The future of newspapers: Anybody’s guess at this stage

This post is a work in progress; I have published today [June 27] to get the ball rolling, I will be adding to this post over the next 72 hours.

On Monday 18 June the sky began falling in the Australian news media. Within 10 days the world of Australian journalism had changed forever, but the change hadn’t stopped.

Over 3000 jobs were going to be purged from Australia’s two largest news organisations.

The West Australian mining mogul, Gina Rinehart, was poised over Fairfax Media like a vulture over the corpse of a dying baby.

We all knew why she was there; it was just a matter of time.

That was the week that was (June 18-24)

What is the future of newspapers? At the end of a week in which both Fairfax Media and News Limited announced seismic changes to their business – including ditching about 3000 jobs between them – what can we say about the printed news sheet?

Well, it seems that the answer is ‘heaps and heaps’. Millions of words have been written, blogged and spoken on the future of newspapers this week; tens of thousands of them even appeared in the newspapers themselves.

So what do we really know at this point?

Not much more than we did last weekend, is my quick answer.

The ‘perfect storm’ that hit Fairfax Media this week — with Gina Rinehart at its epicentre — has been a long time coming. The Fairfax share price has been on a really steep down slide for the last two to three years.

Today it’s under 60 cents, just three months ago is was over 70 cents. The last time it was over $1.00 was June 2011; it dropped under $2.00 in November 2008. It was last at $3.00 in June 2008 and we have to go back nearly six years to December 2006 to see Fairfax at over $5.00.

In contrast the News Corporation share price on the ASX has jumped from $16 to $20 since June 2011. It has been over $15 for the past three years despite some ups and downs and has risen from a low of $12.91 on 23 June, 2009.

This shows that the problems facing Fairfax Media are commercial and financial, not just or even mostly technological.

These problems are not brand new either. It is not the Internet that has caused the total collapse of the newspaper business model; it has been a long time coming. It is instructive to go back and look at the history of the newspaper industry in Australia to understand why we are in the situation of having the Rupert Rinehart duopoly looming over the news media’s future.

Fairfax has a new model

In the middle of the second week of this perfect storm – June 27 to be precise – things did become a little clearer.

Three senior Fairfax editors had left the newsroom for the last time. It seems that there was a period of negotiation – one incoming new EiC (see org chart below) admitted he had been in discussion with management for about two weeks.

Still, many reporters were shocked and emotional scenes were reported.

News Limited announced around 100 job cuts, mainly in regional areas, including the Gold Coast and Fairfax unveiled a new newsroom model to staff.

The Fairfax model looks a bit like the broken ferris wheel here in Melbourne and I can’t help wondering why some of the content wedges are bigger than others. Is it because they will get more attention in the new system of content brokerage across neutral platforms?

If it is then going ‘compact’, or ‘tabloid’ is about more than just the size of the page.

The Fairfax ferris wheel.
Click to enlarge

The new Fairfax organisational chart is also worth taking a look at.

It’s not that different from a traditional newsroom structure in many ways, but the convoluted explanations of roles and responsibilities that accompany it are straight from a weak MBA dissertation.

Fairfax Org Chart: designed by a poor MBA student?
Click to enlarge

In this model reporters who are covering breaking news are to be known as ‘first responders’, this gives the whole thing the feeling of a medical emergency.

And that’s what this is. It is an attempt to triage a series of seriously wounded patients on a bloodied battlefield.

The Fairfax mantra of journalism and integrity come first is pleasant soothing language that will hopefully comfort the afflicted, but when you rip the heart out of a newsroom no amount of placatory talking can alter the facts.

Then there’s the hovering vulture and her cronies.

In a statement released on 27 June, Rinehart’s advisers conceded that she might be prepared to negotiate and sign a new Charter of Editorial Independence, but this ominous set of phrases is where the really alarming detail bedevils:

“Active consideration of content or a change in content is required to attract readers and advertising revenue in the interests of shareholders, together with other options to increase revenue and hence share value.”

What does this mean?

Well, it can really only mean one thing: shifting the Fairfax editorial culture. But which way will it be shifted?

Most money is on the bet that Gina Rinehart will want to shift Fairfax to the right and into more ‘business-friendly’ reporting. This is assumed to include more climate change ‘scepticism’ and less criticism of the minerals industry.

However, it is questionable as to whether this will attract readers, increase advertising or enhance shareholder value.

It may well have the opposite effect as current readers of the SMH and The Age desert the papers in direct proportion to their rightward drift.

If this happens and the new tabloid-ified Fairfax mastheads begin competing with the Murdoch titles then the next logical step – to maximise shareholder value, mind – would be to merge the titles in Melbourne and Sydney and turn them into one-paper towns in line with the rest of the country.

That is the logic of shareholder value maximisation – or in blunt Marxist terms it is the application of the logic of capital accumulation.

It is also the history of the Australian newspaper industry.

In 1886 – just 128 years ago – there were capital city 48 daily newspapers in Australia. By 1903 that had dropped to 21; it was down to 17 in 1947, 15 in 1950, 14 in 1960 and it has continued to drop since. From the mid 1990s on the present situation became established.

Today there are 11 capital city dailies: two in Melbourne; two in Sydney; one each in Canberra, Adelaide, Hobart, Perth and Darwin and two that circulate nationally.

That is why questions of concentration, ownership and diversity are being talked about again in the context of both the Finkelstein report and the Rinehart push for editorial control at Fairfax.

The giant media fuss about Finkelstein and the frenzied cries of censorship and government control prompted me to look at the last government report into the news media, delivered to the House of Representatives in 1992. [I’ll come back to this].

 

News & Fair Facts

Just over 20 years ago, in March 1992, a House of Representatives Select Committee tabled its report into the Australian print media industry. It is worth looking at this report because it had bipartisan support and its findings make it clear that the issues that free speech alarmists are shouting about today have deep roots.

It is also interesting because the free speech alarmists — those who argue that government censorship is coming in the form of the Finkelstein report — would deny some of the language used in News & Fair Facts, particularly about the problems of monopoly and the concentration of media ownership.

For example:

On the basis [of figures given to the committee], the Australian print media industry generally is highly concentrated. In almost every sector of the industry one or two groups dominate in terms of the number of publications and related circulation under their control.

News & Fair Facts, 1992, p.101

Now the Rupert Rinehart apologists deny that monopoly is a problem.

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