QUEENSTOWN AIRPORT CORPORATION AGAINST CRUX

Case Number: 2940

Council Meeting: SEPTEMBER 2020

Verdict: Upheld

Publication: Crux Media

Ruling Categories: Accuracy
Balance, Lack Of
Comment and Fact
Errors, Apology and Correction Sought
Headlines and Captions
Unfair Coverage

Overview

1. Queenstown Airport Corporation (QAC) complained about a series of articles in the local news websiteCrux about the potential difficulties in financing the cost of paying for land taken under the Public Works Act to provide for airport expansion.

2. The 15.4ha Lot 6 was vested in QAC in late 2019 with the price subject to yet-to-be completed negotiations with its former owner, Remarkables Park Ltd.

3. QAC, a council-controlled trading organisation that operates independently from the Queenstown Lakes District Council, has been hit this year by the Covid-19 pandemic which has severely restrained passenger numbers and stopped international flights.

4. Crux has taken a close interest in issues relating to the airport. It regards QAC’s administration, finances and plans as being of significant public interest.

5. At the same time QAC has been cautious about disclosing information. Its annual report, released in late August (after this complaint was filed) states that Covid 19 will have a material impact on future trading. The report said it “has required a restructure of the business, a suspension of the capital programme and renegotiating bank facilities and covenants out to 31 December 2021.”The report notes it was offering $18.4 million for Lot 6. This figure had not previously been publicly disclosed and is far lower than the $116-$263 million estimates reported by Crux.

6. Crux has written extensively about the controversial land acquisition and four articles are cited in this complaint.

The Complaint

7. QAC general manager corporate and community affairs, Sara Irvine, complainedCrux had breached Media Council Principles 1 (accuracy, fairness and balance)’ 4 (comment and fact), 6 (headlines and captions), and 12 (corrections).

8. She said Crux did not contact QAC for information or comment before publishing an editorial written by Peter Newport onMay 2, 2020 headed Into the Danger Zone – is something Very Bad about to happen with our airports?She said the central contention of the article is that there is a serious risk of the Queenstown Lakes District Council’s majority ownership (75.01%) of QAC being diluted by a share sale and that the asset is at risk of being stolen from ratepayers.

9.In the editorial Crux asserts that QAC could instigate a share sale which it cannot – a fact stated by a QLDC councillor at a full council meeting attended by Mr Newport (via video-conference) one week prior to the publication of the editorial.

10. On June 19 Crux published an article headed Airport risks bank limits over redundant $200 million land purchasesand on July 7 it ran another article headed Will the Bank of China need to rescue Queenstown Airport’s debts?Both articles were presented as straight news, not opinion. In the articles Mr Newport maintains the unsupported claim that QAC’s solvency as a business is at risk and QLDC’s majority ownership of QAC is at risk. This is factually incorrect and does not accurately reflect the information Crux has been provided by three sources: QAC, QLDC and minority shareholder Auckland International Airport Ltd.

11. The June 19 article was wrong in stating the acquisition of the land was redundant and not required. Mr Newport was advised of this in a news release sent out on October 25, in an email exchange on January 23 (where he was resent the release) and by a statement to a public council meeting by QAC’s acting chair on April 23.

12. In his editorial on May 2 Mr Newport said the Queenstown Airport land in Frankton is valued at $1.2 billion by some estimates. Yet in the June 19 article he quotes QAC’s accounts which valued its total assets (including Wanaka) at $365 million.

13. Mr Newport claimed on June 19 that Crux had contacted QAC acting chair Mrs Adrienne Young-Cooper to obtain her perspective on the Lot 6 situation but no such approach was made until June 23, after publication of the article.

14. On June 17 he asked for the acting chair’s contact details but did not request an interview or send any questions for her consideration. Mr Newport was provided contact information which was publicly available on the QAC website. He published his June 19 article without sending any correspondence to the email address provided for the board of directors.

15. On June 23 Mr Newport emailed QAC with additional questions and put forward the view that QAC was technically insolvent. In that email exchange he requested an interview (for the first time) with the acting chair.

16. An Official Information Act response was provided on June 26 and Mr Newport was asked what topics he wished to cover in an interview with the acting chair. To date there had been no response to that email.

17. On July 6 Mr Newport wrote to QLDC and Auckland International Airport Ltd stating falsely that QAC was not answering questions “on this issue” and that QAC toldCrux on June 26 that the purchase of Lot 6 was budgeted for but did not provide any detail to further questions and no public records exist to back up that claim.

18. On July 7 Mr Newport published an article which begins “The question as to the source of cash for the QAC’s purchase of Lot 6 remains a mystery.” In this article he repeats claims made in the June 19 article and introduces the unsubstantiated claim of insolvency.

Mr Newport also wrote that QAC will only say that the amount is budgeted for without releasing any further detail – this is untrue and misleading.

19. The value attributed to the land is the guesswork of the writer, not substantiated or supported by a professional valuation and is greatly inflated. He has also provided wildly inconsistent values for QAC’s land and assets at Frankton between the two articles, seemingly cherry-picked to support his argument of the day.

20. QAC’s finances were not at risk. Funding requirements were covered by bank facilities and Mr Newport was advised of this in some detail on June 26. Suggesting otherwise unduly threatens the reputation of a vital community asset. It also appears to have negatively impacted community confidence in the company in some quarters.

21. In both articles and in email correspondence it is evident Mr Newport is unwilling to deviate from his opinion regarding the value of Lot 6, make any corrections or acknowledge he has been provided with a significantly more detailed response than he claimed.

22. Crux has misrepresented opinion as material facts and has reported without accuracy, fairness and balance, which has precluded readers from exercising informed judgement, and to the detriment of the reputation of QAC, its directors, management and staff.

23. These articles blur the line between comment and fact. Examples of opinion presented as material facts include:

“QAC now needs to fund up to $263 million to finance the purchase, even though the land is no longer needed.”

“Such a purchase will exceed the airport’s current $140 million borrowing limits and put it in breach of current banking facilities.”

“There is now a real risk the airport will have to sell shares to finance the land purchase, a move that could see the airport disappear from majority QLDC ratepayer ownership. Even the sale of shares could be difficult or non-viable post Covid-19.”

“The current debt facility for QAC is shared between a number of local NZ/Australian banks along with the Bank of China. If the local banks don’t have an appetite for further loans to QAC, especially with international air traffic at a near-complete standstill, then it may be the Bank of China to the rescue.”

“The QAC official website is published in only two languages – English and Chinese – and it maybe that the Bank of China sees commercial or strategic merit in offering up further cash to finance Queenstown Airport expansion land that may, or may not, be needed for actual future aviation purposes.”

24. QAC also complained about two captions which it says were neither accurate nor fair. One picture was captionedActing QAC chair Adrienne Young-Cooper – not responding to questions about Lot 6and the other stated Queenstown Airport’s comms person Sara Irvine – will only say that the Lot 6 purchase is budgeted for.

25. Also Crux was unwilling to correct significant errors published on June 19 and had republished and extended unsubstantiated claims on July 7.

26. In December 2019 Mr Newport had published a personal forecast in which he said the airport’s chief executive would be persuaded to vacate his post after more revelations around poor handling of community relationship emerge. This went to the publication’s “agenda” that appears to have played out in the articles and might explain his refusal to make corrections.

27.The articles raised community concern and anxiety regarding a valued community-owned asset. People who commented on the articles accepted them as fact-based news and reacted accordingly. No corrections or clarifications were made despite detailed information to refute the claims being provided on June 26. Further on July 7 Mr Newport repeated the claims and upped the ante by introducing new theories designed to legitimise contentions made in his May 2 opinion piece that the asset was at risk.<

The Response

28. Responding to the complaint that it had not contacted QAC for comment before publishing its editorial on May 2,Crux said it had been asking for this information since January. It was not supplied. As to the possibility of a share sale, this could be the case as ratepayers were unlikely to agree to provide many millions of dollars to “rescue” the airport. The latest pre-Covid accounts for QAC showed only around $1 million in cash and $70 million of debt. There were news reports of other airports selling shares or being rescued with cash from local councils.

29. As to QAC’s statement that Lot 6 is not redundant, Crux said QAC’s media release (in which it said it was taking the land under the Public Works Act) offered no evidence or reasoning as to the need for Lot 6. It also failed to address community and QLDC opposition to further airport expansion. Lot 6 was only required for theoretical large-scale future expansion – not for current or even post-Covid forecast needs.

30. As to differences in land value estimates Crux cited local architects and other expert sources as having valued all the airport land at between $1.2 and $1.6 billion. It assumed the QAC figure of $365 million was unrealistic and a deliberate undervaluation in an attempt to reduce commercial rates paid to QLDC.

31. Crux had been asking for details of the purchase since January. In the absence of any details from QAC “we are forced to use our own calculations which are clearly detailed in our story.”If QAC wanted to identify factual errors, it was happy to make a correction. The purchase also had to be seen in the context of the airport’s current trading position and the post-Covid collapse of air traffic.

32. As to why Mr Newport asked for the acting chair’s contact details on June 17, but did not request an interview or send questions,Crux said emails showed its questions were clear as were its attempts to contact her. Equally clear were its concerns over QAC’s lack of transparency or access to public information. There was a history of information being blocked with no good reason. There was no response to one email in which Crux asked for an interview and outlined indicative questions and Ms Irvine had been provocatively disingenuous in pretending to supply the acting chair’s contact details – one was the airport’s postal address and the other was a QAC admin email that went straight through to the PR and Comms team.

33. A letter received in response to a list of questions submitted on July 1 contained no new information and a subsequent request for comment was answered by repeating the content of an October 2019 press release and a repetition of sparse facts from a previously published statement of intent.

34.Responding to the complaint that it had repeated an unsubstantiated claim of insolvencyCrux said QAC public accounts did not show sufficient funding to cover the purchase of Lot 6 and unlike other airports QAC had not provided any detail of their post-Covid trading position. Any reasonable person or ratepayer would be concerned at the state of QAC’s finances and even more concerned that the financial situation would be used to “re-engineer” the share structure to remove local majority shareholder control.

35. As to the complaint that the land valuation was guesswork and cherry picked,Crux said its methodology was clearly stated in its story and it was up to QAC to challenge that with their own facts or valuation range. QAC had failed to address why it had not paid for Lot 6 nine months after taking possession. A simple explanation, in the absence of any factual rebuttal from QAC, is that they cannot afford it or are trying to get out of the purchase.

36.As to claims that no corrections had been made, QAC did not answer questions, and made no further statement when repeatedly ask for more, or any, detail. There was no evidence in the email correspondence from QAC or QLDC providing any information that could reasonably be regarded as the basis for a correction.

37. Any goodwill that could have been created by some limited cooperation, background briefing or partial release of facts simply did not take place and was not offered by QAC at any stage.

38.Attempting to blame Crux for what has clearly been a disastrous, expensive and failed attempt to “sell” airport growth and the attendant mass tourism to Queenstown and Wanaka is both unfair toCrux and damaging to its own reputation

39. QAC, in close coordination with QLDC, has attempted by gathering the local PR community into a “wolf pack” to attackCrux and organising this coordinated Media Council complaint with QLDC’s companion complaint, is a blatant attempt to shoot the messenger.

40.Crux makes a number of other points about the dire state of journalism in New Zealand, says it is the only local media platform that holds power to account in the Southern Lakes and that it is under attack for its journalism, not for its refusal to publish corrections.

41. It apologised for the tone of its emails which failed on occasions to hide its considerable frustration at the culture of total secrecy that had grown up around the QAC and QLDC. It also urged the two bodies to embrace transparency.

Further correspondence

42. QAC in the final comment noted that independent professional valuers are engaged to value QAC’s assets every year and its accounts are audited every year. The information is publicly available.

43. They also noted that the email address supplied for the Acting- Chair went to the executive assistant to the CEO, who was responsible for correspondence with the board of directors.

44. There was no orchestration of complaints with QLDC. The timing of the QAC complaint was to comply with Media Council time limit requirements.

45. One further point raised in QAC’s reply to Crux’s rebuttals is that is has no record of two emails Mr Newport cited in his defence – dated July 1 and July 13. This was confirmed by an independent IT company. As far as the complaint goes little turns on this as nearly all the published material being considered in this complaint pre-dates those emails. Other points raised also do not clarify or advance matters further.

The Decision

Discussion

46. QAC has made a wide-ranging complaint that Crux’s stories over several months did not adhere to standards of ethical journalism and breached Media Council principles.

47. In presenting its case QAC has put forward a long and detailed list of matters to back its arguments andCrux has also advanced a very detailed response. A feature of this complaint is repeated reference to various emails, two of which (July 1 and July 13 fromCrux) QAC says it never received. The Crux emails are notable for their tone, the way they dismiss Ms Irvine’s answers, and aggressive follow up questions which leave no doubt what he was thinking. Ms Irvine was affronted by Mr Newport’s approach. The Media Council notes it is not unknown for journalists to clash with and get angry with public relations professionals who they think are being obstructive. These emails are indicative of a clearly dysfunctional relationship and give a glimpse of what sometimes goes on behind the scenes in journalism.

48. But in considering this complaint, the emails and much of the argument that flows from them, have to be considered as secondary to the main issues. The Media Council’s purpose and scope is to consider published material and it will therefore focus on the four website articles mentioned by QAC which were published by Crux on April 23, May 2, June 19 and July 7.

49. The April 23 article headlined Councillors vote to accept airport Statement of Intentappears to be a straight forward report of a QLDC meeting which voted to accept an airport Statement of Intent. QAC said this was one of three articles where there was an absence of material facts and substance but it did not set out how it considered this particular article was flawed.

50. The May 2 article is labelled as an editorial. It was headlined Into the Danger Zone – is something Very Bad about to happen with our airports?The headline captures the flavour of the article in which Mr Newport surveys the predicament faced by QAC at a time when “commercial aviation is pretty much screwed. ”He also said that in his view QAC’s chief executive is overpaid and the company is $70 million in debt and about to spend the same again or more to buy Lot 6, which could force the QAC to sell shares and change its share structure.

51. As an editorial this is clearly the editor’s opinion. It was based in part on information in previous articles published byCrux, information from Mr Newport’s own inquiries and responses to his requests for information from the QAC over the previous months. As such the opinions expressed had a foundation of fact. While some of Mr Newport’s assertions are contested they are not demonstrably wrong. As it has not been proven that material facts (on which the opinions expressed in the editorial were based) were inaccurate the Media Council finds there was no breach of its principles relating to comment and opinion.

52. The June 19 article was headlined Airport risks bank limits over redundant $200 million land purchase. It reports that the airport needs to find up to $263 million to pay for Lot 6 land, even though the land was no longer needed. Such a purchase would exceed the airport’s current $140 million borrowing limits. The price estimate was based on information from sources close to the former land owner that he expected a price linked to other recent sales in the Remarkables Park development where land had sold for $750-$1700 per square metre.

53. While QAC asserts the information contained in this story is wrong it did not take the opportunity to respond to Mr Newport’s questions or provide him with its own information which may have allayed his concerns about its finances. Crucially it merely repeated information previously supplied which gave no estimate as to what it expected to pay for the land to counterCrux’s figures. However it was not beyond Crux to establish from another reliable source, such as an independent valuer, what the cost might be.

54.The suggestion that Lot 6 is no longer required also remains a matter of contention but a problem we have in dealing with this whole complaint is that both parties hold assertions to be fact. Journalists are expected to back up assertions with supporting information or informed comment. QAC says the land is needed for future airport development and that was why it was taken. While development is now on hold because of the impact of Covid-19, it may still be needed in the future. ButCrux has asserted, without any substantiation, that the land is no longer needed. That could ultimately be the case but the headline goes further by describing it as a “redundant $200m land purchase.” Its redundancy is not a fact and nor is the $200m price stated in the headline, which is inconsistent with the line in the story which cites sources to say the land may cost $116-$263 million. Because of its unsupported contentions that the land is no longer needed or redundantCrux is in breach of Media Council Principle 1 (accuracy, fairness and balance) and Principle 6 (headlines and captions).

55. The article also said Crux approached QAC’s acting chair, Adrienne Young-Cooper, for comment but received no response. The story was accompanied by a photo of Mrs Young-Cooper captioned “Acting QAC chair Adrienne Young-Cooper – not responding to questions about Lot 6.”

56. Emails show the journalist attempted to contact Mrs Young-Cooper through the media advisor for another company she was involved with. It is not known what he asked but he was advised, a day before the article was published that his details would be forwarded and that he would hopefully hear from Ms Young-Cooper soon. The first email fromCrux outlining questions for the Chair was dated July 1. On the basis of this information the Media Council found it was inaccurate and unfair forCrux to state on June 19 that she was “not responding to questions about Lot 6” and this was abreach of Principles 1 and 6.

57. The article also stated, without supporting information, that there was a real risk the airport would have to sell shares to finance the land purchase. The journalist sent an email to QAC four days earlier about how the purchase would be financed – by lending or sale of shares. QAC’s response was unhelpful but the journalist’s statement that the airport may have to sell shares was speculation. This was abreach of Principle 4 (comment and fact) which states a clear distinction should be drawn between factual information and comment or opinion. An article that is essentially comment or opinion should be clearly presented as such and material facts on which an opinion is based should be accurate.

58. The final article cited in this complaint was published on July 7 under the headlineWill the Bank of China need to rescue Queenstown airport’s deal. This article again refers to the problems QAC could face in financing the Lot 6 land purchase (this time estimating it could be as much as $200 million). It stated QAC did not have the money and asked QAC and its two shareholders (Auckland Airport and QLDC) how the purchase might be funded. It also asked the council chief executive Mike Theelan whether QAC was trading while insolvent. The article reported Mr Theelan’s statement that QAC was continuing to work on the “appropriate compensation for the land, which had been budgeted for and funded through its existing bank facilities”. He said the purchase had not caused QAC to become insolvent.

59. The article repeats the statement that a sale of shares could see local ratepayers lose majority control of the airport. While this is true, the article did not report comment made in a letter from QAC on June 26 that no share sale was proposed and that such a sale would require a shareholder resolution. This was in breach of the requirement for balance as detailed in Media Council Principle 1.

60. The article went on to note that only an official audit would confirm questions around insolvency. It acknowledgesCrux may be misreading official accounts but in the absence of facts “all we can do is report on what we can see.” It then suggests the Bank of China, with which QAC has a $30 million loan facility may come to the rescue if other banks with loan facilities do not offer further loans to QAC.

61. This article advances information of public interest about QAC’s situation and again demonstratedCrux’s efforts to find out important information about its finances. However, it was speculative, and not a factual report. Like the earlier article, there was abreach of Principle 4 (Comment and fact)

62. Much of the argument raised in this complaint revolves around the yet-to-be settled price of Lot 6, the piece of land taken for future airport expansion. There appear to be two vastly different assessments of what the land is worth and assertions that flow from those conflicting valuations can only be regarded as opinions rather than facts. The only figuresCrux had when these stories were published were estimates based on comparable land sales provided by sources close to the former owner (i.e. $116 million to $263 million) while QAC was holding to a line that it would pay a much lower but unspecified sum which had been budgeted for and would be funded through existing bank facilities. It has only subsequently been revealed in QAC’s annual report that it is offering $18.4 million. There is a wide gulf between those figures - the price is still to be negotiated or perhaps decided by a valuation tribunal. We note that this process, under the Public Works Act, could take more than two years.

63. Other issues raised in this complaint have been considered and found to be relatively inconsequential and there is no point in canvassing all the arguments here.

64. However, the Media Council is concerned there has been a serious breakdown in what should be a straight forward professional relationship between the editor of a news organisation and the communications/public relations manager of a council controlled local company. QAC operates a business that has a crucial role in Queenstown’s economy and its affairs are matter of significant public interest.

65. The Media Council holds that an independent press plays a vital role in a democracy. It would seemCrux has a commitment to fulfil that role in its community but in doing so it needs to apply the standards of ethical journalism. It also seems that key figures in two of Queenstown’s largest organisations – the QLDC and QAC – take exception toCrux’s questioning of their operations. Public bodies have a duty to provide information.

66. This complaint and other recent complaints filed by QLDC with the Media Council show a relationship of festering mutual suspicion and growing antagonism marked by stonewalling and hostile email exchanges that just aggravate relations further.

67. We note that in response to this complaint Crux has apologised for the tone of its emails.

Result

68. As noted above the Media Council upholds -

Three complaints under Principle 1 (accuracy, fairness and balance)

Two complaints under Principle 4 (comment and fact) and

Two complaints under Principle 6 (headlines and captions)

Media Council members considering the complaint were Liz Brown, Craig Cooper, Jo Cribb, Ben France-Hudson, Jonathan MacKenzie, Hank Schouten, Marie Shroff, Christina Tay and Tim Watkin.

Hon Raynor Asher took no part in the consideration of this complaint.

Rosemary Barraclough stood down to maintain the public member majority.