Fairfax and News Ltd have been joint venture business partners in the
AAP wire service for decades but that is certainly the exception to the rule for
the long-time fierce newspaper rivals – until now, it seems.

Fairfax chairman Ron Walker made an impassioned plea for greater
industry co-operation and less warfare after last year’s AGM and it
seems he might just be closer to achieving that goal if a merger of the mycareer.com.au and careerone.com.au
online jobs sites proceeds.

Allowing the two dominant players in an industry to get together is
usually a pretty scary prospect, but they will obviously argue that the
online and newspaper job ads markets are completely separate.

Given that no other newspaper company in a modern democracy has a market
share like the 70% enjoyed by News Ltd, the structure of any deal would
be vital. For instance, would it mean that Fairfax and News Ltd could
start pooling their newspaper job ads online? That would be an
enormously powerful combination against Seek. If it was for online ads
only, then this wouldn’t be a problem because Seek is the dominant
player in this market and the barriers to entry are relatively low for
new competitors.

The online jobs market is now approaching 20% of the total jobs market and the
Packer-backed Seek has about 60% of this, giving them an overall jobs
classifieds market share of just over 10%, which is pretty small in the
scheme of things.

However, not having to kill trees, employ printers and distribute
newspapers across the country gives Seek a huge cost advantage which
explains why its shares have doubled in ten months and it is now
capitalised at $1.4 billion.

Crikey reported last week that Seek is looking to launch a major
assault on the online real estate market which is led by the
News-backed realestate.com.au. Perhaps threats of this move are
designed to pre-empt any co-ordinated attack in the online jobs market by
Fairfax and News.

The most worrying aspect of Fairfax and News Ltd doing deals is the
notion that they could co-operate in other areas. A unified approach to
political endorsement would be hugely powerful, as would any agreement
not to criticise each other’s boards and management.

This is where News Ltd’s coverage of the Ron Walker share trading
controversy gets very interesting. The Murdoch papers are certainly
going in with kid gloves against Ron when compared with the treatment
that James
Packer and Eddie McGuire copped over the Mark Llewellyn affidavit.
Let’s see how they deal with our revelations today of this Coonan lunch
(item 3) and the merger talks.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey