MediaWorks has had a fairly rough ride over the past few years. But the big guns were all smiles last night at the new season launch. We sat down with two of them—chief executive of MediaWorks TV Paul Maher and group head of revenue Liz Fraser—for a chat about the company's content strategy, results and evolution.
It's not unusual for broadcasters to be overly optimistic at new season launch. But MediaWorks chief executive Paul Maher says there's good reason to be confident, because with its big international formats—MasterChef NZ, The Block, The Bachelor, Grand Designs NZ and X Factor NZ—there's more depth and more local content than it has ever had.
"And it's more than I expect anyone will have on their schedule," he says.
Compared to last year, where MediaWorks invested in some new, unproven formats like The Great Food Race and Cadbury Dream Factory, group head of revenue Liz Fraser says there's much less risk for next season, especially at 7.30, because the formats are so well known. But that's no guarantee of success. MKR NZ rated poorly in comparison to the Australian version, in part because it was put up against The Block.
"I’d call MKR NZ a failure," says Maher. "There’s no crystal ball that says we’ll be at a 30 share in that zone, but what we do know is that if you don’t do anything you know what’s going to happen. You’d look at Great Food Race and say that was something created from scratch so it carries higher risk than the other formats. Those four shows all have pedigree and they have been fully developed."
When it comes to these big international format shows, Maher says you want a blend of genres and categories and the addition of MasterChef brings MediaWorks something that's important to the business.
"It’s one of the biggest formats worldwide and I think we do shows like that better than our competitors. We integrate in a smarter way and because we’ve got a broader business base we can bring it life in different ways. So we'll do it the TV3 way and it will be amplified through the MediaWorks business. "
X Factor lost a big chunk of its audience in its most recent Australian season. So is it concerned the same thing could happen here?
"No, I don’t think so," says Maher. "It’s a really competitive space in Australia, with the Voice. X Factor has fallen in some markets, lifted in others, but we’re confident it will lift in this market. We can do it in a way that no-one else can. It fits so naturally with our network and then with our radio brands."
Many believe Paul Henry's cross-platform news show is a roll of the dice, but Maher doesn't see it as being too risky.
"It's an innovation around news. And proof of concept in some ways in my mind around how you make different touchpoints for consumers work in our business. People said that it was a risk when we did it at 10:30pm and we consider that to be a real success. He’s an amazing broadcaster. If anyone can do it, he's one of the people in our stable who can."
When looking at success, TV networks have traditionally been based on audience. But that's changing, says Fraser.
"Great Food Race didn’t perform in the ratings as high as we would like, but from an integration point of view, with Countdown and Air New Zealand, it was really successful for them. The way we integrated them into the show and the performance metrics were all delivered and it was the same with Cadbury Dream Factory. The sales that Cadbury got out of that and the increase in brand health was huge. Yes, you take risks with these new formats and yes they didn’t rate. The ideal of course is to get both working. The Block and X Factor NZ do that really well. And the known formats have a higher chance of success."
Maher says it's an interesting challenge for MediaWorks because it’s about balancing schedule performance and customer performance, particularly if they’re funding partners.
"That’s part of the evolution of where our business is going. Increasingly, we’ll create customer solutions that can work in a whole bunch of platforms and ways, so it changes our success metrics and the client’s view of traditionally what they want from a media partner."
And its integration department, which has grown from just a handful a few years ago to 20 staff now, is benefitting from that evolution.
"If you look at Grand Designs NZ, you won’t see ANZ integrated into the show, because that’s not the format of the show, so there’s different ways of how you can activate it outside the show. It’s not just the likes of The Block, where you’re seeing lots of products and brands. We’re doing more of the bespoke content creation, so when you’re getting a brief and they’re possibly wanting to use some of our talent and utilising those people to help activate those brands and creating much more of that content that doesn’t necessarily have to sit in a programme. It can sit online or on a Facebook page."
It's difficult and time-consuming to create those bespoke solutions, but she says this is growing every year, with Heineken, V and Unilever all doing campaigns of this type and coming back to them with new briefs.
Despite some optimism around audience growth last year, Maher says overall audience share for MediaWorks has fallen (it's gone down on 3, although it's grown on the much smaller Four).
Part of that was down to the loss of Home & Away, which Maher says was the biggest loss that it had through the receivership and impacted its news audiences.
"Do we have to go back there?" Fraser laughs.
"We’ve had some successes in replacing that," says Maher. "Clearly the brief to the market [for a G-rated soap] is an indication of our thinking about what we might do in that space. But the news audiences have been back to 27 share and that’s in the range of where a product as good as 3 News should be. But the lead is important to news, as are the 7.30 and 7 o'clock shows. Part of what’s lifting our news audience is The Block, where people will come to the channel a bit earlier. But I didn’t talk about [Home & Away] for six months. I was pissed off."
He says the number of responses to its brief for a soap have been "frighteningly large". But it's too early to discuss any details, aside from hinting strongly that it will play at 5.30.
Part of the decline in audience can also be put down to the fact that it was a very disruptive year for the company.
"If we look back at last year, it’s been transitional. We took some punts, some of them worked, some of them didn’t. But The Block is now almost back to where it was last year. It's about 250,000 ahead in overall reach on the same time in last year’s series. It started a bit slower this year and has continued to ramp up. And if you look at the Australian market, that tends to be the way those bigger formats build audience over time."
Somewhat paradoxically, despite a decline in overall audience, Fraser says it has grown its share of advertising revenue, which includes display, sponsorships and integration. And it has also raised its prices. So what does she put that down to?
"A good sales team. And delivering value to the customer. We've seen growth in the integration space in terms of revenue."
She says it has some business, as all media companies do, on a guaranteed CPT and it honours those deals and makes sure it's delivering. And she says it had to provide some make-goods for some clients when the ratings went down last year.
"But we’ve managed and we’ve delivered and everyone’s happy ... That’s part of the success of MediaWorks. You enter into an agreement, it might not be guaranteed, but we’ll make sure that campaign is successful and works and that’s why they keep coming back to us so it’s quite a point of difference."
So that doesn’t happen with Sky or TVNZ?
“Generally not. They’ll remove make-good bonus, they won’t deliver on what they entered into. We hear that a lot from customers.”
Fraser says it has been increasing its rates recently, whereas she says there have been a couple of quarters where TVNZ has dropped its rates. And Maher believes that was a reaction to its success.
"From my perspective we are still the most efficient network, we still deliver reach at a more efficient level than anyone else and then it becomes a demand and supply question really, so we’re pretty sensitive to the market in terms of price increases. But there’s value in our product."
Fraser says its radio brands are also more efficient than its competitors, but interactive is more expensive than TVNZ.
"It’s selling out, so the high demand for that product means that we can retain that price."
Video inventory is highly prized at the moment and the strategy for its ondemand services (it has had over 360,000 downloads for 3 Now app and it keeps growing every month) is to maintain a premium and run fewer ads at a higher price.
"We’re also growing streams so, again, if you use The Block as an example, it's had double the number of streams over last season which means double the amount of inventory in the market. Our news teams are continuing to increase the amount of short form video we put on our website, as are our radio stations, so everyone’s moving to create more inventory in that space."
Maher says businesses don't just buy media space. They come to MediaWorks "because they want to drive their business".
"Our ability to say 'you want these things' and here are the ways we could bring New Zealanders to make your tills ring higher and faster. Ultimately that's what they want and you want to make it as easy as possible and anyone who’s in that space is a competitor, whether it’s Google or NZME."
MediaWorks picked up the sought after media brand of the year at The Beacons this year. And part of that seems to be down to degree of difficulty.
"We had a big story to tell," says Maher. "We had clear demonstration of working harder, providing more success for advertisers, we changed a lot of our things we were doing inside the business to make sure that happened, we were winning and growing audiences, and we did all that during a period of financial transition."
And those trends have continued, he says.
"In terms of the business turning around and coming out of receivership, we're in fantastic shape. We are in the new capital structure, the board is embedded, a new chief executive is in place and it feels like we are being incredibly aggressive and positive about the investments in the business. We have never had more local on our schedule. I’ve said that at TV3 before, so it’s getting progressively more. We’ve got out of the full output deals, but we're not completely out of studio deals. But the money takes time to flow through the system and I think there is more support from the board around investment in the business."
He says the company continues to grow in all aspects, but because radio is already well-established, it's growing at a slightly slower rate than say, interactive, which has revenue growth in the double digits.
"Radio is highly profitable and had its best ever survey and TV is growing in revenue, and it’s been pretty solid in audience if you look at it over the last five years. We've been sitting around 27/27.5 share as a network for about the last five to ten years. And our profit is growing aggressively as we turn the business around. So all parts of the business are growing, which is good, and the trick for us to amplify that by ensuring that our sales solutions are smarter and easier and work better for clients."
So how does that work with TRB? Is it stepping on toes?
"If a client comes to me and they want to look at how they can work across all of our platforms, we weren’t really set up to do that before with individual sales teams," says Fraser. "And to a certain degree we’ve still got that, because you need your specialists in different fields, but a client can come to us and say 'what can you offer?' and behind the scenes we will pull all our assets together. That doesn’t mean they don’t book through the TRB. We don’t take agency business of course. But they can come to us and we can give them a whole integrated plan across TV, radio, online, mobile or social. We can still put a schedule and a plan together and they’ll book it through TRB, or we can say, 'here’s how radio would work' and they can do it with TRB directly. The biggest thing is to make it easier and simple for the customer."
As for Four, Fraser says it's been an amazing performer. She says it’s been averaging 5.5 channel share for the last year and in the last six weeks that has gone up to 6.1 and the content has been driving those results, with movies doing particularly well, especially with families. Four plus One has also helped lift the audiences by 12 percent, beating its own forecasts of about eight percent.
And Maher says it’s got to a five to six percent share much faster than Prime did.
"It’s grown since this time last year. We had a period coming out of receivership where we didn’t have Fox products, so it went through a bit of a slump but picked up a lot in the last ten months. It grew out of C4, which was a younger channel, but Four's profile is more in the heart of the commercial demo than advertisers realise. It’s the younger end of the mainstream commercial demo, between 25-34, but it’s not youthy."
This year one of the key changes is to bring local content with The Xtra Factor, which links 3 and Four, and The GC.
"It’s growing really quickly, it’s got a good brand proposition, demographically it’s in the right place and it’s complementary to 3."
Maher says the arrival of Mark Weldon as chief executive has been a boost for the company.
"One of the signals of change is how much and how quickly we’re investing in what our core proposition is, which is content. He should take a lot of credit for pushing us forward in that space. Whether that’s driving the Paul Henry cross-platform breakfast show or encouraging the content team to drive more investment."
But you could probably attach an asterisk to that statement.
"Overall, part of our strategy has been to reduce our overall content investment. One of the core metrics in this business is content to revenue but we’ve effected that through change in our international acquisition strategy, the change to Fox and NBC and CBS output deals."
So total investment is down, but he says investment in local shows is closer to 300 percent more now than it was last year. And given he says local shows perform better, it's a no brainer.
"They don't always perform better, but if you look at something like MasterChef, not only do you get a lift in ratings, it also drives revenue opportunities and then there’s the integration opportunity on top of that. Were in a more competitive marketplace, with new entrants to the market and changes to distribution, so backing local is a strong defense, or a strong way of attacking that."