Even at his most philosophical, columnist Matthew Hooton is a realist. That made his economic alignment of New Zealand with the likes of Kazakhstan just a little scary.
He is entitled to be philosophical (he has a doctorate in the discipline) but last week’s column in the New Zealand Herald was brutally material: If we continue our steady-as-she-goes, borrow-and-hope, growth-will-come economic prescription of the past 17 years our economic peers will be Bulgaria, Russia and Kazakhstan.
I liked his colourful analogy suggesting that we have been kidding ourselves: “There never was a rock-star economy, except in the sense of a once-successful arthritic band loading themselves up on cocaine and methamphetamine to get through the nostalgia tour.”
His bottom line was that our level of productivity sucks. Per-capita GDP growth has stagnated at less than 0.5 per cent since 2008.
Hooton’s focus was on the economy as a whole but his sobering commentary made me think about the long-term effect of gross domestic product growth on media sustainability.
His timing was a little unfortunate. It took the shine off some positive news from two of our media companies in the same week.
NZME reported a net profit for 2025 of $13.1 million, a pleasing reversal of last year’s $16 million loss. A couple of days later Sky TV reported its half-year result, which showed an underlying net profit after tax of $19.3 million – up 77 per cent.
These reversals were good news. After all, a profit is a profit. However, neither result really reflects a significant long-term shift in the fortunes of the New Zealand media industry.
The Sky result was driven by the acquisition of TV3 and Three Now (or what it now calls Sky Free) from Warner Bros Discovery for one dollar last July. Three’s contribution was responsible for Sky’s six-month revenue ‘growth’, not inherent improvement in the market.
NZME’s operating revenue for the year was actually down by $5 million to $345 million, reflecting the closure last year of the group’s community newspapers. The group’s publishing interests continue to face declining revenue, but the closures reduced that rate of decline to two per cent last year. Its radio revenue improved by five per cent but that growth was in the second half of the year, reflecting ongoing market volatility. In reality, allowing for ups and downs, total New Zealand radio revenue has been effectively flatlining for more than a decade.
Our media companies continue to bolster their bottom lines by containing costs. That generally means cutting staff (which they place under the faux empathetic heading of ‘people costs’) or cutting services. Rarely does it reflect significant real increases in productivity among reduced workforces already operating at full capacity.
The media groups are in an unenviable position. Their mainstay source of income no longer delivers as it once did. Domestic advertising revenue has been on a downward trend. Transnational digital platforms have sucked the life out of it.
The Advertising Standards Authority will release the 2025 revenue figures for newspapers, television, radio, magazines, outdoor and digital this month. I have no doubt we will see a continuation of the trends that have been in place since newspaper and television revenue peaked almost two decades ago. Apart from a relatively small gain by outdoor advertising, only digital will continue its upward trajectory and the vast majority of that money heads straight offshore. The platforms leave behind contributions to New Zealand journalism that, compared to their revenue, are so small a forensic accountant would be required to find it in the spreadsheets.
That is a problem that a government with guts could remedy. The OECD has already provided the framework to combat profit shifting arrangements that have offshore enterprises laughing all the way to the bank.
However, that does not address the longer-term issue in which our media industry is inextricably tied to national productivity growth.
Levying digital platforms could provide funding to sustain a significant amount of journalism in this country. It does not, however, ensure a healthy environment for accountability journalism.
Do we want to see a future in which most or all of our journalism is paid through hand-outs from a government agency? My trusty Trump Filter envisions a future inhabitant of the Beehive who does not have regard to the principles inherent in constitutional democracy. That inhabitant could manipulate such funding to produce a cowed and compliant news media.
To avoid such danger, we must have a pluralistic media system with sustainable elements drawing their funding from a variety of sources. Yes, there is a place for publicly funded media freed from commercial imperatives. Increasingly, there is room for philanthropically funded journalism. But there is also a place for commercial media in which the audience is a significant influence, creating a market for the advertising of goods and services in the process.
And that audience-driven commercial model requires a vibrant economy – as well as a far more equitable digital landscape – in which to thrive. That means a creative economy with innovative enterprise and real productivity rises. Investment-diverting housing markets and immigration have failed to achieve that.
Matthew Hooton’s timely warning includes a less-than-optimistic appraisal of the ability of either Christopher Luxon or Chris Hipkins to lift us up the GDP league table. That will require vision that neither man currently displays.
However, failure to address it carries enormous risks. One of them is that the journalism on which constitutional democracy relies will fall victim to low productivity, but not on the part of the diminishing number of journalists who work harder and harder to provide it.
Disclosure: Headline image created by artificial intelligence (ChatGPT).
Another fire and thought-provoking piece. A point not covered is that state funding of media in New Zealand was until a few decades ago, state funding of commercial media – first radio and then TV. The non-commercial elements of each were a small part of each enterprise. One of the rationales for state investment in radio was to have an alternative to the newspapers’ then-monopoly on much advertising. There is no reason at all, in my view, that access to advertising by New Zealand firms should not be seen, as it was, as a public good and funded accordingly. (And FTAOD, I don’t mean 100% subsidies on advertising spends. I mean subsidies on carriers).
I cannot read the article as I don’t subscribe. However agree neither Luxon or Hipkins are likely to produce the optimal growth policies. The explanation is simple, even if they could construct optimal policies they would not be electorally possible. We are not alone just look at the UK and Germany etc.