Is the age of the press baron over?
Posted
Democracy needs a strong media, but the
leak of News Corp's financial statements last week reveal the age of the
press barons may be in its final phase, writes Ian Verrender.
Kimleak of News Corp's financial statements last week reveal the age of the
press barons may be in its final phase, writes Ian Verrender.
Williams is a man of contrasts; erudite but explosive, a talented
classical musician who instead turned his hand to successfully running
huge organisations with brutal efficiency.
Almost a year to the day since his ignominious removal from News Corp, he again has been thrust into the limelight for two reasons.
The
first is his book, an eagerly awaited tome due for release this week,
that no doubt will document his life at the top of the News Corp
juggernaut.
And the second was last week's startling revelations on website Crikey
about the alarming erosion of cash from the media group's major
Australian titles, a coincidence that many at his former employer found
somewhat irritating.
It was tremendous fodder for rival Australian
media groups that for generations have routinely gone to war, with
proprietors occasionally even resorting to fisticuffs.
Having been
on the receiving end of an unrelenting torrent of negativity from News
for the past few years over its financial performance, Fairfax relished
the opportunity for retaliation.
But the documents - a set of
accounts that lay bare every painful detail of the Australian arm of
News Corporation - tell a bigger story about the demise of traditional
media, beg questions about whether the nation's biggest news group is
prepared for the financial onslaught and raise concerns about whether
democracy could be properly served in the absence of mainstream media.
The
immediate reaction from News chief executive Julian Clarke, broadcast
through the company's various outlets, (on top of threatened legal
action against anyone who used the data) was that the numbers were 14
months old and that things had since improved. Williams also copped his share of the blame for the results.
Odd
then that just a fortnight ago, the company's own accounts to the stock
exchange revealed a further 18 per cent deterioration in Australian newspaper revenues.
Although perfectly in character, the company's response reeked of delusion.
If
the raw numbers were shocking enough - The Australian lost $27 million
in 2012/13 - even more alarming was the extent to which News Corp
executives had miscalculated the speed of the decline.
Almost
every title missed budget by a country mile. The Australian, for
instance, had budgeted on a $7.56 million loss. On a group basis,
advertising revenue, while still substantial, was evaporating at a rate
of $1.8 million a week.
Until
the newspaper assets were hived off from entertainment last year, (News
Corp and 21st Century Fox are now separate companies), the decline in
the News Corp's traditional print business had been masked by the
ballooning income from cable television and movies.
That protection no longer applies.
As
a result, News is about to experience the same primal forces of change
that have swept through more exposed rivals such as Fairfax with
devastating force in recent years.
Fairfax insiders concede that
until a year ago, the company's future was touch and go. Its most recent
results - a $224 million profit after years of losses - was down to
improved income from its real estate website Domain.
There are some who argue that mainstream media already is dead,
that social media outlets like Twitter and specialist news sites with
tiny teams of reporters are filling the void. Maybe that's true.
Critics now lament with an air of disdain that the once
great Fairfax these days earns its money from events, dating services
and flogging whatever it can for a commission.
There's no denying that. But here's the rub. Journalism doesn't make money. In fact, you could argue it never did.
Every
Friday night, a long line of punters would line up at the loading docks
of The Age and The Sydney Morning Herald to collect a first edition
paper. And while we smugly believed they were there to feast their eyes
on our erudite opinions and fabulous reportage, the truth was far less
edifying.
They were there get their hands on the weekend classifieds, to get a jump on other car buyers.
News
and advertising were always two discrete businesses. The newspaper
itself was simply a conduit, a distribution channel, a pipeline. And
since the internet severed the nexus between the two, news gathering has
been forced to rapidly transform itself into a standalone enterprise.
The
problem is, news gathering is hugely expensive. And no one wants to
pay, let alone pay enough for the news business to be a money spinner.
In a digital world, advertising inventory is unlimited. The barriers to entry are minimal.
Online
news services attract an audience and hence attract ads. But it is at a
vastly discounted rate, and it doesn't raise nearly enough to generate
the kind of returns stock investors demand.
In any other industry,
a rational businessperson would jettison their high cost, low revenue
operations and stick to the bits that make most money, just as BHP did a
decade and a half ago when it shut down or hived off its steel
operations.
Rupert Murdoch would never consider such an option.
The Fairfax board and its chief executive, Greg Hywood, wouldn't either,
as they continually look for ancillary businesses to support the
company's news gathering services.
But Murdoch won't be around
forever and the sentimental attachment will go with him. Make no
mistake, there are major shareholders of Fairfax who for years have been
advocating for a break-up, for the company to ditch journalism and
expand its online advertising sites.
Seek.com, Carsales and REA.
In just a decade, they have stolen Fairfax's rivers of gold and each of
them now outrank Fairfax in terms of market value.
The situation
is no less dire for free-to-air television networks. They have suffered
from the same drain of advertising dollars as print, although not the
same extent. And in an era when viewers can download programs at will,
direct from the production house, the future for free-to-air networks is
challenging to say the least.
This has all come about as public
broadcasters, such as the ABC, are under funding pressures. Governments
are reluctant to tip taxpayer cash into an industry in such a state of
flux and where commercial operators who still wield vast political
influence agitate for the elimination of any serious competition.
Democracy needs a healthy and free media but the age of the press barons already may be in its final phase.
There
are some who argue that mainstream media already is dead, that social
media outlets like Twitter and specialist news sites with tiny teams of
reporters are filling the void. Maybe that's true.
One thing is
certain. Any mainstream media group that believes it is above, or immune
to the crisis engulfing the industry is an organisation that is likely
to imperil its own future.
It is a message Kim Williams forcefully conveyed at News.
Ian Verrender is the ABC's business editor. View his full profile here.
Prince al-Walid bin Talal owns 5.5% of Fox 
