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December 7, 2008
David Kirk's resignation as CEO of Fairfax Media and his replacement by Brian McCarthy is a good time to assess what is happening to corporate media in Australia. Fairfax has diversified---adding more legs to its broadsheets and its dependence on the Sydney and Melbourne advertising markets. It has extended its strong position in traditional newspaper publishing into online businesses. It has done so by going on a spending spree ($5.4billion) over the last three years including Southern Cross Broadcastings' radio stations and production company.
Despite this repositioning Fairfax's share price has been ravaged by short selling, there have been cost-cutting programmes at The Age and the Sydney Morning Herald; these broadsheets continue to lose circulation, and its revenue is still 80% dependent on advertising, a market suffering from weak conditions. McCarthy as CEO means cutting costs and keeping them down. Presumably that means no frill newspapers. Goodbye quality broadsheet journalism.
So what does this mean for newspapers? Media companies in the US, UK and Australia are seeing a slump in revenue and earnings, and most are cutting staff and reducing costs. The Future of Journalism Report by the Media Alliance says that the old model of newspapers is undergoing systematic collapse and not just a cyclical downturn.
Rupert Murdoch in his Boyer Lectures observed that we are moving from newspapers to news brands.
In this coming century, the form of delivery may change, but the potential audience for our content will multiply many times over.... My summary of the way some of the established media has responded to the internet is this: it's not newspapers that might become obsolete. It's some of the editors, reporters and proprietors who are forgetting a newspaper's most precious asset: the bond with its readers.
Margaret Simons says that the events at Fairfax are a generational moment in Australian journalism and public life - the moment:
when it became crystal clear that newspapers were no longer going to be the main, or most important, forum for serious journalism and public debate. That does not mean that journalism and public debate will die. It does mean we are in the middle of a profound paradigm shift with implications for every aspect of our democracy. Things are still playing out, and will do for another decade or so, but the depth of the crisis is clear.
She adds that Fairfax Media may well survive as a company. Kirk’s legacy, the diversification away from newspapers and into internet advertising sites, means that Fairfax Media is unlikely to disappear. However, it is unlikely to be the home of premier Australian journalism in the medium and long term.
Well, we've known that for sometime. Mass media has fractured from the collapse of the old business and journalism model. What then is Simon's paradigm shift? Is it diverse media voices in a digital media landscape? What does premier Australian journalism mean in such a fragmented digital media landscape? How would it work and be funded?
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A new era. Less revenue from advertising means more cost cutting at Fairfax. Less dividends for shareholders. Reduce debt by selling assets in a fire sale. Less emphasis on quality news and information. The axe is to fall at Fairfax.