Australia’s media owners spent the last quarter of the 20th century trying to get big. Real big.
They were giants in the earth in those days, so powerful that any passing mention of their given names — Rupert, Kerry, and even once upon a time Warwick — was enough to freeze the blood of Australian politicians.
Those same giants (or their commercial heirs) are now caught: too big to pivot to the opportunities of new media; too small to compete with the new giants of the tech world; too reluctant to give up the power and influence their size once brought them.
In the media equivalent of the now official trans-Tasman bubble, this week has given us a couple of on-again/off-again insights into the underlying process.
On Monday morning, NZME, publisher of The New Zealand Herald, was going to buy Nine’s local subsidiary, Stuff, for $1. Then by midday it wasn’t.
At the same time The Australian revealed one of the industry’s worst-kept secrets: News Corp was trying to sell its regional papers (most of which it absorbed from the break-up of APN Media in 2015) to Australian Community Media (which was spun out of Fairfax last year after the Nine takeover). Then a day later it wasn’t.
$1 has become the price of choice for declining media properties, ever since the New York Daily News tabloid sold for that in 2017. It was the same asking price that Bauer sought (unsuccessfully) from the New Zealand government for its local magazines last month.
Of course it’s not really about selling media. It’s about off-loading liabilities, particularly those owed to staff such as for leave and redundancy. In the case of the New York Daily News, for example, these were more than $100 million.
Paradoxically, these liabilities are keeping old media alive — for the time being at least. Current (if declining) cash flows can support existing costs with regular redundancy rounds to adjust outgoings downward while liabilities roll forward. Closing a product immediately crystalises the liability costs while turning off the income tap. It would require real cash from the parent company.
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This week’s on-again/off-again shufflings came the week after the two remaining giants — News Corp and Nine — released trading updates that illustrated how well (or poorly) they’re managing to rescue themselves in the middle of the COVID-19 shock.
The News Corp figures came courtesy of its end-of-quarter reports. These demonstrated that its once mighty Australian newspapers are now worth … hmm, approximately nothing.
News Corp’s value comes from Dow Jones and The Wall Street Journal, its book publishing arm, Harper Collins and, most significantly, its holding in REA Group. The share boost off the sale of News America Marketing last month suggests the rest of the company is holding it back.
But a look at the company’s claimed digital subscription figures (613,300 at March 31) suggests there’s a good little new media company trying to get out from under the old giant. The most recent breakdown by masthead (at June 30 last year) shows this total is spread reasonably evenly across its tabloids: about 81,000 at Adelaide’s The Advertiser up to about 108,000 for Melbourne’s Herald Sun.
The Australian is already all but a digital play, with an average Monday-Friday print circulation of about 84,000 across the previous year (probably lower now) compared with a combined print and digital subscription of 164,000 at last June 30 (certainly higher now).
All the company’s major mastheads operate behind a hard paywall with limited free access. The Australian papers are fully priced. At $10 a week for all-access digital, The Australian is about twice the price of The New York Times.
The transition would be rough, and costly, although there was a faint pointer that News Corp is taking the first baby steps with a management restructure around subject verticals (like food) rather than delivery mechanisms (like mastheads) — the sort of restructure that led to the 2013 editors revolt resulting in the resignation of then-Australian head Kim Williams.
A new fully digital media company would support maybe a third of the already reduced numbers of journalists currently employed (and maybe a quarter of the total staff).
But the major cost would be in influence and power, particularly with all its content behind a paywall. How eager will News Corp be to pay that price by giving up its status as an enduring media giant?