Friday, May 29, 2020

News Corp going digital is the latest sign of the Murdoch empire's struggles. Will Australia be on the map when Rupert Murdoch dies or cedes power?

In the once lucrative newspaper business, the so called "rivers of gold" from classified advertising not only underpinned quality journalism but ensured that highly anticipated hard copy editions landed with a thud at homes and businesses every day.

If you were selling or buying a car, looking for a job, buying a house, running a garage sale or even looking for love, newspapers were once the main way of taking care of business and getting on in life.

That is until the Internet devastated the business model of metropolitan newspapers.

Read my analysis on ABC News Online

The one time broadsheet giants like The Age and The Sydney Morning Herald could afford to break even on weekdays and assigned reporting teams to expensive long term investigations because massive classified advertising revenue on Saturdays created a cash cow.

But over the past twenty years, since newspaper proprietors began seeing the threat of the Internet materialise, metropolitan print editions have gradually shrunk to the size of suburban and regional papers in line with the demise of traditional print advertising that had been taken for granted.

Now, those suburban, regional and community newspapers - the lifeblood of small towns usually ignored by the big smoke papers - are likely to become relics in the local museum about the way things once were.

Listen to my interview with News Corp Australia executive chairman Michael Miller broadcast on The World Today 

The underestimation of the internet revolution was summed up by comments from a prominent newspaper editor in the mid-1990s who emphatically told me the Internet was a "fad" and scoffed at suggestions that consumers would switch to little known digital startups who brazenly sought to cut the grass of traditional publishers.

History tells a bleak story of massive change where arrogant proprietors have been forced to make thousands of reporters redundant with News Corporation and Fairfax Media (now owned by Nine Entertainment) even sharing printing facilities - something unthinkable a decade ago in cut-throat newspaper wars.

Seek now has a major slice of employment classifieds, Realestate.com dominates property, Carsales is where buyers and sellers trade wheels while romance and dating opportunities abound on the Internet. Who would go to a newspaper?

The latest chapter in this slow-moving train wreck has engulfed Rupert Murdoch's News Corporation which is now focused on survival and has made hard decisions about the viability of sustaining printed newspapers in a high cost, low advertising digital world.

The once mighty publishing empire is watching dollars and cents ferociously to protect its flagship interests and has put up the white flag by converting the bulk of its regional and community newspapers to digital only.

Some mastheads will close completely. Profitable regional papers like the Cairns Post and the NT News will remain in print. Metropolitan papers in Sydney, Melbourne, Brisbane and Adelaide will remain in print and will focus on greater regional coverage to fill the void.

But the hard decision to close down the printing presses underscores the demise of hard copy editions and the dawn of an uncertain digital era where no one knows if the advertisers will defy the odds and shift their business to a purely digital world.

News Corp Australia executive chairman Michael Miller will spend the following days meeting staff and delivering bad news to journalists who are not among the 375 required in the new business model.

When I spoke to Mr Miller shortly after the restructuring announcement was made public, he seemed resigned and well prepared to back the decision which has been in the works for months with COVID19 providing the trigger. 

"It was a regrettable decision, but one which was coming for a while. Locals can now transact to the other side of the world with a click," Mr Miller told me.

Mr Miller has refused to say how many staff will be axed, despite speculation that between 650 and 1000 will go.

"We're not talking about numbers, we're talking about people. There will be staff leaving the organisation and we're not shying away from that statement."

But as the rivers of gold become rivers of blood, Mr Miller would not call the end on further cuts despite concerns that staff numbers were razor thin even before.

In what appeared to be a scripted answer, Mr Miller told me: "we'll continue to change as our country and people continue to change."

Mr Miller wasn't pulling punches, but the words are not comforting for remaining News Corporation staff especially those in the regions who worry their hard fought livelihoods are vanishing.

This month, News Corp posted a $1.1 billion loss for the March quarter, dragged down in Australia by the cable TV business Foxtel which has seen the plug largely pulled on its once wealthy sports broadcasting model due to COVID19 restrictions on crowds.

Media analyst Peter Cox, a long time News Corp watcher, says the slump in real estate advertising though REA has compounded the losses but that financial pressures at Foxtel accelerated the decision to close regional and community printing presses.

"News Corp in Australia is totally challenged. The original idea was that Foxtel would be the cash cow to finance the newspapers in Australia," Mr Cox told the ABC.

"But of course Foxtel is in steep decline, it has huge borrowings and very reduced advertising and is in a diabolical state. 

"So rather than being able to feed and finance the newspapers, that hasn't happened."

News Corp boss Michael Miller says the digital strategy while painful for staff is all about taking advertisers and readers along with rapid changes to a digital world.

But Peter Cox doubts the advertising switch from print to digital will ever go close to matching the old "rivers of gold" from classified advertisement revenue.

"This is what we used to call a 'dime for a dollar' in the advertising business," Mr Cox said.

"When you advertise in newspapers or on the television you get a dollar and when you put the same ads on the digital versions, you only get ten cents for it."

"This is a double whammy. No money from Foxtel, reduced money from REA and struggling newspapers, News Corp is in a desperate position."

Rupert Murdoch established his global empire from a single Adelaide afternoon newspaper he inherited from his father in the 1950s and challenged the establishment by turning around struggling mastheads and taking on massive debt.

But Peter Cox doubts that an ageing Mr Murdoch would sentimentally prop up the company's fading interests in Australia and might be under pressure to concede the local business is unviable.

"That is certainly the case. Rupert Murdoch is now in his mid-80s, he won't last much longer," Mr Cox said. 

"I would think that as soon as he passes, that there would be a push to reassess the Australian operations and whether they want to be in Australia or not."

Mr Cox says the viability of The Australian - the national broadsheet established by Rupert Murdoch in the 1960s - will not escape the glare of News Corporation bean counters who are working to sandbag key investments in the US including the prestigious Wall Street Journal and the conservative Fox News cable network.

"I think there's going to be reductions right across the organisation. Not just the regional newspapers and closing some of them down. And every time you cut back, you lose experienced journalists, you lose skills.

"So this is a very challenging time for both News Corp and their newspapers."

The challenge for Michael Miller is to deliver on the promise of maintaining community content in regions where the ABC is often the only other journalism voice.

News Corporation must find a model to take advertisers and readers online in the faith that parish pump events like local council meetings and sporting events are covered.

It's another critical moment for journalism and ensuring that politicians, businesses and local government bodies are properly scrutinised in a COVID-19 world where rules are changing by the day.


Thursday, May 28, 2020

Regional printing presses to fall silent as News Corp scraps local hardcopy editions. I speak with News Corp Australia executive chairman Michael Miller

News Corporation has confirmed major jobs losses across its newspaper business as the bulk of its regional and community mastheads go purely digital. 

Executive chairman Michael Miller says metropolitan mastheads will continue to with print editions but will become more state focussed with increased regional content. 

Mr Miller speaks with ABC's Peter Ryan.