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Follow the money, part four: Where New Zealand's news media is finding pots of funding gold

Follow the money. It’s an axiom that journalists have believed in for years and a guiding light when it comes to holding the powerful to account. But that phrase is increasingly pertinent to those who run media businesses. As advertising money flows away from traditional channels towards large tech firms, the old business model of selling space around the news is creaking. And that has led to a range of experiments from publishers and broadcasters hoping to keep the lights on – and to keep shining those lights into dark places. Erin McKenzie dives into the local news media feed and finds plenty of experiments, but no simple answer to the funding conundrum.

By Erin McKenzie | September 20, 2018 | features

Read part three of Follow the Money here.

Filling the gap

With Stuff shedding many of its regional journalists on the ground, opportunities have opened for local players to swoop in with the development of local apps. Wanaka, Wellington, Southland and Nelson are among eight provincial apps that are part of the Independent App Network of New Zealand.

One of those, the Nelson App, found a gap to fill when Stuff culled its regional sports journalists and found it was in a good position to take over that role so a sports reporter was hired. 

Andrew Board is managing director of the app, as well as the independently owned Nelson Weekly, and he told RNZ, because of the app he’s increased his team of journalists by 70 hours a week.

More recently, The Southland App was launched by Advocate South and in the announcement, general manager David Pickett said: “We ultimately want to be the definitive place to find accurate and timely Southland news, weather and road conditions, sports draws and results, death notices and acknowledgements, business directories and much more, with the convenience of being always at your fingertips." 

"Kind of like the newspaper of old, but in a format for today." 

Funding for the apps comes from localised, directory-style advertising and Wanaka App developer Tony O’Regan told RNZ the news apps are providing a sustainable advertising revenue stream, unlike news websites. 

New revenue

Looking at the digital revenue figures of media companies makes for harrowing reading in comparison to what they were making in print. It’s simply not enough to sustain these expensive newsrooms, which is why media companies are diversifying their revenue streams. Media companies have long attempted to sell things, and very few of them have done it successfully, but over the last couple of years Stuff has added a number of new, non-news related products to sell to its significant audience. 

It’s launched pay-per-view streaming service Suff Pix, created Stuff Fibre with New Zealand Fibre Communications Limited, launched a digital energy business called Energyclubnz and partnered up with NIB to create health insurance provider Done.

When Stuff Fibre launched, Simon Tong (Fairfax managing director at the time) explained the move was a means by which to keep its news offering going. 

“We’re really proud of the fact that we’ve kept so many journalists in their roles around the regions, and we really want to maintain that because that’s what makes us different,” he said. “The question isn’t ‘how many journalists do we have’, but rather ‘how do we pay for the level of journalism we’ve got today in the future.’” 

NZME, which has a wider range of assets at its disposal through radio brands and ecommerce engine GrabOne, has also recently added new recruitment, automotive and property platforms to its list of digital assets. 

Called YUDU, Driven and OneRoof, they extend on classified listings that have long been included in newspapers – and more recently have moved across to online marketplaces like Trade Me, Seek or Realestate.co.nz – as they offer recruitment, vehicle and real-estate listings respectively. Currie says it absolutely sees them as huge opportunities for revenue. And like Stuff, he does not signal a move away from its papers.

“The newspapers are still vitally important, and our print subscribers are very loyal,” says Currie. 

  • Earlier this year, StopPress sat down with NZME chief digital officer Laura Maxwell to talk about YUDU, Driven and OneRoof. Listen below.

Combine and conquer

Beyond new revenue sources, other opportunities for news media organisations have opened up in the form of partnerships. 

Once upon a time, exclusivity was something used to gain a competitive advantage but now the value of combining talent, resources and audiences has been realised.

For Stuff that’s demonstrated in its work with Māori Television, RNZ, TVNZ, and Newshub. The latter partnership resulted in 'A Tale of Two Cities', an investigative piece examining the gaps in prosperity across Auckland.

Stevens says we will see more and more of these relationships and collaborations in the future as a way of securing the sustainability of journalism in New Zealand.

RNZ’s chief executive Paul Thompson agrees, saying it now understands if more resources, like two newsrooms, are thrown at a story, the impact of the journalism increases. He gives the example of the Panama Papers investigation when it teamed up with TVNZ and Nicky Hager.

They were brought together by the International Consortium of Investigative Journalists and journalists spent a week and a half trawling through the local aspects of the funds incorporated in 21 tax havens. The findings were rolled out on RNZ and 1News

The new newsroom

A more recent partnership of local media outlets saw Stuff and MediaWorks collaborate in a documentary series called 'The Valley'. It investigates the New Zealand Defence Force’s 2012 battle in Baghak – a valley in Afghanistan – that resulted in the deaths of two New Zealand soldiers. The Stuff Circuit team behind the series (Paula Penfold, Toby Longbottom, Eugene Bingham and Phil Johnson) won Best Team Investigation at the 2018 Voyager Media Awards.

But not only is it a showcase of quality journalism, it demonstrates the new look of journalism. It’s made up of a six-part online documentary, prime-time broadcast documentary, a long-form read, an interactive website and a virtual reality experience. 

That evolution in storytelling was also realised in the addition of digital and multimedia categories in the 2018 Voyager Media Awards. Best Innovation in Digital Storytelling went to RNZ for its 'NZ Wars: The Stories of Ruapekapeka' web-documentary, Best Team News Video was won by 1News Now’s 'Edgecumbe’s poor flood defences', and Best Team Feature Video was awarded to New Zealand Herald’s 'Under the Bridge' series. 

This kind of journalism doesn’t come cheap, it takes a long time to create, and it isn’t often that appealing to advertisers who tend to shy away from controversy. So stepping in to provide some support has been NZ On Air, which, according to its Annual Report 2017 had an expenditure totalling $130.8 million in the 2016/17 year. 60.5 percent of that went to national TV, three percent to digital media, 0.9 percent to regional media and 24.9 percent to public radio.

Within that almost half a million went to Stuff for 'The Valley' and also for the investigation 'Last of A Few', a short series focused on three Air Force war veterans representing the last of their era. They are just two of a number of journalism projects funded by NZ On Air, including 'The Silence Project' for nzherald.co.nz, 'Hijacked' for The Wireless, 'Frame' for The Spinoff and 'Great South Stories' for Newsroom.

While this type of funding can’t sustain a commercial media business, these digital journalism projects are helping to push journalists in new storytelling directions and for Stevens, all it takes is a look around the Stuff newsroom to see how the skillsets of journalists have changed since the days when writing was the key skill. 

“When I started you needed to be able to write, now we have journalists creating audio for podcast, fronting videos and shooting videos, taking stills, analysing data for data journalism pieces, creating interactives and visualisations of that data and writing stories.” 

With such variety, it’s undoubtedly an exciting time to be a journalist. But it’s also a scary time. Editorial budgets have been continually cut as companies look for cost savings and, with the appeal of big salaries in PR and comms roles, many journalists have left of their own volition. MediaWorks’ chief news officer Hal Crawford sees some hurt and anger among some journalists who are resistant to the changes being forced upon them. 

“People take justified pride in skills they have maintained over years and it is very alarming for individuals to find that those skills are no longer valid or they no longer add value in different environments.”

He says being resistant to the change and unwilling to move beyond a fixed skillset is not a good mindset anymore. On the flip side, those who are willing to keep learning will find themselves in a better space to get better results as a journalist.

“That attitude is the key to riding out the anxiety.” 

However, it doesn’t all have to change. As the fake news saga has brought to light, the importance of journalism and the fundamentals of its practice remain the same. 

“So much has changed but those fundamental pillars of journalism haven’t and can’t and won’t change – fairness, accuracy, balance and that term ‘keeping the bastards honest,” says Stevens. 

Gillespie agrees, and when reflecting on the pace of reporting on digital he says “if you are first and wrong, you are still wrong, you are not really first”. 

But it’s probably RNZ’s Thompson, a man at the helm of a media company that is likely to receive additional government funding and is in what many now see as a luxurious position as a totally non-commercial broadcaster, who best sums up the future of journalism when he compares cockroaches to journalism: “We may get bombed occasionally but we do survive.” 

Despite the numerous commercial pressures and existential angst in the news media business, everyone is hoping that the truth will continue to set them free. 

One beacon of light held up this year has been the government’s recent investment in New Zealand programming and journalism. Labour allocated $15 million in Budget 2018 and the wait is now on to see how it is allocated between RNZ and NZ On Air. 

  • Since this story was published, decisions about how that funding will be allocated have been announced. Read those decisions here.

While it’s not quite the $38 million outlined in Labour’s pre-election policy, which featured a plan to strengthen the public broadcaster’s multimedia o er with RNZ +, Radio New Zealand chief executive Paul Thompson says it’s still a significant investment – “even if we only get a share of it”. 

“More important are the strong signals that this is just year one and that increased investment for RNZ and the sector will be available from next year on.” 

“I think what you will see within a 10-year timespan is politicians and officials thinking about what they can do to encourage diversity of news and information. It’s so vital to any functioning democracy, it’s as vital as air and water to how we operate as a society.” 

For RNZ, proving that function comes with the financial support of the government and a charter outlining its role to provide comprehensive, independent, accurate, impartial, and balanced regional, national, and international news and current affairs. 

Thompson says it’s very fortunate and privileged to have public funding and is aware that “it’s fairly tough for commercial operators”. 

“I think there will be quite a lot of consolidation across those entities and I think media organisations that continue to rely on advertising as their main source of income will nd it very challenging.” 

One of those is TVNZ, a media company with a form of media bipolar disorder: it’s almost entirely commercially focused, yet its only shareholder is the New Zealand Government.

Earlier this year, Hal Crawford, MediaWorks chief news officer, shared his views on the state of the local media landscape and said having a government-owned commercial TV company in New Zealand is a big distortion in a small market. 

“To say that the TV ad market is a level playing eld is like denying the incline of Ruapehu,” he said in a piece on The Spinoff.

He went on to explain that TVNZ’s model, alongside RNZ’s, means the broadcasting scene in New Zealand is poorly set up to serve the audience.

“There is no public broadcaster in New Zealand making digital, radio and true TV content – no single source for all platforms.” 

His suggestion was to make TVNZ1 that public broadcaster – rather than the “awkward work-around” of pushing RNZ into TV. 

Regardless of whether or not RNZ does move into the TV space, TVNZ head of news and current affairs John Gillespie does not see it as a threat to TVNZ’s offering, and says the question should be: What does that mean for the wider market? 

“It’s about all the players and if you pour a whole lot of money over there, which I’m not saying they will or won’t, that will make a difference to the overall market.” 

That difference is something Gillespie says the media funding commission is going to have to get its head around.

Stuff editorial director Mark Stevens says he struggles with the “thinking and reasoning” behind sharing the additional funding between RNZ and NZ On Air. 

“If you look around the country, RNZ’s not really in the regions. It’s not creating local journalism in the regions or certainly not at the level that companies like ours have been for many years.”

Similar concerns have been seen in the UK with some saying the government funding for the BBC is putting local democracy reporting at risk. Stevens says the solution in the UK was the establishment of a Local News Partnerships scheme, which sees the BBC funding 58 news organisations in England, Scotland and Wales to cover the employment costs of democracy reporters. When announced in December 2017, there were contracts to employ 143 full-time and two part-time reporters and the stories written by them will then be shared with over 700 media organisations that are part of the scheme.

In the announcement on the BBC, controller of BBC English regions David Holdsworth said: “is is a major advance in the partnership which will significantly improve the reporting on councils and public institutions, leading to greater public accountability for our local politicians.” 

Closer to home, NZME managing editor Shayne Currie believes there are great opportunities for NZME to be able to get a slice of the funding, be it from NZ On Air or any of the other funding coming from the government. 

Already it’s received NZ On Air funding for video and radio projects – including The Road to Rhythm – 15 years of Rhythm and Vines, Kiwi Women who Changed the World' and ZM’s 'Sealed Section' 2018 – but, like Stuff, Currie gives its regional reporting as another possible incentive for it to receive funding. 

“There’s no reason NZME can’t have a share,” he says. “We are a media business and we are investing a lot of time and money and resource into regional journalism, into our metropolitan newsrooms and we have regional newsrooms and they are each telling stories from those areas.” 

RNZ’s Thompson says growing its regional coverage is one of the plans it has in place, but what this looks like it is still unclear.

Want to read more? See the other chapters here.

This story was originally published in the 2018 Media issue of NZ Marketing. To subscribe, click here.

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