Analysis: Pressure mounts on Faafoi as NZME and Stuff narratives diverge

The last thing Kris Faafoi needs a second media company in trouble. Photo / File

NZME's announcement today isn't the first time we've seen a $1 dollar offer for a media company in the Covid-19 era.

It was previously revealed the Bauer offered all its assets to the Government for the deceptively low price, which, of course, requires the purchaser to take over all the liabilities, staffing costs and other expenses associated with a company devastated by the pandemic.

The difference this time is that the offer has been made public – and the pressure will now be on Broadcasting, Communications and Digital Media Minister Kris Faafoi to do something or risk another calamity.

Faafoi may not have blood on his hands when it comes to Bauer, but he was definitely in the room when the company was felled. This time he won't have the privilege of his actions – or inaction – playing out behind closed doors.

After Bauer, we now know that there's no such thing as "too big to fail" when it comes to New Zealand media. Faafoi can't afford to again apply the "wait and see" approach to the latest media challenge to come his way.

"Covid-19 has shown that New Zealand can't sustain the number of media companies we currently have," one senior media source told the Herald under the condition of anonymity.

"This has ultimately called into question the original decision by the Commerce Commission in deciding to block the merger between NZME and Stuff in the first place."

The challenge the government faces is that it can't write a blank cheque to save all media companies. It needs to make a call on what's worth saving and how to go about it. Doing nothing, pushing the decisions out to consultants or simply waiting will not solve any of the problems currently facing the media.

The other big issue hanging over today's news lies in the divergent narratives coming out of two businesses that are meant to be melded together.

After NZME made its announcement this morning, Nine quickly countered with a statement saying it had terminated discussions with NZME last week. This denial was later driven home by Stuff chief executive Sinead Boucher, who expressed surprise at the remarks being made by NZME.

"This announcement was very surprising to both Nine and ourselves," Boucher said in a memo to staff.

"While Nine and NZME had been in discussions around the sale/purchase of the Stuff business, these were terminated by Nine last week. There is no deal between NZME and Nine."

NZME boss Michael Boggs didn't back down after his narrative was challenged by Nine Entertainment. Photo / File

This did not dissuade NZME (the owner of the Herald, other print titles and radio stations including ZM and Newstalk ZB), with the company releasing a follow-up NZX statement saying that the company is still in a binding exclusive negotiation period with Nine and does not accept that exclusivity has been validly terminated.

So where does the truth lie?

Massey University public relations expert Dr Chris Galloway says that duelling narratives aren't that uncommon and that it usually takes additional information to uncover where the truth lies.

"I suspect that in the coming days as more information comes out, we'll find there was a bit of truth to what they both said," Galloway explains.

Following NZME's second statement, it appears that although the companies may not have reached a final agreement last week, they are still tied together by an exclusive negotiation period.

And even if an agreement is made, the deal will still have to be approved by the Commerce Commission.

Galloway describes the whole merging saga as a Gordian knot – a reference to an extremely difficult issue that can't be unravelled.

"We need the Government to just take a sword through it, so we can all move on," Galloway says.

"Personally, I would like to see as much diversity in the media environment as possible but I also understand the financial pressures that face media companies. I hope the companies do manage to find an agreement that works."

One person who isn't as optimistic about the prospect of the companies coming together is Horton Media boss Matthew Horton.

He argues Nine could find a far better offer if it took its negotiations further afield.

Horton said he was aware of Stuff and Nine rebuffing numerous approaches from potential buyers on account of the exclusive negotiation agreement with NZME.

He adds the interest in many of Bauer's titles illustrates there's still a market for media businesses in the current climate.

He believes that if Stuff were to be sold for $1 that Nine shareholders might have cause to take action against the company for not seeking the best deal possible.

Horton confirmed he was among those who have looked at some of Nine's New Zealand assets but says his enthusiasm has been tempered on account of not knowing what the next 12 to 18 months might hold.

And this is really the problem with anyone looking to take on the risks of a media company in a post-Covid-19 world. At this stage, we simply don't know how much of the ad revenue will return or where it will go.