NZME Limited (NZM) Earnings Call Transcript & Summary

Good morning, and welcome to New Zealand Media and Entertainment's 2026 Half Year Results Webcast. My name is Kelly Gunn, and I'm the GM of Communications at NZME. I'll be facilitating all questions at the end of today's presentation. Presenting on the call today is Michael Boggs, NZME's Chief Executive Officer; and Jo Hempstead, NZME's Chief Financial Officer. Following the presentation today, we will open the webcast to shareholders and analysts for questions. [Operator Instructions] I will now hand over to our CEO, Michael Boggs.

Good morning, everyone. Thanks for joining us today. As Kelly said, I'm joined by our Chief Financial Officer, Jo Hempstead, who will shortly take you through the financial results in detail. I'll begin with the group result, the key developments across the business and the market environment. Following Jo's review, I'll return to cover the performance and the priorities of our Audio business, Publishing and OneRoof, and then I'll conclude with our outlook. The central message you'll hear from us today is that during the first half, NZME has returned to revenue growth and delivered positive operating leverage. This is despite a trading environment that remains challenging. You'll see that audio was the principal growth driver. Disciplined cost management lifted our operating margin and stronger cash generation enabled us to materially reduce debt. At the end, Jo and I will be happy to take your questions. At a group level on Slide 3, the first half result shows growing earnings, improving cash flow and reducing debt. This is despite the economic conditions that remain tougher than we had expected at the start of the year. Our operating revenue and other income was $167 million. That's up 1% or $1.3 million on the first half of last year. That growth was led by strong audio performance with softer results across other segments moderating the overall increase. Operating EBITDA increased to $26.5 million. That's up 11% or $2.6 million on the prior year. The improvement was supported by operating expenses being down 1%, reflecting the ongoing benefit of the cost-saving initiatives we implemented during early 2025. Statutory NPAT had improved from $0.4 million loss in the first half of 2025 to a $6.6 million profit this year. And as you'll see, free cash flow increased by $5.1 million to $7.3 million. And pleasingly, this allowed us to reduce net debt by $13.9 million to $19.4 million, and this represents a leverage ratio of just 0.5x -- sorry, 0.4x our EBITDA. The Board has declared a fully imputed interim dividend of $0.03 per share, and that will be paid on the 23rd of September. As we update you today, you'll see the results demonstrate an important distinction between the external conditions we are managing and the changes we're making within NZME. Some of the pressures we're seeing, including softness in parts of the advertising market and the slower recovery in the Auckland property are cyclical. Our response, though is structural. We are investing in athlete engagement, strengthening our digital products, bringing key technology capability in-house, and we're lowering fixed and variable costs right across the business. We are not simply waiting for an economic recovery. We are continuously reshaping the business to deliver stronger and more resilient earnings through the cycle. Slide 4 summarizes some of the key highlights across each of the 3 divisions, plus our progress on financial discipline. In Audio, revenue grew 8% in the half with our market-leading audio platforms growing faster than the market. This was anchored by New Zealand's #1 talk brand, Newstalk ZB. We also signed a 10-year commitment with iHeartRadio, and our new iHeart app is increasing both digital revenue and its capability. We now have over 1.3 million podcast monthly active listeners and digital radio total listening hours are up 8% year-on-year. In Publishing, our digital publishing EBITDA grew 11%, with digital profit growth and tight cost control absorbing the print decline and returning publishing to a firmer footing. We launched the New Zealand Herald app in June, built from the ground up for New Zealanders who want to make news their own. We'll talk more on that a little bit later. In OneRoof, EBITDA grew 9% with digital growth reflecting stronger upgrade volumes and better yield, while print, marketing and selling costs were controlled to deliver the result. We also launched a new OneRoof app and brought in a new leadership team. And on disciplined financial management, total advertising revenue grew 2%, underpinned by larger agency clients who have grown at a faster rate than our SME customers during the year. Total operating costs were 1% lower, reflecting continued operating discipline and net debt reduced by the $13 million I referred to earlier. This has strengthened the balance sheet and gives us greater flexibility to fund future opportunities. Now Slide 5, sorry, sets the market context for the half. The difficult economic environment has continued. And while we're seeing early signs of improving confidence, that is not yet showing up in market activity. The economic settings and indicators are contributing to weak domestic demand and softer advertising conditions right across consumer categories. However, on a more positive note, both business and consumer confidence have been trending upward from their 3-year lows as expectations for market conditions continue to improve. The total agency market ad spend is up 2% to over $537 million for the first half of 2026. That's on the back of stronger digital, which is up 4%; outdoor, which is up 7%; and radio, which is up 9%. So while there are early signs of improving confidence, we're not relying on those indicators to drive our performance. The timing and strength of any economic recovery does remain uncertain. And as mentioned earlier, our focus is on the factors that we can control. Slide 6 highlights the strength of NZME's audience reach with our platforms connecting with 9 out of 10 New Zealanders. This provides the foundation for continued growth in our digital revenue streams. In Audio, radio revenue grew 8% and digital audio revenue grew 16%, reaching a radio audience of over 1.8 million and a digital audience of over 1 million. In Publishing, digital subscription revenue grew 1% and core digital advertising revenue grew 1%. There is a loss of a print audience -- sorry, there is a large print audience of 1.23 million and a digital audience of nearly 2 million. And in OneRoof, Auckland digital listing revenue grew 3%, while the rest of New Zealand digital listings revenue grew 13%. Again, there are large audiences across both print and our digital propositions. That reach is the foundation of the business. It's what allows us to build subscriptions, grow first-party data and command yield in the advertising market. Slide 7 shows that $26.5 million of operating EBITDA was delivered across the divisions with 11% growth. As mentioned, Audio revenue was the primary driver of the improved profitability with audio EBITDA up 19% to $11.9 million. The improvement in digital publishing profitability, up 11% to $6.3 million. This has offset the declines in print, which is down 7% to $9 million. OneRoof digital revenues grew 4%, while below expectations and were more than offset by a 15% print revenue decline, though EBITDA still grew 9% to $1.8 million for the half. Corporate and other costs reduced by $0.7 million from $3.1 million to $2.4 million, also contributing to the overall EBITDA result. So let me now hand over to Jo, who will take you through the detail of our 2026 half year financial results.

Thanks, Michael, and thank you to everyone joining us on the call today. Slide 9 shows our operating results for the 6 months ended 30 June 2026. The first half result shows the benefit of returning to revenue growth while maintaining cost discipline. Revenue growth was modest, but importantly, it flowed through to earnings with operating EBITDA increasing at a faster rate than revenue. That is the operating leverage we have been focused on delivering. Advertising revenue grew 2% to $118.6 million, a good outcome given the challenging economic conditions. Operating revenue grew by 1% overall, largely driven by a strong performance in Audio. Operating expenses reduced by 1%, contributing to a strong EBITDA improvement. Operating NPAT of $6.6 million for the half was an increase of $3.2 million on the first half of 2025, a positive improvement in a challenging market. Operating earnings per share was $0.035, up from $0.018. In addition to the improved operating result, the recovery in statutory NPAT also reflects lower nonrecurring expenses incurred versus the prior period. Moving to Slide 10. The revenue mix continues to shift. Audio was the clear growth driver in the half, and we continue to focus on the quality of revenue across the portfolio. Audio advertising revenue grew 8%, continuing the gains we saw in the second half of 2025. Total digital advertising was down $1 million or 4%. The largest component of that was a $0.6 million reduction in digital performance marketing revenue, which was a deliberate decision on our part to reduce our usage of low-margin third-party channels. Total reader revenue declined 3% with reduced print subscriber revenue outpacing a 1% increase in digital subscriber revenue. Print subscriber volumes reduced 9%, offset by 5% yield gains. OneRoof revenue growth has slowed with digital revenues constrained by the Auckland market and overall print revenues declining. Moving to costs on Slide 11. Total operating expenses reduced by $1.3 million year-on-year. The key point is that the savings delivered last year are now supporting the earnings result. At the same time, we have continued to absorb inflationary pressures and selectively reinvest in capability that supports future growth. Lower people expenses from the savings initiative implemented last year have been impacted by wage inflation, KiwiSaver changes and planned reinvestment. That reinvestment includes in OneRoof engineering roles, Herald NOW and selected Christchurch roles. Print and distribution expenses improved by 4% due to decreases in overall print volumes. Third-party fulfillment costs reduced 37% to $1 million, which reflects the decrease in digital performance marketing revenue spoken to earlier. Nonrecurring expenses in the first half of 2025 include restructuring costs incurred as part of the $12 million of annualized savings initiatives. There were no nonrecurring expenses in the first half of this year. The waterfall chart on Slide 12 highlights the key movements in operating expenses, showing the reinvestment in people costs and savings across the business that delivered a $1.3 million improvement. The final quarter of the 2025 cost-out savings have offset the impacts of wage inflation in KiwiSaver and allowed investment in our OneRoof engineering team, Herald NOW and new Christchurch positions. Print savings of $1.1 million, driven by reduced volume have more than offset higher distribution costs impacted by fuel cost increases of $0.1 million. Selling and marketing costs largely reflect an increase in the proportion of agency sales and the respective commission paid. On Slide 13, the balance sheet is in a much stronger position than a year ago. Lower net debt, improved earnings and reduced interest costs have strengthened our financial flexibility and reduced risk in a still uncertain operating environment. Net working capital, excluding cash, is $3.8 million lower than June 2025, primarily due to a tax position that was a tax receivable position last year as well as lower trade receivables. Net debt, as Michael indicated, has reduced to $19.4 million with improved operating earnings, lower capital expenditure and interest costs, the absence of nonrecurring cash outflows incurred last year. Net assets increased to $93.3 million, and our leverage ratio has more than halved from 0.9x to 0.4x. Slide 14 shows our cash flow results. The important point is that the earnings improvement is converting into cash with free cash flow improving by $5.1 million to $7.3 million. Cash flow from operations was $19.3 million, $4.3 million higher than the first half of 2025, supported by strong operating performance and the absence of prior year nonrecurring cash expenses. Capital expenditure was lower in the first half with full year BAU capital expenditure still expected to be between $10 million and $12 million. After lease principal repayments of $7.3 million, free cash flow was $7.3 million compared with $2.2 million in the prior period. Slide 15 shows net debt finished the period $13.9 million lower than June 2025. 12-month operating EBITDA pre-NZ IFRS 16 was $46.1 million, up from $38.3 million, while our 12-month interest expense reduced to $1.8 million. That has lifted our net interest cover to 26.1x from 15x. As I've previously said, our leverage ratio of 0.4x is lower than the 0.9x last year and below our target range of 0.5x to 1x EBITDA. The Board has declared a fully imputed interim dividend of $0.03 per share or $5.6 million payable on the 23rd of September. That completes the overview of the group's financial results. The key financial takeaways are that NZME has delivered positive operating leverage with revenue growth and disciplined cost management, supporting improved earnings, stronger cash flow and lower debt, all while preserving flexibility for future investment and continuing to return capital to shareholders. I'll now hand you back to Michael, who will take you through the performance of each division.

Great. Thanks, Jo. So let's now first turn to Audio, which includes our digital audio platform, iHeartRadio, along with our radio stations and podcast network. Slide 18 shows that we've now delivered 15 consecutive months of year-on-year audio revenue growth. Revenue from the larger agency customers grew 15% year-on-year, and that's lifted our agency sourced revenue to 51% of total audio revenue. That's an increase of 3 percentage points. Non-agency revenue grew 2% year-on-year. This mix shift does carry higher commission costs. Digital audio grew 16% on year to $6.2 million. Digital audio total listening hours have grown 8% and podcast downloads have increased 4% over the same period. Digital audio now represents 10% of our total audio revenue. That's up $3.8 million 3 years ago. Slide 19 shows audio profitability up 19%, driven by strong revenue growth. Operating revenue reflects the strength in the audio advertising market with growth in both radio advertising and digital audio revenue. People expenses increased year-on-year, driven by wage inflation, KiwiSaver changes and a higher proportion of commercial people costs that have been supporting this revenue growth. Selling and marketing expenses increased 16%. This reflects the higher agency commissions as these agency sourced revenues remained strong, together with targeted marketing investment in key stations. So despite these higher operating costs, revenue growth more than offset expense increases and delivered an operating EBITDA of $11.9 million. That's up $1.9 million year-on-year. Slide 20 highlights the significant progress we've made in audio during the half and of the key priorities that will support continued growth from here. As noted, Audio delivered a strong first half performance, growing ahead of the market and reinforcing the strength of our audience and commercial position. We completed a 10-year extension of our iHeartRadio partnership, which gives us long-term certainty and underpins our digital audio strategy. We saw good momentum across our priority brands, including record audience growth for the hits and continued strength from Coast on iHeartRadio. We're also investing behind targeted marketing growth opportunities, particularly in Canterbury, where local content, promotions and marketing are being used to build audience and revenue over time. Our new product, iHeartCountry, is continuing to scale nationally with commercials now introduced following its initial commercial-free launch period. So looking forward, our focus is on sustained marketing behind the Hits and Coast brands, continued revenue share gains and making iHeartRadio a default part of every media plan. Digital audio does remain an area where we see significant growth potential. Newstalk ZB and our podcast network will play an important role in lifting engagement through the second half of this year. Importantly, it does include coverage of the 2026 general election. Let's now cover our Publishing division, which is focused on being New Zealand's leading news destination. Slide 22 summarizes some of the key operating metrics of the business. The New Zealand Herald app recorded total launches in the first half of the year of 2026. These were 9% more than our nearest competitor over this period. App engagement is now at 57% across all users who visit the New Zealand Herald with more time being spent in the app than on the web. The new app, which we've launched is expected to drive further engagement and accelerate our digital performance. Total video views across all of our platforms have lifted 132% with Ryan Bridge TODAY and Herald NOW adding a significant volume of content that's shared across multiple platforms. The new video module on the homepage and the watch section of the newly released app have both made a strong contribution to the incremental views that we're seeing. Total subscriptions have lifted 6% to 250,000 with more New Zealanders embracing digital news. New Zealand Herald subscriptions are up 5% and BusinessDesk is up 18%. Average yield has fallen 12% as bundling increases, but we see that as an opportunity for yield growth into the future. 70% of subscribers are now digital-only. That's up 13% to 176,000. Slide 23 shows stable profitability following tight cost control despite inflationary pressures and a reduced focus on commercializing low-yielding third-party digital revenues. Reader revenue decreased 3% with slower digital subscription revenue growth of 1%, offset by continued print subscriber and retail outlet declines in print. Lower digital advertising revenue was driven largely by a reduction in the digital performance marketing revenue. This is the low-margin third-party channels. However, core digital advertising was stable year-on-year. Print advertising revenue decline of 5% was better than our historical trends. Slide 24 separates the Publishing business into its digital and print components. Digital Publishing delivered operating EBITDA of $6.3 million. That's up 11% year-on-year and the margin improved to 13%. Print Publishing delivered operating EBITDA of $9 million, down 7% year-on-year with margin of 12%. While we continue to maximize the cash contribution from print, the growing contribution from the digital business reinforces the progress we're making in reshaping the Publishing business. Slide 25 introduces the New Zealand Herald App. It offers a smarter, faster and more personal way to stay informed with the news worth knowing. The latest version of this New Zealand Herald app was released at the end of June and was built from the ground up by our in-house digital team. It's a completely new ecosystem with new architecture, new features and a new user experience. This includes a customizable news feed called, My Herald, a dynamic button navigation bar, best practice accessibility, offline reading and a dedicated watch section. In addition, it's got an integrated OneRoof property portal. New Weather and Listening sections will be coming soon. App users spend more than 6x more per day than web users with overall engaged time per app user up 8% year-on-year. App users do read an average of 5x more pages than web users. Slide 26 highlights that subscribed users are our most valuable digital audience. Although they are the smallest cohort, they generate 54% of our digital revenue. That comprises 34% from subscription payments and a further 20% from advertising that's delivered to these subscribers. As you can imagine, growing subscribers is a key step in driving engagement and leveraging first-party data to maximize advertising revenue, obviously, alongside subscriptions. Digital subscriptions remain an area of emphasis to embed ongoing recurring revenues. Strong contributors to the increase in digital subscriptions over the last few years have been the Listener, which is up 58% during '25 and Viva Premium, which is up 61% versus last year. New Zealand Herald has still seen ongoing growth of 5% year-on-year and BusinessDesk saw growth of 18% year-on-year. So much of the growth has come from bundling subscriptions together for individual users. While this reduces the average yield, it does deliver engagement across multiple web brands. Therefore, this does offer the potential of lower churn and improved yield as we move forward. Print subscription revenue has fallen 4% despite a 9% volume decline over the first half of '26. Disciplined pricing has continued to lift per copy actually, with yield up by 5%. Slide 27 highlights the progress we're making in Publishing, where we're continuing to manage print for cash while scaling the digital business. Print remains an important contributor, and we have slowed the rate of revenue decline, reduced churn to a 4-year low, and we've continued to optimize the network to protect the cash generation. At the same time, our digital growth engines are strengthening. There is strong video engagement from Ryan Bridge TODAY and Herald NOW. There's continued momentum in BusinessDesk and further opportunities to improve yield through personalized pricing and a new paywall. The performance of our newsrooms also remain a key differentiator with 8 wins at the New Zealand Media Awards. This reinforces the quality and reach of our journalism. Looking ahead, the acquisition of smaller and more efficient print plant as a replacement for our aging Ellerslie equipment will enable us to rightsize our footprint and deliver meaningful annual savings over time. We're also investing in BusinessDesk, including a new website and app and expanding our premium content offer. Video will continue to be a major growth priority, Ryan Bridge TODAY and Herald NOW now extending onto TV Three and helping take our journalism to new audiences beyond just our own platforms. And with the 2026 election ahead, New Zealand Herald is poised to deliver comprehensive political coverage through major covering moments, debates, events and live video programming. This will be in conjunction with Newstalk ZB. Now turning to OneRoof, our Property platform. Slide 29 shows a reset of the leadership team and technology stack is delivering renewed growth. There were 60,000 new listings across New Zealand in the first half of 2026 with new market listings up 3% year-on-year, although days to sell remains above historical averages. In Auckland, stock has returned as market listings are up 7%, but properties are taking longer to sell and the median sale price is flat. This is keeping vendors cautious on their marketing investment, though OneRoof Auckland residential listings revenue still grew 3%. Across the rest of New Zealand, upgrade rates are up 140 basis points and average yield is up 8%. This takes rest of New Zealand to 36% of total OneRoof residential listings revenue, and it delivered listings revenue growth of 13% year-on-year. Slide 30 shows that despite significant leadership change, digital revenues and EBITDA did deliver growth. Digital advertising revenue increased $0.4 million, up 4%, but did not fully recover the $0.7 million or 15% decline in print advertising. This is where vendors remain the most cost conscious. As just noted, Auckland revenue was soft as weaker conversion was cushioned by improvements in listings volume and yield. Regional performance was strong with growth in conversion and yield outweighing the lower levels of new listings. People costs increased $0.2 million. This reflects the continued investment in leadership, sales, customer relationship management, engineering, product and design capability. Our print and distribution costs reduced $0.3 million, broadly in line with the lower print activity. Selling and marketing costs reduced by $0.5 million, a deliberate choice as we focused our efforts on improving the quality of our technology and content to engage the audience across all of our multiple platforms. Slide 31 shows the new OneRoof app that makes it easier to navigate all things properly, all in one place. The OneRoof app has strong growth during the half with sustained month-on-month audience growth and engagement holding firm as the audience scaled. This was supported by this latest major app release earlier this year. Features recently launched give new users a reason to return in the first 30 days, including a new app with refreshed design, more estimate visibility, more filters for easier search and more detailed data on every listing. Our monthly app users grew 54%. They increased in every month across the first half of 2026. Our daily active users grew 53% with daily engagement rates holding steady. There was a 24% lift in the number of users viewing property listings every day and 7 in 10 monthly users returned the following month. This was sustained through the first half despite the rapid audience growth. So looking ahead, we continue to sharpen the app experience and core conversion pathways to deepen the engagement and drive more value to our audiences. Let's move to Slide 32. OneRoof's first half revenue performance was below our expectations, particularly in Auckland. During the half, we did reset the leadership team. We bought engineering capability in-house, and we strengthened the app and product platform. The benefits of these changes are not yet fully reflected in revenue. The new OneRoof app is already showing encouraging momentum with monthly active users up 54% since January and our engagement holding firm as that audience scales. Market conditions do remain mixed. The regions are leading growth, while Auckland is suffering as properties take longer to sell and the vendors remain cautious. Digital does now represent 71% of OneRoof revenue, reinforcing the shift in the business model. Looking ahead, there is further opportunity as market confidence improves, particularly through higher upgrade penetration, stronger premium product adoption and more disciplined packaging and pricing. With this more experienced leadership team, a stronger app and product platform and a largely fixed cost base, OneRoof is in a strong position to convert future market recovery into margin growth. Slide 34 shows corporate and other costs are lower year-on-year by 18%. Corporate and other includes the unallocated costs associated with the group management and governance together with the company's events business. Other expenses included $300,000 of savings from insurance, professional fees, travel and entertainment costs. Slide 35 shows improved performance, delivering the operating EBITDA growth of 11%. As we've talked about, audio was the principal earnings growth driver. Digital Publishing improved profitability. Print remained an important cash contributor despite its structural decline and OneRoof grew EBITDA despite softer revenue. Together with lower corporate costs, that delivered an 11% growth in group operating EBITDA. NPAT improved from a $400,000 loss in the first half of 2025 to a $6 million -- $6.6 million profit, also supported by lower depreciation, interest costs and nonrecurring expenses. I'd like to move to Slide 36, where we highlight the next phase of our cost-out program. This remains central to building our resilience, and it creates capacity to invest for future growth. The major print plant investment will give us a rightsized, more efficient production footprint with up to $15 million investment over 2026 and 2027 with an expected payback within 3 years of becoming operational. The savings are expected to build from around $3 million to $5 million in 2028 to around $7 million in 2029. We are also progressing efficiency initiatives across the business. We're using automation and AI to structurally lower the cost base and improve the speed and efficiency of manual workflows. Those initiatives are expected to deliver $4 million of annualized savings from the fourth quarter of this year with a further $3 million of annualized savings to be delivered in the first half of 2027. In addition, we've completed negotiations on our Central Auckland lease. It's on materially improved terms, but it is subject to a landlord shareholder approval. This will lower our fixed occupancy costs while retaining flexibility over space and term as we move forward. While these lease changes have not been reflected in the first half accounts, the cash flow benefit will be backdated to November 2025, once it has been approved. IFRS 16 accounting will reduce reported NPAT in the medium term. Together, these initiatives provide a clear pathway to a lower, more flexible cost base and improved long-term earnings resilience. Slide 37 again brings together the major initiatives that are reshaping the next phase of NZME's performance. The common theme across the business is that we're investing in the apps, platforms, products and capabilities that improve audience engagement, deepen our customer relationships and strengthen our long-term earnings quality. In audio, our priority is to keep building on our market-leading position by growing digital audio, strengthening iHeartRadio and converting the strong audience into revenue momentum. In Publishing, that means continuing to modernize the New Zealand Herald experience, growing premium digital products, extending our journalism further into video and new distribution channels while also reshaping print for a more efficient future. In OneRoof, the focus is on building a stronger product platform and operating model, so the business is better positioned to capture upside when property market conditions improve. Across the group, technology and AI are important enablers, helping us lift productivity, reduce manual work and improve our speed to market. At the same time, we're continuing to lower fixed costs through structural initiatives like property savings and print efficiencies. Taken together, these initiatives are about making NZME more digital, more efficient and more resilient while preserving the strength of our core brands and cash-generating businesses. So let's now move to the outlook for NZME. The first 6 months focused on returning revenue to growth, while at the same time, maintaining tight cost discipline. Audio underpinned our 2% first half advertising revenue growth and the ongoing cost discipline positions us to convert the recovery into margin. We do, however, expect the trading environment to remain volatile with consumer confidence still soft and discretionary spending constrained as households continue to absorb higher living costs and mortgage rates. We do expect any recovery to remain gradual with the potential for a modest improvement in demand through the second half of 2026 and further momentum into 2027. We will continue to focus on controllable levers to support our earnings resilience and fund future growth. We are also actively working to renew or replace the Google content supply agreement that concludes in December 2026, while expanding these content licensing and AI monetization opportunities with other global digital platforms. From a capital management perspective, the strength of our balance sheet means NZME is well positioned to deliver strong dividend returns while continuing to invest selectively in OneRoof, digital subscriptions and video, along with technology and AI to deliver productivity gains right across the business. The subject to trading conditions in the second half and assuming no material deterioration in market conditions, we expect the full year 2026 operating EBITDA to be ahead of what we achieved in 2025. Jo and I are now happy to take your questions.

Thank you, Michael and Jo. We'll now open the webcast for any questions from shareholders and analysts. [Operator Instructions] Our first question is actually an online question, and it's from Chris Scarpato. Given the low gearing position and the rather subdued share price, why is the hesitancy to implement a share buyback program?

Chris, it's probably not something for me to answer and something more from a Board perspective. Capital management does feature heavily in the discussions of the Board. As you will have just seen, we have invested or will be investing up to $15 million in the smaller, more efficient print plant. And so I think at the moment, the Board does think it's important to continue to look for opportunities to improve performance. But as I say, probably something more for them to ask at this stage.

We have another couple of questions online from Yuri Selz, and I hope I've got that pronunciation right. Do you see more price increase potential for Herald Print subscriptions to compensate subscriber losses in the next 2 to 3 years?

Yes, that's right. We certainly do. As you will have seen over recent years, our loss of subscribers in print has been about 8% to 9% per annum. And we've been substantially offsetting that by half or sometimes more than half by yield increases. So we are seeing strong retention. People are continuing to enjoy the content that's produced. And so with that, we do continue to see the opportunity to increase yield and pricing.

And then another one from Yuri. Shall we expect your lease payments to be roughly flat in the next 1 to 2 years?

Subject to the negotiations, as I say, have been concluded, they still need the building landlord's shareholder approval. We would expect actually leases to reduce. But that's something we'll be able to give an update once we've had a confirmation of that.

And another one from Chris Scarpato. How is OneRoof comparing relative to Trade Me? Have they become more aggressive on pricing given their push for a potential sale/IPO?

Yes, we definitely are seeing Trade Me continue to be more aggressive on pricing and specifically at some of their higher-end packages, so often seeing double-digit percentage increases. I think that -- what that will see more and more is real estate agents and vendors deciding that they don't actually need those packages on Trade Me, and it actually gives us the opportunity to sell higher packages of our own and get higher penetration. So it really is, I think vendors going, I've got a fixed budget I want to spend. I'll downgrade the package that I am on Trade Me, and I'll bring in quality audience from NZME. We are consistently told that OneRoof does deliver different inquiries to Trade Me. I think you'll find that most people would go to the Trade Me site. So therefore, being on a higher package doesn't necessarily mean they get more inquiry. So therefore, by putting incremental investment into OneRoof, we can bring different audience and a different type of inquiry.

We don't have any other questions.

We're just looking to see if we've got one other question.

Apologies. James Lindsay has got his hand up so, James, please go ahead.

Thanks, Jo. Well done. Not a particularly easy market to be operating in. First question, just on the solid audio performance. So congratulations there. You've obviously been picking up revenue share over now a number of years. Just interested in what you think is driving that more specifically?

I think there's a couple of things driving it, James. One of the things is we do have the #1 station in Newstalk ZB. And even in the most recent survey, we've seen Newstalk ZB's audience grow again. So I think what we're finding is most advertisers want to be associated with that brand. It's a very focused and quality audience. It certainly keeps you up to date with what's happening. And I think the election coming will give it more potential, both from an audience and revenue perspective. We are investing in a number of brands, as I outlined, across the rest of the country. A big focus for us, which we started in the first half of this year is a focus on the Canterbury region. Obviously, you'll know that Canterbury is now the second largest -- or Christchurch is the second largest city and Canterbury, the second largest region. So that's an area of focus for us, specifically around New Zealand Herald digital and audio and OneRoof as areas we haven't had print publications in the past. So I think disciplined focus on where we're growing our audience and then certainly making sure we package up all of our brands utilizing the #1 station to ensure we can grow our share.

Nice one. You mentioned just with regard to the election, just remind us again in history, what has that spurred on to you?

Yes, there is a few tos-and-fros. So sometimes we find that some of our advertisers don't want to be around it because it gets a little bit noisy. And then we have others who absolutely want to be around it because they see audience growth in that period of time. The other thing that happens is we do get some election advertising. We're already beginning to see some of those bookings come in. So not a material up or down, but certainly, we see a bit of a mix change.

Nice. And then just on the ad market, up 2%. Just interested, you mentioned sort of Canterbury going well, but any sort of feedback on categories or segments that have been stronger?

So you might recall when we talked back in February, what we were finding was end of '25, we saw the larger agency clients beginning to spend and SMEs wane, and that sort of reversed in the beginning of '26 where SMEs started to spend and agencies pull back again. And then what we've seen through the rest of this year is the agency clients have spent -- well outspent the SME clients, and that was pretty evident as you see in the audio business where they become a bigger and bigger share of the revenue. Travel is a big focus as an industry. Banks are certainly more and more in a competitive market. So I think we'll see that pretty consistent. But right at the moment, we'd just like to have everyone's heads up a bit more and see everyone more confident in the market continuing to grow.

Yes. And you mentioned just with regard to the Google renegotiation coming in, obviously, not wanting to negotiate that live here. But just interested in how you think you can expand that relationship?

Yes. We are having engagement across all the large platforms. Be fair to say, some are more interested than others in having a discussion. One of the things I think is really valuable is both the Prime Minister and Minister Goldsmith, who looks after our portfolio are very focused on what's happening in this area. They're clear that it is a copyright breach, and they would prefer to see commercial arrangements implemented. But if you do just look across the Tasman, last week, the Australian government introduced a levy on these large customers or large players. It's 2.5% of their advertising revenue to be split across the players to fund journalism unless these platforms do commercial arrangements with each of the publishers. And so you might recall, both the Prime Minister and the Minister in recent days and even recent months have said they'll closely follow what's happening in Australia. We don't want to be a leader in this area, but they would be good to be a close follower.