The closing of a major newsroom in New Zealand because of disappearing advertising revenue is a warning to the rest of the world.
Newshub plans to close its newsroom following a collapse in revenue, according to its US-based parent company, Warner Bros. Discovery (WBD).
Around 200 journalists, producers, editors, camera operators and associated staff would lose their jobs, in a move which would leave state-owned TVNZ with a "near-monopoly on TV news".
The local market in New Zealand is an exaggeration of global trends. The move to digital advertising has happened faster in NZ.
The New Zealand advertising market fell 7.3% in 2023 from a record high the year before, according to media agency bookings analysed by Standard Media Index (SMI).
Linear TV ad spend fell 19% in NZ last year and the local market there has had a frenzied love affair with digital, which is now 44% of all agency ad spend.
And programmatic at 39% has the largest share of digital ad spend of all markets in which SMI reports.
In Australia, search is the biggest category in digital ad spend but in NZ programmatic is twice that of search.
“This a very big deal and a very sad loss for media diversity in New Zealand,” says Ben Willee, general manager and media director at Spinach.
“What everyone is wondering is could this happen in Australia? The answer is a definitive yes.
“The real challenge for Australian media companies is revenue is running like a burst pipe towards global tech firms.”
While advertising spend on digital is growing in Australia (2% in 2023, according to SMI, and 3.7% to $14.7 billion according to the IAB), news publishing ad dollars are sliding, down more than 14% for newspapers and -7% for digital.
Australian regional markets have been dealing with local news closures since the pandemic which is a result of the same symptoms, declining audiences and ad revenue.
“While it's unlikely to happen to the major players in our market any time soon, it's not out of the question in the long term,” says Adrian Roeling, managing partner at Hatched.
“Factors ensuring Australian TV networks have a longer runway include the fact that NZ is a smaller market. The high fixed costs in TV production and broadcast ie satellite feeds etc, have a harder impact on smaller TV networks that lack the scale of the larger networks in Australia to spread their costs out over time.
“NZ advertising in TV has traditionally been fairly cheap to buy, unlike TV in Australia which has been able to maintain relatively high CPMs and achieve YOY inflation.
“The NZ economy and in turn advertising have deteriorated much more significantly in NZ than in Australia. This, coupled with the fact NZ broadcasters haven’t had as strong a digital offering, has meant they have been more impacted by the shift of ad dollars away from TV to global digital platforms.
“Australian TV networks have been developing and diversifying their digital offering for some time and are better placed to stem the tide of ad dollars shifting to global platforms.
“Having said all of this, if Australian TV audiences decline further and the broadcasters don’t successfully continue digitalisation strategies or effectively collaborate to manage costs, we sadly may witness some form of consolidation.”
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