News Corp’s rivers of gold drying up
Once upon a time newspapers could almost print money off the back of classified advertising. But although classies still accounted for a large slice of News Corp's revenue in 2012-13, the rivers of gold are much shallower than they used to be.
No matter the spin from News Corp Australia hacks and executives (in The Australian) about how things have improved since the end of the 2012-13 financial year, there was a lack of any figures advanced yesterday to support the argument. But one thing the spin can't obscure is that News Corp Australia has been severely damaged by the impact of the internet.
For decades, one of the great stories of Australian media was the so-called "rivers of gold" that Fairfax controlled in its vast classified advertising columns in The Sydney Morning Herald, and then Melbourne's The Age. And of equal notoriety were the attacks on those "rivers" by the Packer family and Rupert Murdoch, and how they chortled as Fairfax gradually lost control of those golden gushers thanks to greed and ambition, new competitors, Murdoch's purchase of The Daily Telegraph in Sydney, and finally the rise of the internet.
Fairfax has lost its domination of the classifieds -- they now seem to exist in suburban and community papers, while their presence in the bigger metros has all but gone. But there are still hundreds of millions of dollars of "gold" in the News Corp Australia papers, making the Murdoch clan's Australian papers the ''new Fairfax". And these rivers of gold are now flowing out the door of News Corp Australia papers around the country, on every level, at a rate of $1.8 million a week in 2012-13.
And even if the pick-up in the real estate market in 2013-14 managed to staunch some of the outflow in property and real estate ads, public notices, amusements, travel and personal ads will still fall, along with employment ads, given the softness in the jobs market and the slide that has been showing up each month in the ANZ's job ads report.
One of the figures that stood out in the awful operational report for News Corp Australia for 2012-13 was the $337.7 million in classified ads income for the year. That figure is down 21%, from $426.6 million in 2011-12, but it is still an awful lot of money. Classifieds made up a significant part of News' total advertising income in that year.
In addition to the drop in adult personals to $19.1 million from $21.5 million, other personal ads fell to $31.8 million from $33.5 million. That drop of 4.9% was the best performance of all the categories of classifieds. Public notices, a classified staple, recorded a fall of 15.1% to 26.4 million from $31 million. Travel lost 14.6% to just $1.6 million, while ad revenues from amusements fell 19% to $21 million.
Among the larger areas of classified ads, real estate dropped 26% to $64.54 million (remember the property boom was just starting towards the end of the year, so was there a rise in 2013-14?). Employment classies fell a massive 35% to $57.8 million (that's the internet and the weak employment market at work. That weakness is confirmed by the ANZ job ads series, where print newspaper shares have fallen dramatically in recent years). Motor vehicle classies fell nearly 19% to $61 million (another staple damaged by the internet, and despite three years of near record or record new car sales). The market place segment fell 21% to $10.3 million, and trades and services (plumbers, etc, another classifieds staple) fell 11% to $56.9 million. Most of these ads are in suburban free papers or in regionals.
Every region -- metro, suburban, local and regionals -- recorded double-digit falls in all types of classified ad revenues in 2012-13. And its very hard to pin the blame for those falls on changes in the national ad sales force system introduced by former News CEO Kim Williams. The best way to refute these figures would be to release the data for the 2013-14 financial year -- at the same time supporting the claim yesterday by Chris Mitchell (editor-in-chief of The Australian) that the paper had halved its loss in the year to June from the near $30 million loss in 2012-13.