Local media at a tipping point?

Recently I attended a presentation from a local analyst/commentator on the state of the media industry in this country.

His contention, backed up by a significant amount of local and international data, was that New Zealand media are at a tipping point as a result of structural shifts in the global media landscape which are putting local media in smaller countries like New Zealand under increasing pressure to remain viable.

My view at the time was that he made some valid points, but the tipping point analogy seemed a bit alarmist. However, within a few short weeks, MediaWorks announced their intention to sell their TV business. Whilst this alone might not constitute a tipping point, there are definitely dark clouds on the horizon and as a marketing community, I believe we need to think very carefully about the media ecosystem that we want in this country.

The simple fact is that we live in a world of borderless media. An open economy like ours, with low barriers to entry, is vulnerable to new players with global scale. In and of itself, that isn’t necessarily a bad thing. As marketers, the changes to the media landscape over the past decade have opened up a world of new possibilities for how we engage with our customers.

But as a result, we’ve seen a significant shift in the channels that advertising dollars are spent in. Particularly hard hit has been press which has seen a $500 million decline in revenue since its peak. But linear TV has also come under pressure at a time when a necessary strategic focus on local content on their part has significantly inflated their cost base. Consequently, TV in this country is probably a loss-making industry. That simply isn’t sustainable in the medium term.

So the mediums that have historically delivered New Zealanders their news, entertainment and advertising are feeling the pinch, to put it mildly.

The question is, why should we care? Isn’t this simply a case of technology disrupting an established market and the market will sort itself out eventually? Maybe. Maybe not.

The Comms Council’s position is that New Zealand needs a group of strong local media organisations to ensure three things; 1. plurality; 2. the ongoing creation of meaningful local content and 3. to provide businesses with local platforms to build their brands

As citizens of this country, we should all be concerned about the first two points and as a marketing community, we must be concerned about all three points.

In any democracy, plurality of voices and a range of media outlets offering a range of views on political, social and economic issues is critical. Strong and independent local news platforms are a core part of our democracy and anything that undermines this is bad for all of us. Local news is dependent on local media. Fewer local media with fewer resources….well, you get my drift….

New Zealand content is an important part of our shared cultural identity. The simple fact is that Kiwis love to watch Kiwis.

Kiwi content, on whatever platform drives audiences and always will in my view. Therefore it’s good for advertisers and agencies alike. In fact, in 2018, 30 of the top 50 shows on television were local. Local content is important at a commercial level.

But it goes far deeper than that. When I was growing up, people still talked about the “Kiwi cultural cringe”; that national trait of deferring to imported culture, as it was obviously so superior to our own. Our newsreaders used to speak with English accents for chrissake! Fortunately, those days are long gone. As a nation we’ve forged our own distinct cultural identity rooted in achievement on the world stage, cherishing the land, Māori culture, international political independence and finding our own unique voice. 

I believe locally produced content that reflects these values and tells these stories has been a key enabler of this change. It’s not overstating the case to say that it’s been an important part of nation-building and we would be much poorer as a nation without it.

So if we believe there’s an issue, what can we do? Well, individual organisations need to make their own decisions about how they allocate resource and the kind of future they want to operate in. And for that matter, what kind of country they want to live in. But they should do so knowingly.

At the Comms Council we believe that if we’re to preserve local content and give local advertisers the opportunity connect with customers, then scale is important for local media organisations.

We’re therefore extremely concerned by the position taken by the Commerce Commission on market consolidation over the past few years. They have ruled against several acquisitions / mergers that would have created local players with more meaningful and sustainable scale. Specifically the proposed Stuff and NZME merger on the basis that it would concentrate too much media influence in one entity and also the proposed Sky and Vodafone Partnership

If the Commerce Commission continue this stance the outcome will be exactly the situation they believe they are preventing i.e. a lessening of market competition, particularly amongst local players, with a resultant move of advertising dollars to off-shore digital platforms.

Our view is that from the perspective of a legal definition that the Commerce Commission might apply, most media are multi-platform and international borders count for little. A broader definition of the competitive set is therefore required if we are to preserve a healthy New Zealand based and focused media industry.  

Finally, local content is critical to the survival of local media, particularly TV. However, the cost of local production that serves a small market of 5 million people is prohibitive. We, therefore, believe the government should increase funding for NZ On Air, with a specific focus on news and current affairs.

We recently met with the Minister of Broadcasting to make these points.

For all of our sakes, a vibrant and viable local media landscape is critical and as a marketing community, we need to think carefully about the risks we face and the kind of environment we want to be operating in five or 10 years from now. Our decisions will shape that future directly.

John Lennon once sang “you don’t know what ya got until ya lose it”. Whether or not we lose it is pretty much in our hands. Think about it.

  • Paul Head is the chief executive of the Commercial Communications Council.

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