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media shakeup « Previous | |Next »
June 21, 2012

As we know the structure of the media industry is rapidly changing as the shift from print to the internet due to the digital revolution deepens, and the long term shift from newspapers to pay television continues. The good days for mass circulation newspapers are over, and they are never coming back.

The Fairfax news about shrinking and staff cuts, highlights the decline of print media whilst News Ltd moving to increase its shareholding of Fox Sport and Foxtel (cable television) highlights the shift to pay television by buying out Consolidated Media Holdings.


News Ltd remains bullish about its tabloid newspapers even as they cut costs through consolidation (its divisions in eastern Australia will shrink from 19 to five) and it snap up the independent voice of Business Spectator to remove competition to the paywalls. This concentrates more media ownership in fewer hands--Australia has some of the most concentrated media ownership in the Western world--- and is another step in News Ltd's desire to dominate.

Murdoch is considered foreign, so News Ltd's proposal to buy James Packer's Consolidated Media Holdings is subject to Foreign Investment Review Board approval. On the strict FIRB criteria it's hard to see how it could be knocked back. The deal would also require regulatory approval from the Australian Competition and Consumer Commission. But given that News already has 25 per cent of Foxtel and management control it is hard to see how the ACCC would present much resistance.

The chief obstacle facing Murdoch's takover is Kerry Stokes, who owns 25 per cent of Consolidated Media. Will Stokes sell, given his attempts to create his own pay television operation many years back?

If digital is the future of news media, then how do Fairfax and News Ltd make money from their growing digital audience? It's a more pressing question for Fairfax than News Ltd, which is more of a multimedia company with lots of synergies and part of a global media empire. Lifting its stake in Foxtel brings News Corp's Australian business into line with its global businesses, where News Corp is primarily a television business. More than 80% of its $5 billion annual profit comes from cable pay-TV) and movie making and its ambition is to create the world's first multi-platform media operator available from paper to web to TV to iPhone to iPad.

In this new media landscape the ABC will continue to provide a comprehensive news service across all media platforms for free, for reasons related to equitable access, national reach, and the information needs of citizens. Since online advertising will not cover the costs of a digital newspaper, the turn to paywalls is seen to be necessary by Fairfax. However, Fairfax will need to provide quality journalism, if they want their paywall-protected sites---The Age and SMH --- to survive.

Unfortunately, the future of the mediascape in Australia looks to be one where the combination of market dominance, power, fear, political influence, inadequate policing and feeble regulation becomes self-reinforcing.

| Posted by Gary Sauer-Thompson at 7:54 AM | | Comments (16)


Communications Minister Stephen Conroy is firming his position in favour of a media ownership public interest test to replace the existing bans on further concentration.

The latter is the “two out of three” rule that limits Rupert Murdoch’s News Ltd or Kerry Stokes’s Seven West Media from buying other media companies. Media companies are currently prevented from owning free-to-air television, newspapers and radio assets in the same market.

Those journalists that remain in both the Fairfax and News Ltd media groups will be working harder and filing more often to update their newspapers' online sites. And they will be worrying too about whether their future is secure with the greater casualisation of employment.

Packer sees Australia becoming "Ginaville" and is loading up the station wagon.

Pay TV is the profit driver in the media landscape now, not broadsheet newspapers. News Ltd, which is part of a global media empire, is in the business of content delivery over a range of platforms at a scale that is truly global.

Fairfax is a small national company that is fighting for its survival.

There is a relentless wave of creative destruction rolling across media companies

News Ltd's papers are in a better position than their Fairfax rivals, because The Daily Telegraph in Sydney and Herald Sun in Melbourne are mass-market tabloids with high circulations that have never relied on classified advertising. Consequently, they're not suffering so badly from its mass migration to the internet.

re the print media:

The near future is one of less revenue from declining print sales and ads, and fewer jobs for journalists, who will find themselves working harder to feed the media machine. So paywalls need to be made to work to ensure the future of newspapers such as the Sydney Morning Herald and The Age.

Is the paywall working at The Australian?

Having a bigger share of Foxtel will enable Murdoch's media interests to do more bundling of services and products and more cross-selling of ads.

how long before some journalists start

"The near future is one of less revenue from declining print sales and ads, and fewer jobs for journalists"

Rupert Murdoch recently told the Leveson inquiry:

Every newspaper has had a very good run... It's coming to an end as a result of these disruptive technologies. I think we will have both [internet and print news] for quite a while, certainly ten years, some people say five. I'd be more inclined to say 20, but 20 means very small circulations.

Advertising cannot support the infrastructure necessary for the Fairfax mastheads – The Sydney Morning Herald and The Age – to survive as digital papers.

The shift to a paywall requires that these mastheads must provide to what consumers see as their value: in-depth investigation, reliable news.

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The bleak reality is that over the next couple of years a great many journalists are going to be offloaded by the big media companies--Fairfax and News Ltd.

In The Age Bruce Guthrie says that these sacked journalists could become into online entrepreneurs and publishers, reporting on their chosen field

How would they make money from this?

Isn't a key question: How do you stop media power being concentrated in a few hands?

The choice for newspaper readers with Rinehart controlling Fairfax is one between Murdoch and Murdoch on steroids.

Now that Fairfax is on its knees I expect that Murdoch will lobby hard in Australia to cut funding to the ABC, given his record in Britain.

The Australian's editorial on media change says that Fairfax's problem is that their decline in their newspapers' circulation to their politics.

Fairfax broadsheets The Sydney Morning Herald and The Age have been producing journalism for a shrinking audience. Part of the problem is that they no longer act as a mirror to the nation, are able to chronicle the vast changes under way in the economy and society and report on the diversity of stories that encapsulate life in modern Australia.

It goes son to say that the myopia that predominates at Fairfax has seen its broadsheets cater, almost exclusively, to a conclave of left-leaning professionals, public servants and activists situated in inner-city Sydney and Melbourne. Rarely do they report on the shift of economic power to the north and the west of the country.

This conservative argument ignores the impact of technological change, but it coyly overlooks the fact that The Australian itself isn't even financially viable---its subsidized by the tabloids.

News Limited sees itself as the lone fearless crusader for effective government in a nation populated by an otherwise politically compliant media. Only News Ltd offer straight-from-the-shoulder assessments of national affairs

Now News Limited pursues an agenda that reflects its values and boosts its newspaper circulations in the marketplace. However, it cannot at the same time credibly assert that it is primarily interested in fair, balanced and open-minded political journalism and commentary.

Often News Limited political reporting resembles systematic deception---eg., on the NBN in which it is protecting its interests in pay TV (Foxtel) that is coming under threat from internet TV (IPTV) .