Feature
Riders on the storm
by Ruth Laugesen
US newspapers are facing dark days. The ones here claim they're in a much stronger position.
As the new head of the Newspaper Publishers’ Association, Tim Pank-hurst copped some black comments when he told friends and colleagues about his new role. “Somebody said, ‘I hope there will be a newspaper industry left for you to save,’” says Pank-hurst, formerly editor of the Dominion Post.
He has taken on the job of champ-ioning newspapers just as inter-national soul-searching about their future is turning to high anxiety.
In the US, a series of bankruptcies and closures has sent a wave of fear through the industry. The deepening recession, combined with a credit squeeze, has delivered a lethal blow to newspapers already threatened by the rise of the internet. And owners of newspapers such as the Los Angeles Times, Philadelphia Inquirer and Chicago Tribune have filed for bankruptcy.
The knock-on effect has been a shaking of belief in the future of the industry, irrespective of local differences. The refrain in the blogosphere is the newspaper business model is broken. Investors smell the whiff of decline.
But New Zealand newspaper chiefs say they are trailing world trends – for the good. Never mind that Fairfax New -Zealand has just announced another 70 jobs to be cut in pre-production. “They’re bloody challenging times, but we’ve still got a fair bit going for us,” says Pankhurst.
“Being further removed and in a smaller market, we get warning of what’s coming. We have the luxury of seeing what might be two or three years out. I think a lot of those factors [influencing events in the US] are not replicated here. I don’t accept that the model is broken here.”
He is right in one sense – the full force of the internet revolution that is sinking some US papers has not hit here yet. Broadband subscriptions are equivalent to 20% of the population, whereas in the US it’s 25%.
So, how are our newspapers doing? The share of the population reading a daily newspaper is shrinking. In 1993, two-thirds of the 15+ population read a daily paper on an average day; by 2008, it was only half.
Investors are bailing out of old media. The share values of our two biggest newspaper chains – Australasian companies APN and Fairfax – have plunged. And after accounting write-downs in the valuations of their mastheads, both companies have reported losses in recent months.
However, on a brighter note, even though a smaller share of the population is reading a daily paper, readership is up strongly for several papers. New Zealand newspapers have also been hugely profitable until very recently, with ad revenue growing 27% since 2000, according to analysis of advertising figures by the Listener. In the US, revenue fell 22% over the same period. Newspapers here are also more dominant in their local markets. Although many US cities are downsizing from two news-papers to one, that shake-up happened here long ago. New Zealand papers have high readership shares in their hometowns compared with papers in Australia and the US, making them attractive to advertisers. And that readership tends to be increasingly concentrated among higher-income readers.
The future of New Zealand newspapers, with few exceptions, is in the hands of two competing giants. Fairfax owns nine dailies in New Zealand, including the Press, the Dominion Post and the Waikato Times, as well as the Sunday Star-Times, Sunday News, Trade Me and a string of suburbans and magazines. The Fairfax empire, worth A$2.7 billion, includes Australian heavyweights like the Sydney Morning Herald, the Age and the Australian Financial Review.
Its rival is APN News & Media, which publishes the New Zealand Herald, the Herald on Sunday, seven regional dailies and magazines, including the Listener and the Woman’s Weekly. It also has 120 commercial radio stations. The biggest shareholder in the A$800 million company is Independent News & Media, of which Irish media mogul Sir Anthony O’Reilly is CEO and board member, and which recently tried unsuccessfully to sell its 39.1% stake in APN.
To reduce costs, both newspaper chains have cut subediting jobs, with Fairfax now moving to cut jobs in pre-production, too. Fairfax CEO Joan Withers said the latest cost-cutting would allow the company to position itself for growth in digital technology and new media.
“While this pre-press project would have been initiated regardless of the prevailing recessionary conditions, the current economic climate and challenges media companies are facing -globally underscore the need for companies such as ours to have a competitive cost structure,” she said when the cuts were announced.
Martin Simons, group publishing chief executive of APN, says the company cannot rule out further job cuts this year. “These are unprecedented times and one has to be prudent.”
Cost-cutting at Fairfax and APN to date has avoided wholesale cuts to the ranks of reporters, instead reducing the number of subeditors by centralising or outsourcing that work.
Fairfax NZ group executive editor Paul Thompson says, “I do strongly feel we need to make sure we’re working in ways where the number of reporters, photographers, feature writers and columnists is maintained and grows over time because that’s the magic that we do.”
Page 1 
