Taking Stock 18 April 2024

AS a sector, the mainstream media is about as unattractive as artificial meat, or electric rental cars. The public says so.

To put that comment in perspective, from our few thousand clients in recent years we have not one request to provide research on any of these sectors or sub-sectors.

Those promoting artificial meat, Sunfed a recent New Zealand example, had a burst of support years ago but gradually have closed down, discovering the world preferred to eat vegetables as vegetables, not meat flavoured stuff, and meat as meat.

The Tesla comparison may surprise the many enthusiasts who have been early adopters of electric cars (as opposed to hybrids).

Providing the support for the comment that electric car rentals have declining popular appeal is the giant American car rental company, Hertz. It was bankrupted during Covid four years ago.

Merchant bankers bought the brand from the liquidator and, as so often happens, people with too much access to borrowed money (free at the time) made “Hollywood” decisions – rip, hit or bust.

The men who bought Hertz decided electric cars would reduce maintenance and fuel costs, would be a point of difference for those who need to rent cars, and believed there would be a green tick of approval for their adventure.

They ordered 100,000 Teslas in 2022.

Elon Musk announced this. Tesla's share price soared.

Whereas electric cars were far outselling hybrid cars just seven months ago, today in America hybrids sell four times the numbers that electric cars are achieving.

Sadly, Hertz’s customers did not want electric cars. They disliked the battery range, the time spent recharging, and they were unfamiliar with the instant acceleration, many crashing their cars even before they left Hertz’s depot.

So recently Hertz, having made awful losses, put their second-hand Teslas on the market, undermining the prices.

The market had its opinion on electric cars, just as it has an opinion on “plant chicken”.

To defy the market’s collective wisdom is hideously unwise.

I compare other subsets of sectors to that of the NZ media because none of the three currently look sustainable to investors and none have much chance of winning back support, unless they change radically or unless the public changes its verdict.

In the case of the NZ media the market and sector speak together in acknowledging that the current model is kaput.

For years, classified advertising, coupled with shotgun marketing from booze retailers, car salesmen, real estate agents, employment consultants, corporates and government departments had fed money to media outlets.

Things have changed; the media was seduced by its easy money 30 years ago, yet still behaves as though it has a queue of suitors.

For many years classified advertising provided such ample cash flow that Wellington's Evening Post, when I was young, had a front page solely comprising classified advertisements.

During consumer boom years in the 1980s, the media was fed so much advertising revenue that a new mindset was born.

Whereas the Bill Tofts, Dougal Stephensons and Philip Sherrys had been media servants, professionally delivering news without soiling the content with their irrelevant opinions, the later generations developed excesses that seemed childish then, but now seem nonsensical.

Gradually the likes of Wilson and Horton, INL, then Fairfax, and both TV1 and TV3 and women’s magazines (and newspaper inserts) so believed that their people were “stars” or “celebrities” that the bidding wars for talent became ludicrous.

Newsreaders were paid more than the Attorney General. I am not joking.

John Hawkesby shifted his news-reading from TV3 and worked for a few days at TV1, did not enjoy the atmosphere, and won so many millions in compensation from TV1 that he retired, bought a vineyard on Waiheke Island, and has lived thereafter, if not as a king, certainly as a prince that was previously a frog.

All sorts of television and radio journalists, having a curriculum vitae that displayed no particular bank of knowledge, social contribution or wisdom, became “deputy” or “heads” of imaginary departments and strutted around in their environment as VIPs.

I recall one insider describing these people as having won second prize in a village sack race, leading to their belief they were entitled to opine on Olympians, and dispense their views to the whole village on any matter that crossed their mind.

Wages became extreme because revenue allowed it.

Egos became laughable because the media collectively postulated that their “sack race stars” were thought leaders.

Newspaper reporters became columnists, somehow convinced that their inability to change a tyre, or their instant judgements on real leaders, would be of interest to an adult audience wanting news.

As news became soiled with the opinions of those employed to gather news, readership and audiences signalled their response. Circulation and audiences slumped.

People stopped watching, stopped reading, and stopped listening.

Advertisers, looking for target audiences, switched to the digital news forces that were exploiting the growing cynicism of the previous era.

For the people spouting their views, trustworthiness evaporated.

Recent surveys suggest 75% of New Zealanders so distrust news presentations that they avoid them.

Roughly half of survey respondents distrust the media’s objectivity.

More than a quarter believe the media has been captured by those wanting to promote left wing agendas.

Roughly one eighth believe media is captured by those with a right-wing agenda.

If surveyed, most would probably have noticed that the regular lampooning of the likes of Luxon, Peters, and Seymour, and the extreme overweighting of left wing so-called “thought leaders”. Many would wonder why Asian ethnicity and culture is so subordinated behind the people, or cultures, of the South Pacific, yet Asians in number almost equate with indigenous and Pasifika people.

Business news has been trashed by the second biggest newspaper chain (Stuff), business and commerce often conflated with social or political issues. Small wonder so many business leaders do not read NZ papers, watch local television or engage with journalists.

All of these trends have left the media with a cost base that is not met by subscriber payments or by advertisers.

So the media now calls for government action to address the “problem”.

Presumably there is a thought that either the Crown can instruct people to buy what they have indicated they do not want, instruct business to advertise more often, or worst case, can purloin taxpayer money to subsidise the media.

I assume those who seek this subsidy (tax relief, grants etc) believe that the cost would have value because “democracy needs a fourth estate”.

I find that curious. At best democracy is enhanced by sage media, not by today's NZ example of media.

If our people strongly reject the “celebrity” nonsense, see no value in self-appointed “thought leaders”, identify political bias, and are not inclined to believe reporters who mix the facts with their meaningless political opinions, then a democratic process is already occurring.

If investors are not willing to subsidise such a weak business model, then why would taxpayers?

In distant decades the likes of the Blundells and the Riddifords and the Hortons were prepared to take the risk of providing a product that people wanted. The papers sold. Readers read. Advertisers advertised.

There were no foreign digital platforms for the dwindling number of advertisers.

Today we observe NZME, a public-listed company with aspirations to be modestly profitable.

Its CEO, no doubt a hardworking, competent fellow, was amongst the highest paid CEOs in the country last year, according to the NZ Herald.

I repeat - audiences are tuning out; advertisers do not choose television, radio and newspapers to sell their wares; readers distrust the news presentations, and are not interested in colouring the facts with personal opinions.

Would it not be sane to cut back salaries and recalibrate news presentations, actually asking the remaining audience what they want to consume, and prove to business that their customers might be accessible in a new look, sanitised approach?

To seek subsidies or sympathy while still presenting the guff that their audience does not want would be a fairly stupid solution.

I disclose that I have several journalists, or former journalists, amongst my friends.

I obtain my news feeds from overseas organisations but buy both the NZ Herald and The Post, daily.

Increasingly, I clench my fingers rather than write to editors. My subscriptions are not to be regarded as permanent.

Our media has to change to survive. It must separate journalism from comment. It must forget about trying to create “celebrities” and “stars”. Leave that to magazines.

Subsidies would be absurd. Pay cuts are essential. Newsreaders do not have anything like the value of the Attorney General.

The media simply MUST focus on those presentations for which an audience will pay.

Childish columns and articles slanted by the meritless surely would be banished if the media was a real, sustainable business model, of interest to investors and customers. Surveys rarely produce lies.

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IF today's fumbling media owners really do want to find an appreciative audience by publishing worthwhile journalism, they need look no further than at an article published a fortnight ago on the National Business Review digital site.

A journalist named William Mace, who I have never met, wrote an outstanding, informative article on Indevin, a Marlborough-based wine maker and exporter which is transforming the wine industry.

Mace reported how Indevin has innovated, using technology to improve productivity, using science to underpin the art of wine making, and in impressive detail exploring how Indevin has become New Zealand’s biggest and most successful wine exporter.

His long article explained technology, science, and strategic analysis in words that non-business people would have read with interest.

I was so pleased to see real journalism that I wrote to him, congratulating him.

Why do so many NZ business owners and executives subscribe to the Financial Times, or The Australian, or the news feeds like Bloomberg?

I guess the answer is that these organisations provide informative, unopinionated news.

When they do publish opinion, it is credible and relevant opinion from genuinely successful people, not childlike magazine style guff, written by the mediocre or low achievers.

Mace deserves attention. If he can do it once, he can do it often.

Media heads should pay attention.

Real journalism is worth buying if you can find it.

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Travel

Our advisors will be in the following locations on the dates below:

19 April – Hamilton – Johnny Lee

19 April – Christchurch – Edward Lee (FULL)

1 May – Ashburton – Chris Lee

2 May – Timaru - Chris Lee

3 May (am) – Timaru – Chris Lee

6 May – Cromwell – Chris Lee

7 May – Cromwell – Chris Lee

15 May - Auckland (Ellerslie) – Edward Lee

16 May – Auckland (Albany) – Edward Lee

17 May – Auckland (CBD) – Edward Lee

28 May – Christchurch – Chris Lee

29 May (am) – Christchurch – Chris Lee

Seminars

Chris Lee will be holding a small number of investment seminars in May.

Chris will be discussing the economy – how to read the signals and avoid disasters – along with a presentation on a proposed gold mine in Bendigo, Central Otago, including the history of gold mining in the area and its plans for the future.

Location: Cromwell

Date: Monday May 6

Time: 7.15pm

Venue: Harvest Hotel

Location: Auckland

Date: Friday May 10

Time: 2.00pm

Venue: Milford Cruising Club

Location: Paraparaumu

Date: Monday May 20

Time: 11am

Venue: Southwards Car Museum

Location: Christchurch

Date: Monday May 27

Time: 1.30pm

Venue: Burnside Bowling Club

In all cases numbers are confined to the limits of the venue provider.

Reservations are required and can be made by emailing seminar@chrislee.co.nz or phoning 04 2961023.

Chris Lee

Chris Lee & Partners Limited