End of year review
It was an interesting year for just about everyone. Covid was no longer front-of-mind, although its impact was still everywhere.
Big wage rises and newsprint cost increases were two of the lingering Covid-related problems for the publishing industry. The pay hikes were largely due to inflation and the paper cost increases due to logistics disruption and reduced supply.
The elephant in the room was the on-going multi-million-dollar government subsidies for media companies. Some medium-sized publishers managed to get in on the government’s lolly scramble in 2022, joining the big boys who sucked up millions in 2021 and continue to do so.
But the money is due to dry up in the coming year. It is hard to see those who are now partially funded by the Labour Government wanting to return to being fully private sector entities. It will be interesting to watch the lobbying in coming months.
And while I’m not a fan of news businesses taking money from the government, I do have some sympathy for the private sector as the state-owned media – TVNZ and RNZ – are in line for a massive new injection of funds, just as the private sector media subsidies come to an end.
The Aotearoa New Zealand Public Media (ANZPM) plan is a farce – there is no obvious reason for the merger and polls show the country is against it. Meanwhile, many consultants are doing rather well out of the process and there will be an eye-watering bill for the taxpayer. Towards the end of the year there were rumblings that the pin may be pulled on the project. Let us hope so.
The glacial shift to digital from print continued in 2022, with one notable breakthrough being the NZME claim that its digital operation was now profitable, without the support of its print publications. The NZME-owned New Zealand Herald went behind a paywall back in 2019.
This year, Allied Press, publisher of the Otago Daily Times and the main news company in the South Island, also put its website behind a paywall.
But for these companies, as well as smaller publishers, print is still profitable, despite a series of body blows that have piled cost upon cost, upon cost. A new public holiday, with associated penal rates, higher wages, due to inflation and a national labour shortage, high fuel costs and delivery costs – the list goes on.
The government’s new “fair pay agreements” legislation also has the potential to cripple small businesses, as some wage rates will no longer be agreed between employers and staff, but between big employer organisations and unions, as happened 50 years ago.
Good newspaper jobs that would have been fought over ten years ago now lie empty. Publishers cannot match the salaries available in communications roles, or government-funded journalism positions.
And it is not only journalism roles. Advertising and graphic artist jobs are also hard to fill.
This is where Spinc Media comes in to its own. There were several new publications which came into the Spinc fold in the past year, some with novel partnership arrangements. Traditionally Spinc has provided advertising production and page design solutions for publishers, but with costs now overflowing in all areas of small businesses, Spinc has been able to grow and offer additional solutions.
If the burden piled on the shoulders of your business is becoming too heavy – why not pick up the phone. There is a solution.
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An update for clients and potential clients of Spinc Media
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.
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.
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