NZME's latest market update made ugly reading.
Hot on the heels of February's annual result - where NZME booked a $175 million writedown on the value of its masthead titles - was news that the firm's headcount is in the process of being cut by 200 - roughly the size of the total staff at Bauer media.
Meanwhile, Herald journalists are taking three-month pay cuts and using up their annual leave. Senior management and board members have taken a 20 per cent pay cut.
Of course, many companies are taking similar measures during the cashflow crisis occasioned by level 4 lockdown.
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However, for NZME and most other news publishers, the collapse in advertising spend caused by the covid-19 crisis is particularly serious. Despite a precipitous decline, both NZME and Australian-owned Stuff have continued to report operating profits in recent years, running cashflow positive businesses even as the value of brands previously valued in the billions of dollars have withered in the two decades that the legacy news publishers have kept losing the race for online revenue.
In the latest update, however, NZME is expecting its total advertising revenues to halve this month, compared to April last year. And even if the country moves out of full lockdown to level 3 and 2, it is inconceivable that those ad revenues will recover strongly.
As BusinessDesk's Paul McBeth wrote this morning: "Print, radio and digital advertising and classifieds accounted for almost three-quarters of NZME's 2019 revenue. If that were to halve over 2020 while other income streams were to hold up, NZME would be looking at revenue of $235 million, more than $70 million short of the cash cost of staff and suppliers in 2019."
The actual outcome might not be as bad as that, but the orders of magnitude are clear and the sagging NZME share price, which has come close to touching a feeble 17 cents in recent days, tells the story of a media firm in some distress.
Across Auckland, at the headquarters of its primary rival, Stuff, things are almost certainly worse.
Not only have Stuff's earnings been falling faster than NZME's in recent years, but its Sydney-based owner Nine Entertainment is even less keen on the New Zealand news assets than Stuff's previous owner, Fairfax. Nine sought buyers last year and got no serious offers. The idea that it has become any more attractive in recent weeks is obviously fanciful.
Rather, the global pandemic looks to be accelerating a messy reckoning for New Zealand's largest, privately owned news media organisations, especially when MediaWorks's unprofitable and equally unsaleable TV3 operation is included on that list.
There is no obvious answer as to how to save TV3's news service, other than the ongoing commercial truth that the news is where the most valuable ads can be sold. Presumably TV3 will want to retain a news service if it is to keep broadcasting at all, even though news is phenomenally expensive to produce compared to buying back seasons of, say, Spongebob Squarepants to play in the 6pm slot.
Nor is there an obvious path to sustainability for either NZME and Stuff. NZME has gained 21,000 online subscribers, but that generated a measly $1.7 million last year. It might be worth $4 million a year sometime soon. By comparison, last year's total NZME wage bill was more than $150 million and print advertising was its biggest single revenue source at a bit off $100 million. Online subscriptions are not going to save it any time soon.
Government ministers looking at all this, which they are at the moment along with every other covid-stressed industry, are reluctant to just see large chunks of the private news media fail commercially at any time, let alone during a pandemic. The daily news media has been designated an essential industry because of its broad community reach and its status, believe it or not, as a trusted source of information compared to other communication methods.
Yet there is little appetite to prop up private sector news media players when so many other sectors would complain they, too, can make the case for a bail-out.
As Finance Minister Grant Robertson put it to Parliament's epidemic response committee this morning, it's important not to blame covid-19 for all the ills of every industry.
"The media sector is one where the patient had pre-existing conditions," he said. Media company bosses turning up to the select committee for hearings on their sector on Wednesday should take that as a sign that the cheque book is not about to come out.
However, there is an option available that would absolve the government of having to find any cash for private news media while giving NZME and Stuff a fighting chance.
That is: let them merge.
In my personal view, the Commerce Commission was absolutely right not to allow their first merger proposal to proceed and the courts were right to back that refusal.
News is a service that requires a diversity of voices to thrive. The fewer the voices, the less opportunity for readers to sieve the available evidence about not only the things they'd like to know about, but the things they probably didn't know they should know about.
However, there was always a route that would probably have allowed the commission to say 'yes' to the original merger idea.
The problem was just that neither NZME, a listed company seeking the confidence of both shareholders and its bankers, nor Stuff particularly favoured.
That was: to argue that they were in financial distress and that without a merger, they would fail. Instead, they argued they needed scale to compete with Facebook and Google, which have nabbed most of the online revenues.
The Commerce Commission chair at the time, Mark Berry, told BusinessDesk last year that if they'd made the financial distress argument and been able to prove it, the commission may well have approved the merger. They didn't, so it didn't.
Today, however, based on the advertising market implosion and NZME's latest disclosures, it would hardly be controversial for NZME and Stuff to remount their argument on the basis that their future is either together, or not at all.
If they won that argument now, there would probably need a fast track to consummation. A new round of Commerce Commission hearings might require time and resources that neither company has anymore.
However, a government wanting that outcome has legislative and regulatory options to make it happen. It has also been entertaining a 'kiwishare' obligation, which would tie the merged entity's hands on staff reductions and regional title closures for two or three years. Even that, at this stage, may be asking too much.
However, if there is a political will to give legacy media a fighting chance, the time to express that is clearly now.
And the lowest cost, most commercially legitimate way to do so is to roll over and let the long-sought merger proceed.
At the very least, it may push the day of reckoning past the current wider period of crisis, making the state of the news media one less political headache in the current sea of trouble.