There is a bitter irony in newspapers funding research to proclaim themselves “absorbing, dynamic and reputable” at the same time as publishing uncritical crap about themselves, and that research.

Today The Australian’s Media Section, amid other articles about the downturn in display advertising revenue online (including Nielsen net rating figures that seem inconsistent with other ones released only a few weeks ago), nevertheless gives another uncritical burst to research by the Fairfax-News funded industry group The Newspaper Works.

This is combined with giving Fairfax CEO David Kirk the space to make a series of quite laughable claims.

I wrote about The Newspaper Works research earlier in the week. It relies on a survey conducted online, using one of the increasingly common internet based panels of consumers, recruited by the promise of freebies and giveaways.

Furthermore, the research companies concerned have not released the full text of all the questions asked in the survey. To do so is basic good practice for public opinion pollsters and surveys of this sort, if they want to be take seriously. The whole thing invites scrutiny and scepticism, but clearly we won’t get that from the “absorbing, dynamic and reputable” newspapers in question.

Now to David Kirk. It seems to have escaped The Australian that yesterday a leading broker toned down the valuation of Fairfax stock by twenty per cent – a fact that, to its credit, Fairfax’s The Age managed to report free of spin.

Nevertheless Kirk is able to get away in The Australian with laughable comments suggesting that Australian newspapers are “past” the crisis that is engulfing print worldwide. Why does the Oz allow him to get away with this? It can only be because it is in the context of spruiking this dubious industry research, in which News Limited is also vested.

Kirk is quoted as saying that the Australian newspaper experience was vastly different from many other parts of the world, especially the US, where publishers were still worried about the cannibalisation of print revenues by the internet.

“But we are past that here. We know how to do our newspapers well and we know how to do the internet well, and we can put them together to deliver a fantastic 24-hour news product.”

Kirk also talks about investing in the newspapers – though not, it should be noted, the journalists or the journalism. He is talking about name changes, use of colour and design – as though these things are unknown in the USA! He also seems to be assuming that all US papers are national, when it is one of the most parochial newspaper markets in the world.

All this is an abbreviated version of the spin Kirk has been giving to the market, as in this recent address to the Macquarie Conference (available under Company Announcements here).

Now we shouldn’t hold all this against Kirk. Spruiking as best he can is part of his job, and we shouldn’t blame him for doing it. But hasn’t The Australian noted that the markets don’t buy it? And for good reason?

Deutsche Bank’s head of media research Andrew Anagnostellis estimated yesterday that weakening advertising and increased borrowing costs would reduce Fairfax’s earnings per share by 1.6% in the year to June 30 and 9.8% the following year.

And as for the American trends that Kirk claims Fairfax is “past”, they are laid out with great clarity and detail in this recent article in the American Journalism Review.

Regarding American newspapers, one set of figures tells the tale – that the bridge from print to online is rickety at best, and on some analysis “plunging into the chasm”.

Using detailed statistics, the article shows that while online advertising will increase as print declines, the total revenue will decline.

“Print ad revenue for the newspaper industry would plunge from $42.2 billion in 2007 to $31.5 billion in 2010 to $19.3 billion in 2015, and on down from there. Online revenue would rise from $3.2 billion in 2007 to $4.3 billion in 2010 to $6.9 billion in 2015 — not nearly enough to cover the stupendous losses in print.”

The article continues:

“If you read analysts’ reports on newspaper companies, you’ll see frequent expressions of doubt as to how well newspapers’ basic strategy — to become a hybrid print-and-online business — can work. For instance, of Gannett’s 24 percent growth in online ad sales for 2006, stock analyst Tom Corbett of the investment research firm Morningstar wrote that “even with that growth, there’s not much to convince us that revenue from Gannett’s online advertising is enough to make up for the protracted decline in the sale of print ads.” This, everyone acknowledges, is the crucial problem for newspaper companies.”

Now, David Kirk may manage to believe that Australian newspapers are simply “past” all this, due to name changes, color ads and design (not, apparently, more journalism).

But surely newspapers that are trying to flog themselves as “absorbing, dynamic and reputable” should be able to do a better job of skeptically examining the claims.

It all smacks of desperation.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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