Stuff pulls pin, ending big media companies' joint ad-buying business
By Paul McBeth and Pattrick Smellie
Aug. 20 (BusinessDesk) - A four-way automated advertising collaboration between the country's largest media companies is
being wound up after one of the four - Australian-owned Stuff - pulled the pin on its involvement as part of a strategic
review of its operations under new owner Nine Entertainment.
The formerly Fairfax Media-owned Stuff is a partner in the KPEX 'programmatic' ad-buying platform that was established
in 2015 with New Zealand's three other large media organisations: TVNZ, Mediaworks, and NZME, publisher of the New
Stuff's chief executive, Sinead Boucher, told BusinessDesk that KPEX had made sense at the time of its establishment
both because automated ad-buying was a much smaller part of the advertising market then than it is now. All four media
firms have also developed different commercial strategies in the interim.
"That organisation doesn't quite make sense in the same way, given that all the shareholders have developed quite
different business strategies over the timeframe," she said. Stuff would develop its programmatic strategy ad-buying
"As you know, we are being kept by Nine now and not being sold. So as we were going through and presenting about the New
Zealand business all the different components of what we do, this was one of the things that came up for discussion,"
KPEX chair and soon-to-depart Mediaworks chief digital officer, David Hine, said in a statement that KPEX was no longer
viable as it had been unable to keep all of its shareholders committed, meaning the joint venture would close.
"Without that ongoing commitment, KPEX is unlikely to generate sufficient scale to compete effectively in the market or
to remain commercially viable," Hine said.
KPEX was set up in an effort to stave off the encroaching reach of Facebook and Google, whose dominance in digital
advertising has been labelled an existential threat to the country's two biggest newspaper publishers. It was
fundamental argument for a merger proposal between NZME and Stuff, which the Commerce Commission and courts rejected.
The Australian newspaper today reported that NZME was reviving a bid to tie-up its operations with Stuff, lobbying MPs
to bypass competition law.
Today's announcement also comes amid a blizzard of comment from Mediaworks executives and journalists suggesting its TV3
free-to-air broadcast service is facing such severe commercial pressure that it is seeking either government assistance
to keep going or to blame the government if it fails to prop up the business. Mediaworks is owned jointly by US hedge
fund OakTree Capital and Australian outdoor advertising firm QMS, which took a 40 percent stake in a merger of its New
Zealand operations with the Mediaworks business earlier this year.
The government is considering ways to support journalism and is running a $1 million pilot to fund eight reporters but
has shown no appetite for funding commercial players directly.
Mediaworks is lobbying for the government to merge elements of TVNZ, Radio New Zealand and Maori Television, which it
claims would free up some advertising inventory for private operators and end what it says is a commercial advantage
that TVNZ gains by being government-owned and not required to turn a profit.
Mediaworks' radio operations are profitable but its television channels have consistently lost money. Industry insiders
suspect QMS is pressing Mediaworks to cut loose the loss-making TV operations.
NZME's most recent annual report shows it received $2.6 million of ad revenue from KPEX in calendar 2018, down from $2.8
million a year earlier, and paid commission of $306,000, down from $413,000.