Moments of truth this week for the Australian media, or yet another mirage? The industry is confident that the cross-bench Senators will again buckle and change the law to the industry to the benefit of the companies involved – and especially News Corp and the Murdoch clan in particular.
At the same time Wednesday seems Fairfax Media and Seven West Media both reporting their 2016-17 results on Wednesday which saw show considerable self-inflicted damage and whose financial positions will not be boosted by the media law changes.
But before that Fairfax has again confused self-interest with the community’s needs in an editorial in the weekend edition of the Sydney Morning Herald, which has called for the Federal Government’s proposed media law changes to be passed by the Senate this week (http://www.smh.com.au/comment/smh-editorial/diversity-is-best-served-by-passing-the-media-reform-package-20170811-gxu5yx.html), arguing:
"It’s time for the rules to be adapted too. That’s why we ask the senate to be realistic in its consideration of the media reform bill shortly up for debate. We call on senators to pass the bill in its entirety. We believe a healthy future for strong, independent journalism in this country depends on it.”
"The shift of audience and advertising to multinational giants such as Facebook, Google and Apple threatens the viability not only of print but of free-to-air and subscription television and radio. Scrapping the two out of three rule will remove a disincentive to investment in Australian media companies and allow them to compete on a more level playing field with global challengers.
It is likely to spark a round of consolidation in local media as companies seek scale which will allow them to monetise content more effectively across a range of platforms. That will enable more investment in quality journalism.”
Fairfax is confusing its survival as a corporate entity and its highly paid managers, their jobs, share packages and comfortable futures with national and community interest and playing into the hands of the Murdoch clan.
The reality for Fairfax is that its future is priced on the unrealised benefits in its Domain property website business, and a bit on its Stan streaming video venture with the Nine Network and the 56% of Macquarie Radio.
The newspapers have negative value, as the company’s annual results on Wednesday will confirm. Two American vulture funds – TPG and Hellman and Friedman – agreed with that view when they walked away from takeover offers for Fairfax a few months ago. While Domain was OK, the newspapers and the rest of Fairfax were weak and not worth the $2.8 billion suggested.
And the brutal reality is that the media law changes will not help the newspapers one bit – it will not assure their futures anymore than not passing the laws will assure them. Passing the media laws will not alter the fact that Fairfax’s biggest and most popular asset is a property listings website (and its the same story at News Corp with REA Group).
Jobs will not be assured in any way, ad revenues will not improve.
News Corp is in a similar position to Fairfax. It’s 2016-17 annual figures on Friday confirmed that it is an on line property play in Australia and Asia (REA Group) and the US (Move’s Realtor.com), with some small value in Pay TV (Fox Sports, Sky News and 50% of Foxtel). The newspapers in Australia, the UK and US have been weak and losing money and value for years.
News wrote down the value of long life assets in Australia and the UK by more than $US670 million in the year to June. Foxtel wasted nearly $A70 million in buying a 13.8% stake in the Ten Network (which was partly-owned by Lachlan Murdoch) – that was caused by Ten’s collapse. Its value was cut by $US227 million.
The history of Australian media consolidation – even before the rise of the internet and then the smartphone giants, like Facebook, has been value destroying for shareholders (both individual and through super funds) and for employees of the companies – look at the thousands of jobs lost across all media forms when the current round started in 1986 when Rupert Murdoch’s News Corp was allowed to buy the Herald and Weekly Times.
The Ten Network has gone bust, twice, Fairfax has lost billions, as has News Corp $US1.3 billion in 2012-13 alone was written off the value of the papers.
If anyone has any doubts that value will be destroyed, just look at the damage Kerry Stokes has done to his fortune, to his shareholders and to employees in Seven West Media. He drove the merger of the Seven Network and West Australian Newspapers into Seven West Media: it was valued at $4.1 billion at creation, and $1.25 billion on Friday (and less than $1 billion on June 13 when the shares fell to an all time low of 65 cents (They were 83 cents on Friday).
Seven West Media reports its 2016-17 results on Wednesday and it has already warned of a 20% plus fall in profit. Changing the media rules won’t change that. The extra money the networks will retain from not having to pay the licence fees (and replacing them with a cheaper spectrum fee) won’t change anything – local production won’t rise and and extra people will not be employed. The savings will merely fatten the bottom line
Fairfax’s editorial ends with the comment "The rules we’re still stuck were drawn up long before we had pay television, when the internet was more an idea than a reality, when smart phones and live streaming were confined to a science fiction future. Now anyone with a smartphone can publish, and anyone with a smartphone has greater diversity in their choice of information sources than ever before.
"That is a great thing but it makes the task of qualified, experienced, well-resourced independent media more important than ever. We can’t bring back those hefty Saturday papers any more than we can turn back time. Neither can the Senate. But we can all move forward with the times, and that’s what the media reform package is all about.”
That ignores the biggest beneficiary of the changes – News Corp and the Murdoch empire. A Murdoch company will be allowed to own Ten, radio stations (Smooth and Nova), newspapers, Pay TV (50% of Foxtel and 100% of Sky News, the monopoly Pay TV news service on Foxtel). The weak figures from the News Corp full year report on Friday tells us the company’s papers are dying and media law changes won’t change that, only buy a bit of time.
