The release of MediaWorks’ financial figures this week showed that radio remains the healthiest and most important part of the business.
While revenue in radio was stable at around $157 million, television contribution to the overall business dropped significantly from $147 million in 2015 to $130 million in 2016.
This contributed to an overall loss of $14.8 million for the business during the financial year in 2016, following on from the $14.5 million loss in 2015.
MediaWorks chief executive Michael Anderson says the entire free-to-air television market suffered a big drop in revenue last year but admits that his business performed worse than the market trend.
“At worst you’d want to decline at the same rate at the market, so this is not something we’d want to see again,” he says.
The drop in revenue for the overall market is largely attributable to shift of ad spend from television to digital channels. However, the problem facing local media companies is that they’re not benefitting from the migration of dollars.
Despite massive investment in digital infrastructure and talent over the last year, revenue on the digital side of MediaWorks’ business dropped from $11.9 million in 2015 to $11.1 million in 2016.
In many ways, this result is even more eyebrow-raising than the drop in television revenue. While the trends always suggested that TV would lose some revenue, digital was at least expected to grow given the ballooning digital advertising industry.
“That [result] was very noticeable,” says Anderson.
“We had a significant investment into digital last year, but the actual payoff for that is coming this year.”
Anderson says the digital arm of the business is currently seeing “double-digit growth” in revenues, buoyed largely by the growth in Newshub and Three Now.
The objective now will be to ensure that this growth is maintained through to the next financial period.
On a more positive side, MediaWorks was able to reduce its total costs from $307 million in 2015 to $286 million in 2016.
The biggest drop in expenses came in the content and production category, which went from $122 million to $104 million.
Anderson attributes this drop to a change in programming strategy. He says that in 2015, content and production investment was higher because MediaWorks was working on “a blockbuster strategy,” which focused on pushing individual shows.
“With 2016, we brought it back to a reasonable level and that was based on shifting the strategy to building primetime consistency rather than individual show performance.”
Anderson says the blockbuster strategy proved challenging because it required the team to build an audience for each show rather than establishing a strong primetime time slot.
“Not only was this difficult from a viewer perspective, but it was also difficult to sell to agencies and clients,” says Anderson.
“What happens is that you have to keep building an individual audience for each one, and clients don’t necessarily buy TV like that. They buy more on primetime than individual shows.”
With the shows such as The Project, Married at First Sight, Family Feud, The Block NZ and its Friday comedy lineup, MediaWorks does have a solid line-up of programming to attract the audiences advertisers desire.
Behind the scenes, the media company has also enjoyed a period of stability, far removed from the chaos that typified the Mark Weldon era.
“When I first joined there was a lot of frustration,” says Anderson.
“There were a lot of people working incredibly hard just to keep balls up in the air. I think what we’ve been able to bring is a level of stability, a level of focus, a level of teamwork that’s helped to settle the whole organisation down. What we’ve also done is lay down a plan that creates the steps for the next couple of years.”
And the aim of that plan is to ensure that all three arms of the business become strengthened into healthy contributors to overall profit.
“If you look at the 2016 results, there’s no doubt that radio essentially carried TV,” he says.
“We don’t want to continue that way. We think TV can be a healthy business, radio is and can become even more so, and digital can, with the right investment, also enjoy high growth.”