The Fourth Estate in Critical Care: COVID-19 and the Media
By Alexander Campbell
COVID-19 continues to be the dominant news story around the world, and now it is devastating the media industry. Journalism is recognised as a public good in a functioning democratic society, and New Zealanders trust our media organisations more than many other comparable Western nations trust theirs. The largest news website in New Zealand, Stuff.co.nz, has had an average daily reach of around two million people during the pandemic. With advertising revenues falling dramatically, media operators are warning without intervention the fourth estate will dramatically shrink. So, what can be done?
Many media outlets are dependent on advertising for much of their revenue. The economic fallout from COVID-19 has caused an enormous decline in advertising. At the Epidemic Response Committee on April 15th, Sinead Boucher of Stuff and Shayne Currie of NZME said that both companies advertising revenues had more than halved during the pandemic. The dependence of media organisations on this advertising revenues mean that unfortunately cost cutting has come just as quick. For example, NZME was forced to indefinitely shut Radio Sport and then cut 200 jobs, which was 15% of its workforce. Bauer Media shut its entire New Zealand operation, taking hundreds of jobs with it.
Media commentator Gavin Ellis pointed out that the effect of COVID-19 on media companies has been worsened by the fact most entered the crisis with virtually no financial reserves behind them. The drift of advertising online to platforms like Facebook and Google has meant that such closures and cuts are not out of place in the industry. Those two companies “siphoned off at least 70 percent of the $1.26 billion spent on digital advertising each year” according to Ellis. Dependence on traffic volumes has fuelled the rise of click-bait journalism and the slow cuts to newsroom up and down the country, risking the ability of the fourth estate to credibly hold those in power to account.
So, what now? In recent weeks pressure has mounted on the government to intervene to save the media, in addition to the pressure it was under from the sector before COVID-19. And so, on the 23rd the Minister for Broadcasting announced an initial rescue package for the media. $50 million dollars was allocated, broken down as below:
$20.5m to completely cut TV and Radio transmission fees for six months;
$16.5m to reduce media organisation's contribution fees to NZ On Air for the 2020/21 financial year;
$11.1 million for specific targeted assistance to companies;
$1.3 million to purchase central government news media subscriptions;
$600,000 to completely cut RNZ AM transmission fees for six months; and
A commitment to further develop the Local Democracy Reporting pilot.
While the Minister stressed this is merely an initial package, with more to come in May’s Budget, there are several issues with it. First, for some it has obviously come too late. Companies such as NZME have had to cut jobs already, or close entirely such as Bauer Media, as discussed earlier. Second, the focus of the package is on broadcasters, with much more support allocated to TV and radio than print journalism. In the view of Sinead Boucher “print and online businesses, which employ the majority of journalists in the country, will not get the same level of benefit as the broadcasters at this stage, and certainly not at the scale needed to make up for the severe impact on the revenues that fund journalism.”
Criticism of the government’s response has been forthcoming, but there remains little agreement on what the solution should be. Broadly, three main ideas on possible relief for the industry emerged from the Epidemic Response Committee’s hearing on the 15th of April.
First, the consolidation of existing organisations was suggested. NZME and Stuff have tried multiple times to merge but were blocked, and have now asked for legislation to override the decision. Proponents of the deal argue it will give the companies the time and scale to adapt and compete against global advertising platforms. Detractors argue that even temporary ‘Kiwishare’ restrictions to protect the plurality of voices within the new ‘StuffMe’ organisation will not prevent the loss of plurality. The Government was also considering a merger of public broadcaster RNZ and state-owned enterprise TVNZ before COVID-19. Proponents of this hope a non-commercial TVNZ would leave more advertising revenue currently taken by TVNZ available to other broadcasters and free-up broadcasting funds for the government to spend on other journalism subsidies. Detractors have pointed out the same plurality issues exist as with the StuffMe merger, and the fact TVNZ and RNZ have markedly different internal cultures, leading to doubts over the success of any such merger. The Minister for Broadcasting has recently said this proposal is “on ice” but not dead.
The second proposal involves subsidies for the industry. These could be administered through NZ on Air or a new scheme. Mark Jennings of Newsroom and numerous other participants suggested during the Epidemic Response Committee hearing that NZ on Air be allocated more funding to distribute “focused on good, solid journalism outcomes”. Another option he suggested was encouraging consumers to donate to their preferred news outlets through platforms such as PressPatron by “making those donations tax deductible or, in fact, matching them on a one-for-one basis”. However, any form of subsidy to media organisations would create the issue of at the very least a perceived reduction in independence from the state, if not an actual reduction of independence.
Finally, there was some talk of special ownership structures by commentators such as Ellis during the Epidemic Response Committee hearing. These would take account of the largely unprofitable but socially very valuable nature of journalism. They might have a special tax status or require ownership in a collective fashion rather than by individuals or companies. However, any such work is at an early stage of conception, with Ellis suggesting a “Bretton Woods Conference” be established in the long term to decide on specifics.
We know that despite the devastation COVID-19 has the potential to bring, it will pass. When it does pass and while it is still here, we need a strong, independent media. Evidently, market forces can no longer provide that on their own, so the Government must step in. How they do so will undoubtedly shape our society for years to come.
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Featured image source: Matthew Guay on Unsplash