Rupert Murdoch confirmed with his $360 million, or 7.5%, purchase of John Fairfax Holdings what Roy Morgan CEO Michele Levine highlighted in her paper “Newspapers are Transforming not Disappearing“– published in the October 2006 Australian Press Council Report: State of the News Print Media in Australia (pages 23 and 24).
The paper showed that while readership of the “hard copy” Sydney Morning Herald was flat year-on-year from 2003 to 2006, the combined reach of the SMH in “hard copy” and “online” had increased substantially — plus 13%. A similar story is also seen for the Melbourne Herald Sun which has increased its combined newspaper and internet reach by 5% between 2003 and 2006.
While Murdoch’s spokespeople may be saying that this latest Fairfax move is merely an investment (and from these figures, a very good investment), Murdoch’s acquisition has changed the Australian media landscape forever. Fairfax will be bought, broken up and sold. The end result will be one national business newspaper (like The Wall Street Journal) with a profitable internet component. The AFR internet component today is near to non-existent.
The Melbourne Herald Sun and the Sydney Daily Telegraph will soon be part of the Packer “tabloid camp” of magazines and TV, while The Age and The SMH will join with the Adelaide Advertiser and the Brisbane Courier-Mail to be Murdoch’s “Australian Broadsheet”.
What happens across the Tasman is also of great importance, as marketers and advertisers now treat New Zealand as the “eighth State”. Packer is large in a very competitive NZ magazine market, while Murdoch has only a minor interest in TV through Sky. Splitting New Zealand Fairfax will be “stage one” of catapulting New Zealand into the international media scene.
James Packer may or may not be a business genius, but his people are smart enough to know that Australians involved in the media and marketing industries need to go global if they are to be really successful — Packer has the best international joint venture of them all with Microsoft.
It is important to recognise the distinctive nature of the Packer business: As Gary Morgan wrote in his paper “Historic Look at Australia’s Top 20 Business People (including one American!)”, published in Crikey:
Packer and his team became the masters of cross marketing (promoting) celebrities, specific Packer magazines and TV programs in Packer’s many magazines and Channel Nine, which clearly became “The One” for at least 30 years.
This unique quality will be instrumental in expanding the Packer business into foreign markets. While there is a lot of foreign hyperbole about cross-media marketing, currently there is next to none in the US, UK or European media.
Of course such cross-media marketing allows significant economies of scale, which add greatly to marketing efficiency and profitability — not only does it allow for repackaging of content across various media, but it also allows the potential to eliminate overlapping operations. However, the greatest benefit of cross-media marketing, made exponential when carried out internationally, is the advantage of gaining international advertising contracts — the Packer and Murdoch lifeblood.
These factors place James Packer in a unique position to make his mark on the international media market. All Australians will benefit with two, not one, of the world’s major media moguls being Australian.
Read more at Henry Thornton.