NZME hits 10,000 paying subscriber target early
By Paul McBeth
June 12 (BusinessDesk) - NZME's foray into charging its readers to access online news has beaten its expectations, taking just six weeks to attract 10,000 paying subscribers when it thought it would take a year.
Premium digital subscription revenue has exceeded the company's expectations, chief executive Michael Boggs told shareholders at today's annual meeting in Auckland. Of the 10,000 subscribers, more than 35 percent, around 3,500, signed up to an annual payment plan of $199, meaning about 6,500 took up the $2.50 a week introductory offer for the first two months, rising to $5 a week thereafter.
That implies that once the eight-week special ends, NZME's annualised subscription revenue will be about $2.4 million, or about 0.6 percent of its 2017 revenue of $378.4 million.
Boggs said about a fifth of the company's print subscribers activated their digital access. The New Zealand Herald newspaper dominates NZME's print circulation, with New Zealand Audit Bureau of Circulation figures showing the paper's average paid circulation was about 101,000 as at Sept. 30 last year. The sum of all its daily papers' paid circulation was 144,000, meaning almost 29,000 more people had signed up to digital access.
"It is still early days, but we are thrilled with the success of the Premium launch so far and we are committed to providing NZ Herald readers with the best journalism in New Zealand," Boggs said.
NZME was hoping to convert 10,000 of its 1.7 million online audience into paying subscribers within the first year of operation. Its modest revenue expectations didn't anticipate positive earnings before interest, tax, depreciation and amortisation before 2021.
The company has flagged that expects to spend $1.2 million in calendar 2019 on its digital subscriptions service, including the cost of globally syndicated content, the launch, and ongoing support.
The shares fell 3 percent to 48.5 cents on a volume of about 78,000 shares, less than its 90-day average of 106,000.
Chair Peter Cullinane noted the decline in share price from 65 cents since the board introduced a new capital management policy to reduce debt and fund growth in the near-term.
"The board believes that this is in response to the move from being a high dividend yield business to one which is balancing investing in growth, debt repayment and dividends," he said. "I note that it is the board’s intention that NZME remain a dividend paying company."
Boggs said the OneRoof's revenue growth was continuing and it now had 70 percent of residential property listings. The property portal generated $700,000 of revenue in calendar 2018, of which $500,000 came in the final three months of the year.
NZME's advertising bookings are tracking 3 percent behind last year's, although the rate of decline has slowed with growth in radio advertising, he said. The decline in agency bookings extended its decline in the first half of 2019, hitting digital revenue.
"However the market is now showing early signs of an improving trend compared to the same period last year," Boggs said.
NZME has continued to cut costs and improved its underlying cost base in the current year.