Australian Media Organisations  and Media Regulation 

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https://theconversation.com/australian-media-at-a-crossroads-amid-threats-to-diversity-and-survival-77314

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The Australian Media at the Crossroads Article provides an excellent discussion of the pre emptive changes to Australian Media Ownership laws

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Students are encouraged to read the Article which provides the background to the recent Merger of Nine  with Fairfax

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Excerpt from the Article

History shows us every time there is significant reform of media regulations, the biggest media proprietors benefit at the expense of news diversity.
Cross-media ownership law changes in the late 1980s resulted in a frenzy of print media company acquisitions and mergers. Twelve of the 19 metropolitan daily newspapers changed hands; three of them changed ownership twice. And it hastened the death of all evening papers.

Certainly that was in a different time, well before the existence of the commercial internet and digital news sites like Huffington Post and BuzzFeed. Yet this century, Australia still has one of the most concentrated media news ownership environments of any developed democracy.

While there might be a reasonable argument that the internet has theoretically made redundant the 75% reach rule, the same cannot be said for the two-out-of-three rule. The two-out-of-three rule is pro-competition policy designed to ensure media ownership diversity. Advocates for changing this rule commonly argue that news content already crosses these mediums: publishers are broadcasting, printing, tweeting, snapchatting, pod and vodcasting all thanks to digital technologies and the internet.

These advocates also argue that new entrants like The Guardian, Daily Mail and The Conversation offer greater diversity than before. This is all true, and these different news voices are good for Australian democracy.

But this argument underplays the role of audience fragmentation and proprietorial media power. These digital media entrants are not a substitute for law changes that would likely result in fewer big media operators in Australia’s most dominant news media markets: radio, television and print.

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In July 2018  Nine announced it was Merging with Fairfax

 

 

Some key points about the merger and its impact on the media  

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Media diversity has been sacrificed for survival. Nine's takeover of Fairfax Media is the inevitable outcome of legal changes that bowed to the reality domestic media companies' advertising revenues have collapsed.

 

In the era before the internet, Fairfax and Nine were the kings of their respective media spaces.

 

The "rivers of gold" from classified advertising flowed for Fairfax, and the substantial revenues they created cross-subsidised well-resourced newspapers and journalism.

 

Nine enjoyed its own golden age of advertising revenue during the long era when free-to-air broadcasting was a primary source of news, sport and entertainment, while web-based alternatives such as Netflix did not exist.

 

Crucially, nearly all of Australia's advertising spend was captured by domestic media players.

 

The rise of digital media turned that on its head.

 

Now much of the revenue flows offshore, to Google and Facebook, which increasingly dominate the advertising market.

Digital advertising is predicted to reach $8.2 billion in the coming year — half of the nation's total advertising spend of more than $16 billion, according to a recent analysis.

 

 

Television advertising is set to fall to just half of that — $3.8 billion — and haemorrhage further in coming years, with newspapers commanding just $1.5 billion.

It may well be that these forecasts of digital advertising's rise will prove conservative, as they have in the past.

 

The future is digital

 

Most people understand Google makes money from the billions of people who use its search engine and then click on the links of businesses that have won a bidding war to have their content at the top of the search list.

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Fewer people realise Google and Facebook now largely control the markets for display advertising and video advertising through their ownership of platforms that "programmatically" place adverts across different media.

 

• The Federal Government made some big changes to Australia's media ownership laws late last year, which have allowed this merger to go ahead.

 

• When the federal government changed the laws in September last year to allow once again cross-media ownership between newspapers, radio, television and online, speculation about a merger between Nine and Fairfax grew stronger. 

 

• Companies such as Fairfax and Nine, which report the news and investigate issues, are losing the revenues that subsidise this endeavour.

 

• The repeal of laws safeguarding diversity — that stopped one company owning television, radio and newspapers — was a defensive move to try to rescue Australia's commercial media.

 

• The Media Entertainment and Arts Alliance journalists' union urged the ACCC to reject the merger proposal.

 

• Communications Minister Mitch Fifield has expressed his hope the merger will allow the combined Nine-Fairfax to compete with the global media behemoths. That's ambitious; it might merely be a case of slowing the decline.Either way, it may come at a cost.

 

• The changes effectively removed the restrictions that previously prevented  companies owning newspapers, television and radio stations in the same city.

 

• They also abolished the "reach rule" which prevented a single TV broadcaster from reaching more than 75 per cent of the population.

 

• Nine and Fairfax are positioning themselves to remain profitable in a world increasingly dominated by digital media. The merger will allow them to pool assets, reduce costs and streamline management, to adapt to the changing environment.

 

• Fairfax journalists will inevitably fear for their future, given the company's form in retrenching thousands of journalists in recent years and increasing competition from other digital media.Even if Fairfax's newspapers continue, for the foreseeable future, many will rightly fear that a pooling of journalists and other staff with Nine will inevitably lead to more job losses.

 

• It means the death of Fairfax and is the most consequential change in Australian media ownership in 31 years.

 

• It also means that three of Australia’s best and biggest newspapers – The Age, The Sydney Morning Herald and The Australian Financial Review – are now subsumed into a media conglomerate whose editorial culture is characterised by mediocre journalism.
   

• The takeover also means a further loss of diversity in an already highly concentrated media-ownership landscape. The big players are now down to four: News Corp, Nine, Seven West Media and the ABC.

 

• There is also a question about editorial independence.

 

• Fairfax has a charter of editorial independence, which all owners since 1990 have signed up to. Will Nine sign up to it? Will the charter have any meaning when the newspapers are owned by a company whose chairman, Peter Costello, was treasurer in the Liberal-National Coalition government of former Prime Minister John Howard?

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• The answers to these questions will not be known for some time. They will depend largely on who is given editorial control of the combined operation. Since the Nine CEO, Hugh Marks, is to be CEO of the combined operation, it seems more likely than not that it will be a Nine executive who calls the editorial shots, too.

 

• Decades ago, Fairfax journalists fought for, and won, a formal charter of editorial independence that was meant to ensure journalists could report free from commercial pressure to appease advertisers.

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• Nine, which will have a 51 per cent share of the merged entity and is effectively taking over Fairfax, does not share that tradition, although chief executive Hugh Marks has indicated the Nine board would be happy to adopt the charter.

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• But former prime minister Paul Keating was scathing about the implications for quality journalism.

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• "Channel Nine, for over half a century has never other than displayed the opportunism and ethics of an alley cat," he wrote in an op-ed penned on Thursday.

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• "Through various changes of ownership, no one has lanced the carbuncle at the centre of Nine's approach to news management.

 

• "And, as sure as night follows day, that puss will inevitably leak into Fairfax."Across the world, as traditional media companies fight to survive, many fine principles of diversity and independence once held dear in media policy are being jettisoned or compromised.

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• A loss of journalists will mean fewer people reporting on the important issues facing Australia each day, and many fear will mean a loss of diversity in media coverage.

 

• A successful merger between Nine and Fairfax is tipped to open the door to other such deals, particularly now that Australian media laws have been changed to remove restrictions on cross media ownership.

 

• The merger of Australia's second biggest free-to-air TV network with the second biggest newspaper publisher will result in a $4 billion-company that is second only to News Corp in size and impact.

 

• That will put pressure on its media rivals, particularly the other commercial free-to-air networks, Seven and Ten.

 

• Already there is speculation that they will be forced to merge with other media to remain profitable.The merger could change Fairfax operations, and may well bring an end to its investigative co-productions with the ABC.

 

• Marketing lecturer David Waller from the University of Technology, Sydney, says the merger would open up opportunities for cross promotion between television programs and Fairfax assets, such as Nine's The Block and the real estate website Domain.It's no secret the advertising revenues the Domain portal brings in were a major selling   point for Nine when considering the merger.

 

• "By combining different media — TV, print and online — they've got a greater scope to get more people to see the message."And if you have an extremely popular online site like Domain, they're going to use that to expand their promotional activities (for) TV programs like the Block."Such "cross-fertilisation" is likely across other programs and Fairfax assets.

 

 

• Both media companies have major motoring outlets for example, which could be used to cross-promote each other or expand television and online content.

 

• And it is almost certain to mean the loss of yet more journalists’ jobs.
   

• Since 2012, more than 3,000 jobs have been lost across Australian journalism. Yet, if the takeover is really going to represent “compelling value” for shareholders, as Fairfax chairman Nick Falloon says, then newsroom “synergies” – to borrow the corporate jargon – are likely to be essential.

 

• The Fairfax company’s death throes have been painful and prolonged.

• They began in 1987, when the younger son of Sir Warwick Fairfax, “young Warwick”, privatised it. That meant buying out all the public shareholders, for which purpose “young Warwick” borrowed AU$1.6 billion from the National Australia Bank.

 

• Even with the revenue from the “rivers of gold” then flowing in from the classified ads of The Age and The Sydney Morning Herald, “young Warwick” could not meet his debts to the bank, which promptly sold him up.
   

• The Fairfax story has all the elements of Greek tragedy: heroism in the creation of the company, then a combination of comedy, pride, stupidity, greed, arrogance and hubris to bring it down.

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