There is a meeting at News Limited’s Australian headquarters in Holt Street today at which the company’s most senior local lieutenants will talk about the coming year. I hear that axings, redundancies and restructuring to allow for yet more redundancies are on the agenda.
The news is out in the group that senior management has been dismayed and “confronted” by the poor results across the group. There are few if any bright spots.
As for redundancies this is not, despite appearances, anything new. News Limited has been making big cuts for at least the last six months, but unlike Fairfax has been strategic about it and avoided making a noise. As a result unions and even senior employees are not aware of the scale of the economies in the group as a whole.
One went recently from Holt St corporate affairs. Late last year the Holt St editorial training manager went and has not been replaced. But in truth there are no areas of the organization — from Hobart to Cairns — that haven’t been touched.
Everywhere there are sub editors missing, local and suburban newspapers being filled by less than one reporter, cuts to training, cuts even to the number of newspapers staff are allowed to order. News Limited middle managers tell me that it is now at the stage where more cuts can’t be made without restructuring and rethinking the way business is done in some areas of the Australian empire.
Today’s meeting at Holt Street will doubtless prepare for Rupert’s visit next week in preparation for his mother’s 100th birthday. There will have to be an action plan for the year ahead.
Meanwhile, it was reported yesterday that the US based market analyst Pali Research downgraded News Corporation from buy to sell, citing a lack of strategic direction from Rupert himself.
The Pali analyst says:
While we have long viewed Rupert Murdoch as the most visionary CEO in the media sector and one of the only CEOs willing to make long-term strategic investments (regardless of the near-term earnings impact or public investor views), we are increasing surprised/frustrated with his lack of strategic direction related to News Corp’s television station, newspaper and book publishing assets…
Therefore, we are concerned that the News Corp. growth story, propelled by cable networks and Sky Italia, will be far less exciting over the next few years, unless the global economy rapidly recovers and/or News Corp. begins to make the hard decisions to shutter businesses and/or innovate their way out of the downward spiral facing several of its key assets (TV, Newspapers and Books).
And last week came news that a leading US media analyst had cut his 2009 earnings forecast for the global News Corporation and believes the media company could see a 50 per cent fall in profits this financial year.
None of this should surprise. The decline in the business model that has supported newspapers and television is a bigger story than any one media company. That combined with the economic downturn will not leave even the Sun King untouched.
It sounds like the troops should be bracing for more, and worse.