Pattrick Smellie: Nine have told the government that Stuff has borrowed time?

COMMENTARY:

Today’s NZME move to try to intimidate the government into urgent legislation to allow its rejected merger with Stuff could work.

This is because NZME and Stuff owner Australian Nine Entertainment threaten a much larger and more politically damaging version of Bauer Media’s early April shutdown in New Zealand.

Do you remember how nervous Prime Minister Jacinda Ardern was about that?

He accused the German owner of The New Zealand Listener, Metro, North & South, New Zealand Woman’s Weekly, among other titles, of failing to take the wage subsidy, apparently suggesting that they would have been better at trading with free money. of the taxpayer and close a few weeks later.

That was almost as naive as widespread government criticism for rejecting the opportunity to buy all Bauer magazines for $ 1.

That was never going to happen.

$ 1 Deals

Aside from not wanting to become a magazine editor, the government could not afford to be seen willing to buy a struggling business at the start of the Covid-19 blockade.

Imagine the pressure you would have faced to accept any number of other “amazing deals” in other industries.

This time, there is another $ 1 offer on the table, but it would be the NZME dollar instead of the Crown dollar.

All the government would have to do, NZME said, was legislate to overturn the Commerce Commission’s decision, first made in 2017 and up to the Court of Appeals, to reject the merger.

NZME appears to be betting that the public sees a $ 1 deal to save roughly half of the country’s newspapers as a no-brainer, and the government has no choice but to accept or use a massive political attack. Journalists may not be a popular group, but their loss would be felt deeply in New Zealand communities.

Nine of May 31 deadline

The other letter in NZME’s hand is the fact that the government must decide soon, maybe even this week, despite having a Budget to deliver on Thursday and despite the decisions and preparation for changes in the alert level. from Covid-19.

That’s because Nine is set to close Stuff before May 31.

It hasn’t said that publicly, but BusinessDesk confidently understands that Nine has delivered that resounding message to ministers and government officials.

READ MORE:
• NZME seeks urgent approval, help to buy things for $ 1 ‘to help save jobs, newspapers’
• Premium – Analysis: Pressure builds on Faafoi as NZME and Stuff narratives diverge
• Law leader David Seymour says government should allow NZME and Stuff to merge
• NZME encouraged by talks with government about plan to buy things

Since buying Stuff’s assets from Fairfax Media in mid-2018, Nine has been unable to find a buyer for its orphaned New Zealand assets, which were still profitable before Covid-19, but had been in sharp decline for years.

Covid’s impact on media revenue, particularly the disappearance of advertising, has accelerated the need, in addition to creating acceptable conditions, for making brutal decisions quickly.

Killing of pre-electoral media

If things were to close or go bankrupt or liquidated next month, that could be the end not only for the country’s most trafficked news website, but also a series of regional newspaper headlines that are household names.

They include: Wellington’s Dominion Post, Christchurch’s The Press, Hamilton’s Waikato Times, Taranaki Daily News, Timaru Herald, Southland Times, and Nelson Mail.

That’s just a taste of the carnage that would ensue.

Hundreds, if not thousands, of journalists and the army of people who work with them would be out of work.

Reason to be scared

Just four months after a general election, it would not be surprising if the government was frightened by that prospect.

So NZME is calling the government bluff.

The Budget, four days away, is supposed to include a second media assistance package in addition to last month’s $ 50 million emergency “triage”, which delivered very little to legacy newspaper editorial groups.

In announcing that package, the ministers made it clear that they were not interested in propping up the media with failed business models. Like Covid-19’s elders, their “pre-existing conditions” already put them at greater risk of death, said Finance Minister Grant Robertson.

Perhaps acknowledging that, the editor of the New Zealand Herald is trying to turn the tables in a final effort that Stuff, and perhaps Nine, appear to have been unaware of before NZME announced its ultimatum to NZX this morning.

That ultimatum not only builds pressure on ministers but also on Stuff. If Stuff is observed to fail, and NZME is the sole savior, the remaining advertisers will abandon it unless the NZME lifeline is successful.

High risk poker

Public examples of such high-risk plays are rare in New Zealand, outside of the quasi-ritual process by which Rio Tinto threatens to shut down the Tiwai Point aluminum smelter whenever it wants to renegotiate its electricity price.

However, Rio is not bluffing this time around the foundry, and Nine is surely not bluffing about Stuff.

In response to NZME’s statement, the station said it had been in recent talks with NZME, which had ended without an agreement.

But those talks could resume as quickly as a wink if the government gives in and gives NZME and Stuff the regulatory relief they need to be allowed to merge.

The commission and courts agreed that allowing the country’s two largest news producers to merge would be bad for “media plurality.” They found that it would reduce the variety of voices and news media essential to the role of healthy media in underpinning a healthy democracy.

Both NZME and Stuff warned that this approach could cause one or both companies to fail, with an even more devastating impact on the plurality of media than the merger.

NZME’s bold game today seeks to crystallize that problem within a tight time frame.

If successful, it will cement current and dominant news coverage methods and take another three to four years to see if they can transform the stunted newspaper business into a company capable of surviving in a rapidly approaching post-newspaper world.

But first, you need the government to blink.