Compare and contrast is always a bit tedious, especially when it applies to the media, but yesterday and today we have had two quite different announcements from major media groups that went close to the financial edge in 2009, but survived and now have very different mindsets.
In 2008-09, Fairfax Media and Ten Network were nearly crippled by debt burdens, slumping ad revenues, profits were fanciful, (Ten also had a Canadian parent that was collapsing as well) and they were unwanted in the market. Ten in fact failed to get a share issue away in the early months of 2009, Fairfax’s looming demise was openly forecast. But both made it through the dark days and have emerged with profits returning, but very different approaches to their business futures.
Ten yesterday was confident and upbeat, as what’s essentially a sales-driven organisation should be, but today’s announcement from Fairfax Media suggests that Fairfax again has fluffed its chance to be decisive and forward looking and clearly state how it sees its future.
The statement, which accompanies the 2010 profit announcement (yes, Fairfax is back in the black) can best be summed up from these paragraphs from a message this morning to staff from CEO Brain McCarthy.
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“What is clear is that in a rapidly changing and competitive media environment, we must play to our strengths. Fairfax’s mission is to utilise its trusted media brands to connect people and the communities in which we participate for the benefit of all of our stakeholders — our customers, employees and shareholders. In pursuing this goal we will build on our expertise in the areas of news, information and entertainment content, and our market positions in classifieds and online transactions.” and …
“We must continually evolve all of our metro news assets so they remain relevant and profitable. This will be achieved by undertaking a series of business efficiency initiatives focused on protecting revenues and reducing costs over time. We will continue to focus on editorial excellence, subscriptions and effective promotions to maintain paid circulation. Quality journalism is, and will remain, a core competency of the company.”
And there’s more of the same. Puffery and management speak. For a strategy that has been worked on for months, it was lacking in detail, such as just what will happen, who will drive it, who will be impacted, what it will mean for readers of the various publications, the internet and so on. And at what cost?
On Thursday the Ten Network revealed a major change (upheaval actually) in its TV programming strategy, shifting two venerable programs from the main channel to a new digital channel, which hasn’t transmitted yet: the thinking is that moving The Simpsons and Neighbours will drag new viewers to ELEVEN, the new digital channel. But the big gamble is that they will return to the main channel to watch Ten’s programming (for which Ten charges advertisers a lot more on the main channel, than it will on ELEVEN, or ONE, its sports channel).
At the same time, Ten revealed plans for two new news-0based programs for the 6-7pm timeslot Monday to Friday, with the second, a local news, to run Sunday to Saturday, as does the existing Ten News At Five.
Ten said the cost would be $20 million and 100 new staff would be employed for the national and state programs, new equipment would be bought and it will start in early 2011 (before ratings start to bed it in). lots of detail of cost, staffing and strategy.
The detail in the Ten announcement and the way it was announced is in very stark contrast to the management speak at Fairfax.
But from reading both we know that Ten, in the free-to-air TV market, which was (or is, according to experts) about to die thanks to the internet, mobile TV, movies on demand, etc, is expanding and now has the confidence to spend a lot of money, having decided on the strategy and then determined how to implement it.
CEO Grant Blackley and chairman Nick Falloon have a lot riding on getting these big changes right as quickly as possible (Their jobs?). There’s not only the $20 million being spent at stake, but the reputation and strategy of the network, which aims itself at 16-39s and 18-49s.
Ten is a media partner of Fairfax, as is the ABC, which is another major media group (public, and no shareholders to get upset, except right-wing moaners and chancers). The ABC has spent the best part of $20 million on getting its News 24 channel to air and bedded down. They, like Ten, looked at the issue, decided on a course of action and went for it: not without internal ructions and pressures, but management and the board held firm and now the ABC has four FTA TV channels.
But this announcement from Fairfax is vague, a statement of worthy intentions and “what we must do”, but no idea as to how it is to be done. Fairfax’s changes are no more wrenching than what Ten has chosen to do. And Ten will find out very quickly if it is successful; either viewers will support it immediately, or over time, or they won’t. It’s an enormous call in a very conservative industry to change a settled nightly TV schedule.
But Fairfax said in today’s statement that its thinking is governed by the following:
“For the next few years, we have identified three key priorities: 1. We must adapt to being a true multi-platform company. 2. We must evolve our news products and transform our metro business model. 3. We must expand our positions in growth segments.”
But there is at least one positive in this from Fairfax; it is at least trying to grapple with the future, as is Ten and the ABC (which is far more advanced in many of the things that Fairfax wants to be, especially multiple platforms). But not so Nine, Seven and News Ltd, which remain anchored in the present for various reasons.
But it is interesting that after being nearly struck dead by the GFC and ad slump, a section of the commercial media now has taken the first steps towards the future. Contrast that to the stolid, no-change fortresses at the Seven Media Group (whose future is tied to Kerry Stokes’ ambitions to sell lots of big yellow trucks and graders to miners in WA and in China, rather than focusing on its viewers) and at PBL Media where the strategy seems to be boost, boost so that we can be sold back into the market in 2011-12 and our owners and management can make money.
And then there’s News Ltd, which will no doubt poke a stick at Fairfax and openly speculate on its future and this half-hearted first step.
But News is anchored by the Murdoch paywall adventure in London that has been built around The Times and Sunday Times in an effort to prove that people will pay for content. Until that is resolved, the local arm of News Corp will not be able to change and will only fiddle at the margin.