The reasoning behind the
government’s overhaul of the media laws is that new media is eating the
lunch of old media and, therefore, the regulatory framework should be
adapted to cope with that “revolution”.

But is that true? Is old media doomed in a world of digital enlightenment? Is it time to call in the undertakers?

Of
course not. The reality, which is now becoming much clearer, is that
while “old” media is in decline, its growth is over, and mass media
like big newspapers, commercial television and radio will no longer
deliver increased audiences, millions of Australians will continue to
read newspapers and watch or listen to commercial TV and radio. Their
numbers may be falling steadily, but they can still be measured in the
millions and they will continue to be measured in the millions for at
least another decade.

The real issue for old media is the
trajectory, timing and consequences of its decline. The real problem
for any public company which owns old media is how to handle the next
decade – which actually means: how do you manage shareholders who expect
profit growth and who will look elsewhere to invest if they can’t get
it?

For most media companies, there’s only one solution: cut
costs, especially the costs of expensive journalism. But the problem
with just cutting costs is that it won’t be enough to offset the
inexorable decline in revenues and profits which are being cannibalised
(although not destroyed) by the rise of new media.

The
result, increasingly, is recalcitrant shareholders who will either dump
their shares or demand that media company boards sell out while share
prices remain relatively high. That – not death – is the problem
confronting the old media industry.

It’s a dilemma that will
decimate large-scale investment in journalism and will accelerate
mergers and acquisitions by media public companies who know they can no
longer deliver growth for shareholders.

It may sound
technical, but it will be a disaster for the quality and diversity of
Australian media. All thanks to Senator Coonan and Prime Minister
Howard, egged on by old media impresarios like James Packer (Nine
Network) and Ron Walker (Fairfax), whose real objective is to find an
old age home for their declining assets over the next decade.

Peter Fray

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