Nine Chairman Peter Costello and CEO Hugh Marks
One of the Liberal Party’s most senior figures, former treasurer Peter Costello, will chair Australia’s largest media company as a result of the Nine Network’s takeover of Fairfax. The “merger” will dramatically reduce media diversity at a national level and likely bring further big reductions in editorial staff, in what is a major win for the Liberal Party.
In 2017, the Turnbull government removed the final impediment to a Nine-Fairfax merger when it repealed the “two-out-of-three” rule that prevented a company from owning a newspaper, television licence and radio licence in the same market. That paved the way for Fairfax (which owns both newspaper and radio assets in Sydney and Melbourne) to be acquired by Nine (a free-to-air television licensee) with the new entity to be chaired by Costello, who unsuccessfully championed the removal of two-out-of-three when treasurer in 2006. That a senior Liberal will now oversee the dominant free-to-air and newspaper company in Australia is great news for Malcolm Turnbull and his party.
The takeover illustrates how Australia’s now limited media ownership rules fail to protect diversity. The primary diversity protection remaining in legislation is the “5/4 rule”, which prohibits the number of media groups in TV, radio and newspapers from falling below five in the state capitals and four in other markets. Sydney and Melbourne are well above five given the large number of radio licencees and two daily newspapers. However, at a national level, Australia has now lost one of a small number of major media companies that have the power to shape the national agenda — a list that is limited to the Murdochs, the Stokes, Nine, Fairfax and Ten.
According to the ASX statement about the takeover, it will yield $100 million in savings over two years — this paves the way for a significant reduction in staff at the combined entity, including journalists, editors and producers as Nine looks to cut costs to justify its acquisition.
However, the longer-term impact is likely to be even more significant: successful media mergers or major acquisitions in Australia (or overseas) are very rare. They usually result in someone losing a lot of money. That’s not just the 20th century experience of Bond, Skase and Lowy, it’s the 21st century experience: CVC eventually lost $1.8 billion when it bought Nine from James Packer after the 2006 media changes. Lachlan Murdoch, Packer and assorted billionaires did their dough buying into Ten. This eventually translates into lost jobs, smaller budgets and cuts to the high-cost area of production like news-gathering. That two-year period of job cuts is likely to turn into several years of them as the promised synergies, efficiencies and “value creation” that are being used today to justify the takeover fail to materialise.
And forget about any “independent” criticism of Nine’s news coverage or programming — the appalling Love Island, or 60 Minutes’ next debacle, or further close co-operation between Fairfax’s top journalists such as Adele Ferguson, Nick McKenzie and others, and ABC programs like 7.30 and Four Corners. Instead, journalists will no doubt be pressed into combined TV and print roles — and how long will Nine want to keep print editions of the Herald and Age going?
The Financial Review might survive, however: Costello will favour it because it generally hews to the Liberal line, and has enthusiastically changed editorial tack to reflexively favour the interests of the Business Council and major corporations that sponsor its events in recent years.
Another great chapter in Australia’s storied history media diversity.