What a year 2021 was.
Many businesses took a beating because of Covid-19, with media firms no exception.
Some did well, however, especially those not forced to close during the New Zealand lockdowns and which then benefitted from the government’s Covid-19 advertising splurge.
Others couldn’t recover from the disruption. Spinc Media lost production work for several publications as a result of Covid, with one of our oldest clients, who we had partnered with for ten years, deciding to permanently pull stumps after the loss of tourism-related advertising hit their publications hard.
The bulk of our publishers survived, although in some cases paging and advertising volumes were well down on where they were pre-pandemic.
Publishers are far from being out of the woods, with huge increases in newsprint costs as well as shipping disruption causing further problems for an already stressed industry.
Fresh publishing partners have come Spinc’s way, in the form of two long-established New Zealand businesses looking to reduce costs while retaining quality.
As a result, Spinc Media goes into 2022 with seven additional titles in our stable.
Covid overseas
While Covid smacked New Zealand in the past year, it was nothing compared to the trauma in countries where Spinc Media has its production teams – the Philippines and India. Our offices were locked down for lengthy periods of time, staff worked from home as the virus took its toll on people on a scale unimaginable in our relatively safe haven at the bottom of the world. However, Spinc continued to function and no work was compromised because of the disruption.
All Spinc staff and their families were fully vaccinated by mid-year and by October we had moved back into our production offices on a limited basis. In Bengaluru we took the opportunity presented by a disrupted rental market to re-locate to a bigger office space which will enable us to accommodate the increased growth we’re experiencing.
State of the nation’s media
At the big end of town, publishers received millions of dollars of government subsidies via Local Democracy Reporting, Public Interest Journalism and Ministry for Culture and Heritage support schemes.
While some Spinc Media clients are recipients of this aid, it has largely been flowing to the conglomerates – businesses formerly owned by media magnates such as Rupert Murdoch, Sir Anthony O’Reilly and the Fairfax family.
These once-great businesses are now subsidised by the government they used to hold to account.
The chill wind of a changing media landscape has cooled the profits for most publishers, but some have added to their own predicaments with poor decisions over recent years. Yet they can all hold out their hands to Minister Kris Faafoi and receive taxpayer assistance with no need to open their books or justify why they are in need of welfare.
Even some of the internet-only new arrivals on the scene, without the legacy costs of presses and newspaper distribution networks, have been quick to get their snouts in the trough for some of the $25 million doled out in 2021, with lots more to come in 2022.
Does their reliance on state aid impact their impartiality? The answer is clear to see.
Growing multi-million-dollar subsidies for incumbent publishers can’t be the answer to the country’s media woes. It is certainly not delivering competitive businesses with different shades of opinion. On many issues the big players sing the same shrill tune.
Having the government subsidising businesses often ends in tears – think of last century’s wool mountains that filled just about every warehouse in the country after the government bought wool because overseas prices were low. It was an attempt to solve a problem for farmers, but created a different, much bigger problem for taxpayers.
Eventually a Labour Government pulled support from farmers, and while there was pain, the rural sector came through it and thrived.
When Bauer Media closed its doors in New Zealand in 2020, there were howls of anguish that long-established titles would be lost for ever, followed by calls for a government bail-out. Yet, many of the titles were quickly back in print, with new publishers and fresh ideas. Completely new ventures were also launched, employing ex-Bauer Media staff.
Critics often focus on the “destruction” part of creative destruction, but the “creative” element is much more important. Government handouts delay and block creativity.
If the policy of largesse adopted by the current government towards legacy publishers had been applied in earlier years to other industries then taxpayers could still be funding the Cobb and Co stage coach to save it from competition from buses and aeroplanes.
Netflix’s rise is an example of creative destruction happening today. Despite the fact that New Zealand broadcasting is heavily subsidised by the taxpayer, a better product, that is not subsidised by our taxes, is beginning to dominate the market. State subsidies, however generous, cannot hold back the tide of change indefinitely.
One possible solution for the predicament we find ourselves in could be for the two big newspaper-owning businesses to reverse the empire building of previous decades and sell off some of their regional units, to allow an opportunity for smart, new operators to step up.
In regional cities there will be individuals, or groups, interested in their communities who would be prepared to take on a regional daily or a community weekly, even if the profits were not substantial.
On a much grander scale, Jeff Bezos and the Washington Post is an example of this entrepreneur ownership, where profit isn’t the main goal.
Sure there would be concerns that individual newspapers could be captured by special interest groups – although, in the case of the Washington Post, an editorial board successfully maintains the newspaper’s independence from the owner’s perceived influence.
And surely a dozen opinions from different publishers is a better option for democracy than the status quo – one opinion emanating from Auckland, funded, in part, by the government?
The year ahead
Who can say what 2022 has in store for us? Much of our country’s future prosperity depends on the direction Covid-19 takes, and our government’s response. However, Spinc will continue to provide support for businesses hurt by the disruption, as we did in the aftermath of the 2011 Christchurch earthquake, which also took lives and hugely disrupted the city where Spinc is based.
To all our clients – and future clients – we wish you a safe and prosperous new year.
Paul Taggart
CEO
Spinc Media
021 333 335
