More managed decline? Or settling on a sustainable structure?

RNZ News

13 hours ago

Greg Hywood, chief executive of Fairfax Media and some of the company's top newspapers.
CeBIT Australia (CC BY-SA 4.0)
CeBIT Australia
Photo:
CeBIT Australia
When Stuff announced it was merging its digital wing with Trade Me last week, things had gone full circle.
New Zealand's biggest publisher of news had bought the online marketplace itself in 2006 for more than $700m.
Back then it was called Fairfax Media NZ, a subsidiary of the giant Australian news publisher which parted with $1.2 billion to buy the The Press, Dominion Post and Sunday Star Times and others.
By 2012, TradeMe was sold off in bits to ease debts and falling revenue. And six years later, Greg Hywood negotiated a merger of Fairfax Media and TV broadcaster Nine Network. It created an Australasian news titan but extinguished the Fairfax name.
The email Fairfax staff received as the merger news broke.
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screenshot
"The best outcome for our journalism, for our employees, our business and of course our shareholders," Greg Hywood said at the time.
But the New Zealand publishing - now branded as Stuff - wasn't on the radar at the time.
The 95-page merger document only mentioned Fairfax's New Zealand holdings once. And there was no sign of Stuff on a chart showing the logos of the new big beast called Nine Entertainment.
Less than two years later, Nine Entertainment sold its apparently unwanted New Zealand branch for just $1 to its chief editor Sinead Boucher.
Five years after that, sole owner Boucher is now selling half of Stuff's digital business back to Trade Me.
In the same week her former boss in Australia, Greg Hywood, stepped down from his role as chairman of Free TV, the umbrella group for Free to Air TV broadcasting in Australia.
Sydney-based Hywood became the ultimate boss of Stuff and its papers here when he rejoined Fairfax Media as CEO in 2010.
"Editorially and in the day to day business sense, the organisation did what it needed to do - and frankly it was doing really quite well," Hywood told Mediawatch.
"The New Zealand assets were important assets and we kept a close eye on them. They were managed very well.
"I was surprised that it was given back for a dollar because I always thought. . the New Zealand business was probably in better shape than the regional business here, which was sold for A$120m by Nine.
"Good luck to Sinead and the team with what they've subsequently done."
But if Hywood and Boucher had had their way in 2016, the deal could never have happened.
Both backed Fairfax Media NZ merging with its big New Zealand rival APN, the publishers of the New Zealand Herald (these days called NZME). They said it was essential for their survival.
The plan was knocked back by the Commerce Commission who reckoned it would be too much of a monopoly here.
And it would have created one single publisher of news instead of the two we have now - Stuff and NZME - with district editorial approaches offering readers choice.
"In retrospect I'm still supportive of it. Ninety percent of the growth in advertising in both New Zealand and Australia goes to Google and Facebook - and traditional media are fighting over the other 10 percent," Hywood said.
Fairfax and APN / NZME pursued the process in court for three fruitless years.
"You really needed scale to be able to compete and it was a question about diversity or scale. While they have both survived, would they have been able to invest in journalism in the merged entities (more) than what's currently the case? Hywood said.
"I can't answer that, but it was a very legitimate exercise to deal with the structural change going on in the industry and making sure that the journalism would survive."
"By the time I got back to Fairfax in 2010 as CEO, the consequence of investing so heavily in newspapers had put the company in the position where we had to sell TradeMe to reduce the level of debt. The print revenue was dropping at 10 percent a year, which was $100 million a year," Hywood said.
Former All Black captain Divid Kirk was the CEO who bought Trade Me for Fairfax in 2006.
"That was a very good decision by David - to digitise the revenue streams of the business," Hywood said.
Ads for jobs, homes and cars were the so-called 'rivers of gold' - practically a licence for newspapers to print money - as well as news - in the days before the Internet.
Hywood said back in the 1970s Fairfax had its own garage and a staff of mechanics just to service the executives' cars.
"Things were great, and were certainly fun... if you were fortunate enough to be a journalist in those days. But there's no point being what I might call an Anzac of the 70s."
"As the years went by and we hit the Internet period, the role of the journalist was less certain. But the fundamental role of a journalist has always been the same - having a good crack at making sure you get to the kernel of the truth."
Many still know Hywood in Australia as 'the man who swung the axe.' Nineteen hundred people got made redundant at Fairfax in basically a single day in 2012.
"That is what we had to do. You don't feel great making decisions like that, but it's a bit like a surgeon with a dying patient on the operating table."
"The direction the company meant the banks would have been knocking on the door and sold it off and broken it up. It was not going to survive in that form. You've got to do some radical things to save the patient's life."
The closure of printing plants followed - and outsourcing of production to New Zealand.
That prompted strikes and newspaper workers there holding signs like 'Not happy Bro' 'BAAAA-d move' against a backdrop of sheep.
"We offshored the sub-editing process and focused on the local reporting because we had to have the journalism. That was our responsibility."
The New Zealand Herald reports the news that its rival has gone into business with Trade Me.
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New Zealand Herald
Fairfax in Australia established the property news and information platform Domain, recently the subject of a bid of NZ$3b from a US real estate firm. But the market leader across the ditch - realestate.com.au - is currently valued around $30b.
Is Stuff's partnership with TradeMe a smart move to secure its news and journalism?
"I'm not close enough to the Stuff and TradeMe merger... but from a distance it looks like a pretty good idea. Well done to Sinead and the team," Hywood said.
"The whole point of the Fairfax and Nine merger was really to get a media company of scale with a property marketing platform to enable it to compete. Domain is a distant number two, but... with the correct investment and the decisions, the ability to take on realestate.com.au was always there. That hasn't occurred but the property marketing market is extremely lucrative."
Companies like Fairfax Media and Stuff have been in the business of managing decline for the last 20 years. Have they now found a sustainable but smaller-scale model based on lucrative digital property platforms?
"I don't think it will ever calm down. It's a bit like a raging river where you've got to hop from island to island. You can't just rely on content and advertising," Hywood said.
"Also, government has always been slow to adapt to what's going on. And it's got to really deeply think about what the right regulatory environment is... to get New Zealand stories in New Zealand, Australian stories in Australia and the news and information that is required."
"The private sector's got to get on its bike and build the businesses. And the government has to provide a fair, and sustainable regulatory environment so that everyone can get on with it."
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