Today marks the third anniversary of Sinead Boucher's acquisition of Stuff but questions still remain unanswered about the media group's governance structure and the identity of its backers.
As the general election looms, the media will play an increasingly critical role in presenting the political personalities and issues to the New Zealand public. The manner in which those stories are framed will undoubtedly have some influence on the outcome. So before we cast a critical eye over our political parties and their offerings, it might be worth considering the state of our media, and in particular, the state of Stuff.
By its own accounts, Stuff claims to be the country’s biggest news website. In one of its articles in March it stated, “Stuff has held on to its national leadership position and has the biggest Auckland audience, according to the latest Nielsen data. Stuff is read by nearly 3.4 million Kiwis a month across print and digital, and is New Zealand’s number one news website. Every month 2.6 million New Zealanders read a Stuff newspaper or magazine.”
But three short years ago, it was a different story. Its former owner, the Australian media group Nine Entertainment, had started a sales process to dispose of the New Zealand business. The owner of the NZ Herald and NewstalkZB, the publicly listed company NZME, had indicated an interest in acquiring the business and had begun negotiations in September 2019 although the potential merger raised obvious competition issues which required Commerce Commission approval.
Sensationally however, Nine abruptly terminated the two week exclusivity period that it had granted to NZME in early May 2020 and instead agreed a last-minute deal to sell the business to Stuff’s chief executive at the time, Sinead Boucher. It prompted NZME to seek injunctive relief in the High Court in a desperate attempt to enforce its exclusivity period. Justice Katz ruled against NZME and the deal with Boucher closed at midnight on 24 May.
During the Court proceedings, Nine indicated that it considered the New Zealand business to be a “failing firm” and that it intended to close the business at the end of May if it could not find a buyer. In Nine’s opinion, there was no reasonable prospect that the Commerce Commission would approve the merger with NZME within that time period and there was no political interest to help facilitate the deal.
Stuff disputed Nine’s characterisation of its financial position in Court although Boucher did state in her affidavit that, “although the trajectory of Stuff’s business has been declining in recent years it had remained generally profitable”.
Justice Katz decided to suppress Nine’s description of the business as set out in the Court papers for six months “to give it ‘some clean air’ to put its recent difficulties behind it and move forward with its new strategy.” Once suppression was lifted Boucher reiterated in the press the view that, “management did not support the description of Stuff as a ‘failing firm’ as part of the efforts by Nine and NZME to get a sale approved by the Commerce Commission”.
Nine’s deal with Boucher included cash consideration of $1, together with ownership of Stuff’s Petone printing plant being transferred to Nine with a leaseback to Stuff, and the proceeds of the Stuff Fibre sale to Vocus. In a statement to the Australian Stock Exchange, Nine confirmed that it would receive 25% of the proceeds of the Fibre sale before completion of the sale of Stuff to Boucher, plus up to a further 75% of the Fibre sale proceeds over the subsequent 36 months, “depending on the Stuff business’ ability to raise funding”. BusinessDesk reported at the time that this resulted in Nine leaving up to A$5.8 million in Stuff after the Fibre sale.
What was unclear at the time was whether there were other interested bidders for Stuff. It has since emerged however that at least one other credible New Zealand-based party, in addition to NBR owner Todd Scott, formally expressed its interest to Nine’s lawyers regarding making a bid for the business. The fact that Nine did not engage with that party inevitably raises questions about the factors that influenced the deal with Boucher.
As news of the deal broke at the end of May, Boucher declared a “great new era” for the company. “It is great to take control of our future with the move to local ownership and the opportunity to build further on the trust of New Zealanders,” Boucher said.
Chief Executive of Nine, Hugh Marks heralded the importance of local ownership for Stuff, and Broadcasting Minister, Kris Faafoi said the deal, “maintains plurality and competition in New Zealand’s news media, as well as making Stuff New Zealand-owned again.”
Stuff reported at the time that, “there is speculation that bringing Stuff back into local ownership could make it more politically-palatable for the Government to put together a more comprehensive package of aid for the media sector that included Stuff.”
Boucher declared that her next step would be to consider the company’s ownership structure and that she was keen to give staff “a direct stake”. She told RNZ that, “Our plan is to transition the ownership of Stuff to give staff a direct stake in the business as shareholders.”
Boucher would not, however, comment when asked about any backers or other investors in the deal. “Not at this stage, but I think that in the next couple of weeks I’ll be able to disclose more of our plans,” she said. In another Stuff article, Boucher indicated that a new ownership model, “would also open the door to other investors or partners who might want to come on board”.
Despite remaining coy about the topic in public, in her affidavit to the Court, Boucher did state that, “The announcement of Ms Boucher’s purchase of Stuff has been well received by staff, customers, potential investors and venture partners.”
Tim Murphy, former NZ Herald editor and co-founder of Newsroom described the buyout as “heroic” but expressed his surprise that financial backers were not announced. That sentiment was echoed by another former Herald editor, Dr Gavin Ellis, who also expected investors to emerge.
“I think we may be surprised who comes out of the woodwork - I think there will be high net-worth New Zealanders who want to see Stuff continue and to prosper,” he said.
In June 2021, a year after the sale, Boucher revealed that she had received calls from potential backers, but “whose agenda turned out to be wanting to change the government.” She went on to state that if and when Stuff takes on investment, “we will want to do it because we think it will strengthen the company or open up new opportunities, but at the moment we haven’t had to.”
Boucher did announce at that time that a trust “controlled by employee representatives” had been set up to hold 10% of Stuff on behalf of its 900 employees although she conceded that this would not take the form of a direct ownership stake that she had first contemplated.
But three years on from the deal, what does the ownership of Stuff look like now? Somewhat surprisingly, the holding company, Kenepuru Holdings Limited, named after Kenepuru Sound where Boucher has a bach, remains 100% owned by Boucher. She is also the sole director of the holding company.
Companies Office records show that Kenepuru Holdings still owns the legal interest in all of the shares in Stuff Limited although presumably the employee trust owns the beneficial interest in 10% of the company. Boucher and the chief financial officer are the only two directors of Stuff Limited.
Despite issuing an editorial code of practice in late 2020 setting out Stuff’s editorial independence, Boucher did concede that, “at some point there has always got to be an element of faith in there.” And although Boucher claimed that that editorial independence, included independence from herself, that is not expressly set out in the code.
Indeed, there appears to be minimal separation between the management and ownership of the group. The concentration of ownership, coupled with a board comprising only two directors, suggests a potential deficiency in governance, oversight, and diverse perspectives, especially when compared to best practice.
These concerns seem particularly justified given that Stuff is clearly still navigating choppy waters. Last October Stuff announced that it was proposing changes to its regional and local newsrooms which would result in significant job cuts for journalists.
One Stuff journalist was quoted at the time by RNZ as saying, “People are stressed, obviously. It’s been a weird few years, but we got through it because the rhetoric has been that it’s going to be so positive on the other side. Then you come along and say ‘sorry but we’re gutting your newsroom, but by the way we still want all this lovely regional journalism’.”
In November, Stuff journalists walked off the job in protest of the company’s “insulting” pay offer. Staff picketed outside Stuff’s Auckland, Hamilton and Wellington offices holding signs that said, “Stuff Pays Stuff All” and “We Demand Respect”. Wellington-based journalist Tom Hunt said that the company’s behaviour was “an insult to the journalists it claims to be so proud of”.
And only last month, Stuff announced that it was proposing to cut an additional 16 jobs in its sub-editing team as it continued to slash costs. At the same time, it also launched subscription-based websites for its biggest daily papers - The Post, The Press and the Waikato Times, as it continued to diversify and develop new revenue streams. It comes at a time when financial support from the controversial Public Interest Journalism Fund is coming to an end and media advertising spend is reported to be down 10% to 20% post-Covid.
No doubt Boucher and her supporters will claim that, as a privately owned group, Stuff can manage itself as it sees fit even if that deviates from best practice, and it is under no obligation to disclose any details about investors or backers that may sit behind Kenepuru Holdings.
However, Stuff is New Zealand’s biggest employee of journalists, and has been described by The Spinoff’s Duncan Grieve as, “the closest thing to a truly national news network that exists in this country”. That ambition to be New Zealand’s major independent media group is reflected in Stuff’s Editorial Code of Practice and Ethics which states that, “We work in the public interest, independent from political or corporate influence.”
Moreover, Stuff has itself shown a keen interest in transparency when it comes to the control and ownership of other media groups in New Zealand. In August last year, Stuff republished an article by Grieve that first appeared in The Spinoff titled, “Meet the secretive rich lister bankrolling Sean Plunket’s The Platform”. The article was based on an interview that Grieve conducted with Wayne Wright Jr, who he described as the “mysterious backer who funded one of the most audacious new media startups in years”.
In March, shortly after the launch of Reality Check Radio, Stuff journalist, Charlie Mitchell, ran an article on the new media platform titled, “‘RIP woke media’: An examination of Voices for Freedom’s web radio channel”. In that article Mitchell showed some interest in the platform’s funding, stating, “I contacted Voices for Freedom for comment about the station’s finances.”
Today marks the third anniversary of Boucher’s acquisition of Stuff. Undoubtedly, it has been a roller-coaster ride. However, with an election looming and increasing scrutiny on both our politicians and our media, it seems like an opportune moment for Stuff to appoint a board of directors that reflects the diverse range of backgrounds and viewpoints of New Zealand. Additionally, it is important for Boucher to exhibit the same level of transparency that she expects from other media organisations by disclosing her backers and investors.
Thomas Cranmer is a pseudonym. He is a lawyer with over 25 years experience in some of the world's biggest law firms. He divides his time between the UK and NZ. You can read and support Cranmer's Substack here