“The one thing that was clear from travelling around New Zealand and talking to people about the state of the country’s media was the overwhelming support for public service media. It is now seen as perhaps the last bastion of independent, quality news and current affairs, in a media world that is collapsing under a deluge of clickbait and the impact of failing financial models.
This is also evidenced by RNZ’s strong and rising ratings in the last 18 months. Public service media is regarded by many as vital to the health of our democracy but nearly all those who spoke to the People’s Commission were concerned that it is underfunded. Most were aware that RNZ’s funding had, up until the last budget, been effectively frozen for 9 years.
There is no question that RNZ has been squeezed by a reduction in its budget (if you adjust for inflation) while at the same time having to cope with significant changes in the way people access its content. The state broadcaster has had to develop a major online platform, programmes like Checkpoint now engages with its audience via social media and radio producers double up as digital producers.
Not as well understood by those attending the forums was the importance of having a strong, vibrant private sector media.
One of the keys to a healthy democracy is plurality or a range of voices in the media. The Commerce Commission placed considerable weight on the idea when it turned down the merger application of our two biggest newspaper chains, NZME and Fairfax. The merged company would have dominated print and online news in New Zealand.
Competition keeps all the players honest and is the lifeblood of innovation. The country needs a healthy public media and a healthy commercial sector.
The first is relatively easy; increase Government funding to appropriate levels, including capital for investment in the technology needed as traditional platforms give way to new ones, and introduce clear and up to date charters for State-funded media.
Making sure that private sector news and current affairs remain strong is a much harder task. The profitability of Newspapers is in rapid decline and print revenues can’t be replaced by those from digital advertising. Google, Facebook and other social media platforms now take 80 to 90 percent of the digital dollar. NZME and Fairfax wanted to combine their operations and reduce cost as part of a plan to stay financially stable while they work out a way to tackle the challenge of lifting online revenues.
Free-to-air television is beset with similar problems - falling revenues from its traditional operations and low returns from online advertising. The small size of the New Zealand market is also an issue for high cost media like television.
That is why, Three and PRIME make losses and will probably never make a profit in the future. They only survive because their owners have other revenue sources like radio and pay TV. TVNZ does make money but its return on funds is low and it is likely to require propping up by its owner, the state, in the not too distant future.
Both the major radio networks (NZME and MediaWorks) are profitable and have news services, but the cost of news production is shared across multiple platforms. Digital disruption has had less impact on Radio than other media but its turn is surely coming.
There is a view that recent media startups will help with diversity and quality of news in the future. Fairfax and NZME made a point of this in their submission to the Commerce Commission and it is true that news start-ups today are not encumbered with the high cost infrastructure that weigh down many of the established news providers.
However, the two most successful startups in recent times, The Spinoff and Newsroom have captured a small share of the online news market and are currently “niche” players. Barriers to entry are significant; particularly the ability for media start-ups to access capital as investors see the media industry as high risk and offering low returns compared to hi-tech ventures.
Start-ups also face the same problems as the big media players in that returns from digital advertising is not enough to sustain the cost of producing news. They are likely to be partially reliant on readers paying (either through subscriptions or voluntary donations) for content.
Many of those who engaged with the People’s Commission said they understood that the days of “free news and current affairs” are ending and they were now willing to pay for a quality product.
Just how many Kiwis are prepared to pay what amount will be an important factor in determining the future state of our media.”