NZME to introduce freemium model as profits fall 53%

NZME, whose proposed merger with Fairfax-owned Stuff NZ is still with the High Court, has reported an after tax profit of $3.7m in the first half, a heavy 53% fall from previous corresponding period.

NZME publishes the NZ Herald 

Earnings before interest, tax, depreciation and amortisation (EBITDA) fell 18% to $23.2m with revenue down 3% to $185.7m.

The results came as the publisher of the NZ Herald said it will press ahead with its freemium model in the second half of the year. News and current affairs on its digital mastheads will remain free but “premium, in-depth analysis and opinion” will only be available through subscription.

The move “was in keeping with our strategy to grow new revenue streams”, the company said.

Despite the declines, NZME chairman Peter Cullinane said the underlying business continues to perform well “in challenging market conditions”.

The company added that a judgment on its appeal against a High Court decision to block the merger with Stuff NZ is expected in the second half.

NZME’s financial results for the first half of 2018

Under the agreement, NZME was to pay NZ$55m for a majority of Fairfax’s New Zealand assets (Stuff NZ). But the process has been lengthy, with the NZ Commerce Commission blocking the merger due to diversity of voice concerns.

NZME said the weekly brand audience for its flagship NZ Herald title climbed 3% in the first half while engagement on increased 8.5%.

But print advertising revenue was again hit, falling 8%. Circulation revenue fell 4%.

Digital advertising revenues increased across all products, it added, with display and mobile revenue up 20% in the March quarter.

NZME chief executive Michael Boggs said that “given difficult market conditions” it was satisfied to “keep trading revenue within 3% of the same period last year”.


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