No printed Herald? Let’s hope the speculation is wrong

Amid a wave of speculation in The Australian about the future of New Zealand publisher and broadcaster NZME, one line sent a shiver down my spine. It suggested the owner of the New Zealand Herald could opt for “a digital-only publication model”. That would decimate its newsrooms.

Normally, speculation is just that: Something to take with a grain of salt until it comes to pass or not. However, the editor of The Australian’s Dataroom column, Bridget Carter, seems to have been particularly well plugged-in to the NZME boardroom battle precipitated by Canadian billionaire and New Zealand resident James Grenon.

Carter has been devoting more space than usual to what is happening, or about to happen, to media on this side of the Ditch and, although her suggestion of interest in NZME from toy manufacturer Nick Mobray did not pan out, she has been up with the play on other scores.

Hence, I am more inclined to put some weight on her predictions for the directions that a reconstituted NZME board might take. For example, I agree that there could be a pull-back on the plan to move more into news video streaming (by no means a guaranteed revenue source). She also flagged investing in talent to boost subscriptions and I can see the benefit of that.

However, I hope she is wrong about a potential move to a digital-only publication environment.

Yes, I freely concede that on my bookshelf is a coffee mug carrying the slogan I love the smell of newsprint in the morning (a souvenir from Washington’s Newseum). And, yes, it does sit beside another mug that is testament to my age – Grumpy Old Man. However, my reasoning goes beyond a sentimental attachment to the medium in which I spent a large proportion of my now-surprisingly-lengthy working life.

I believe a digital-only strategy at this point could well spell the end of the New Zealand Herald as an influential news source. The revenue fall would leave it unable to maintain the current newsrooms. So I only hope that incoming NZME directors are smart enough to leave a digital-only strategy in the ‘pending’ file.

NZME relies on its print publications for a significant proportion of its revenue and, although it is declining, it continues to far outstrip what is generated by its digital services.

Digital revenue accounted for about a third of the $204 million income from advertising and subscriptions attributed to NZME publishing assets last year. Printed publications generated $128 million of that total and the bulk will have been generated by the New Zealand Herald and its weekend offshoots. Direct print and distribution costs ate less than half that amount.

NZME has made impressive gains in digital subscriptions since it introduced a paywall on the Herald’s digital platforms six years ago. However, the $22.6 million those subs generated last year was far exceeded by the $58 million from newspaper circulations.

Even allowing for the continuing decline of revenue from print sources, could NZME really afford to forsake more than half its revenue in order to rid itself of the burden of a legacy medium?

There is, indeed, a burden: Printing and distribution costs continue to rise as circulations fall. No one – not even the most wild-eyed optimist – would see any hope of that trend reversing. Inevitably, the point will be reached where it is simply uneconomic to print newspapers. It remains a toss-up whether that point will be reached before the presses can no longer be operated through shortages of replacement parts and software updates. One way or another, newspapers will become a thing of the past.

Some of New Zealand’s newspapers have already abandoned the traditional six-days-a-week cycle, cutting out uneconomic editions and publishing as little as twice a week. That strategy might work for smaller regional and local titles, but it is a high-risk strategy for larger newspapers. In the United States, only six of the top 100 newspapers publish only four days a week.

However, it cannot be a zero sum game. The answer is not to cease print publication in favour of a digital-only strategy. Rather, media groups like NZME must find ways of maximising the revenue from their print assets while they look for ways of replacing the significant revenue that titles like the New Zealand Herald continue to generate.

Those ways should include the retention – and expansion – of NZME’s real estate marketing arm OneRoof. The current board’s review of that asset seems predicated on a wish to spin it off. Although its $27 million revenue last year was modest by comparison with the publishing income and the $116 million from broadcasting and audio services, it has a bright future. If it stays in the stable, innovative and entrepreneurial agendas could produce the revenue that would see the group through a phased plan to digital-only publication.

In the meantime, however, part of the group’s strategy must be a cooperative approach to breaking the stranglehold that transnational platforms have on the digital advertising market. Not only do those platforms extract the vast majority of the country’s digital advertising revenue while paying risible amounts of tax, but their power extends to dictating the very nature of the metadata associated with every digital advertisement.  NZME – indeed New Zealand media as a whole – cannot break that suffocating grip. It will require international effort (and probably the end of the Trump presidency).

Another part of the strategy must be to recognise that there remains a substantial number of people who actually like to read newspapers. Their needs, however, are not being properly met. Too often, they have been turned away from the habit of a lifetime by content created for digital audiences who wonder why the newspaper page doesn’t turn when you swipe across it. Digital first means, in fact, print is an afterthought. The newspaper audience is simply fed what has already been online, with little thought given to whether the content will attract readers whose interests have not been captured by online analytics.

Unless NZME pays more attention to its unique print audience it will continue to see those readers deserting its papers even faster than they are dying off. It is simply bad business to let that happen in the absence of fully compensating revenue streams.

James Grenon has made it plain that he regards the editorial content of New Zealand’s largest newspaper as below standard. He says the group needs to invest in its journalism and that would be the aim of a board of his making. No-one should take issue with that, but I am still waiting to hear the words “guarantee of editorial independence” pass his lips. Without that, any money would be wasted.

If the Herald and its siblings are to survive with that board of Jim Grenon’s making, it will be vital that the journalism is left to journalists. None of the board nominees has a news background and, in spite of NZME itself describing him as a journalist, lawyer Philip Crump has not risen through the news ranks. He is a commentator. I should not need to explain the difference.

Among the nominees, however, are plenty of people who can read a financial spreadsheet (Mr Crump among them). The numbers alone should convince them to put an end to any notion that newspapers are already in the graveyard. If not, the consequences will come back to haunt them.