’s print media looks especially grim.

In a bid to remain financially viable as circulations dwindle, New Zealand’s two main newspaper companies, Fairfax and NZME, are seeking to merge into a single organization that would dominate the local market. Such a move, which is awaiting court review after being blocked last year by the Commerce Commission, would place 90 percent of newspapers and most digital news sites in the hands of one owner.

Media executives say the tie-up is the only way to avoid even greater cuts and compete against Google and Facebook, which hoover up digital advertising revenues that could otherwise offset spiralling print losses.

PricewaterhouseCoopers has estimated total print circulation in New Zealand will more than halve between 2012 and 2021, to 246,000 copies, a figure that the New Zealand Herald, NZME’s flagship title, could surpass during its early-1990s peak. At the same, digital ad revenues have failed to plug the hole, making up less than 14 percent of total ad sales in the industry in 2016.

Unsurprisingly, Fairfax, which announced the sale or closure of 28 rural newspapers last month, and NZME both suffered single-digit losses in overall revenue last year. By joining forces, the long-time competitors hope to make savings of $200 million over the next five years.

New Zealand’s leading newspaper companies may have little choice but to merge.
"...in terms of editorial direction, one editor-in-chief... could dictate the editorial policies of all our metropolitan newspapers" Splice illustration: Rishad Patel

Implications for regional coverage

If commercially understandable, the proposed merger is sounding alarm bells about the impact such concentration of ownership could have on quality journalism in a tiny market of just 4.6 million people. In a submission to the Commerce Commission, a group of researchers opposing the plan noted that the merger would result in New Zealand having the second-greatest concentration of newspaper ownership in the world, behind only China.

“The argument against, of course, is it would lead to a considerable concentration of print power in the hands of one group and possibly, in terms of editorial direction, one editor-in-chief who could dictate the editorial policies of all our metropolitan newspapers, for example,” says Gavin Ellis, a media commentator and former editor of the New Zealand Herald.

“The problem is that we have a limited number of newspapers and they are basically all in the same boat,” he adds, describing the country’s newspapers as “in peril.”

In its ruling last May, the competition agency argued that granting so much influence to one media company presented the risk of “causing harm to New Zealand’s democracy.” After the High Court upheld that decision in December, Fairfax and NZME announced that they would appeal, vowing to see the tie-up through.

Ellis believes the industry’s troubles have implications for a region that is increasingly intertwined by commerce and migration, noting that foreign coverage tailored to New Zealanders has all but disappeared.

“The indirect effect is that if we are less knowledgeable about Asia, then we are less engaged with Asia,” he says. “So we really do need to continue to have a population that is aware of what is happening in Asia, what interactions between New Zealand [and the region] are and should be, and so on. Any reduction in direct coverage obviously affects that.”

A glimmer of hope?

Still, the news isn’t all bad. Although newspapers remain the main source of original public interest journalism, several respected online startups such as Newsroom, whose investigation into political payments was recognized at the most recent New Zealand TV Awards, have emerged in recent years. The new Labour Party-led government, meanwhile, has pledged $38 million to expand public broadcaster Radio New Zealand, following years of stagnant funding.

Indeed, Ellis believes that New Zealand’s experience holds important lessons for other small media markets that may be especially vulnerable to digital disruption. Among them, the need for well-funded public service media and the potential for new ownership structures that aren’t dependent on large, profit-driven corporations.

One small regional newspaper, the Wairarapa Times-Age, provides an unusual hopeful case. In 2016, NZME sold the title, which caters to a region of about 40,000 people, to a local businessman. Not beholden to the imperatives driving corporate executives, the new owner has committed to investing in journalism.

“Since that sale, it’s taken on more journalists and seems to be doing reasonably well,” says Ellis, “and the reason it is doing reasonably well is that there are no corporate overheads, no debt repayment burdens and so on that plague individual titles in a large corporation.”

John Power is a journalist whose work has appeared in The Guardian, The Christian Science Monitor, Quartz, The Age, The South China Morning Post, The Irish Times, The Nikkei Asian Review, and Al Jazeera. Previously based in Seoul, he currently reports from Melbourne. Follow John Power on Twitter.

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