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WAN horse town just the beginning for media mergers

The Australian media landscape is undergoing another wave of consolidation.

West Australian Newspapers’ $4.1B proposed purchase of the Seven Media Group to create the country’s biggest listed media group is correctly viewed by industry insiders as the start of a wider consolidation of the Australian media industry.

Reports suggest subscription television networks Foxtel and Austar may soon be one, while the Australian Competition and Consumer Commission (ACCC) has approved the merger between Southern Cross Broadcasting and Austereo.

This leaves only Fairfax Media (publisher of the Sydney Morning Herald and The Age newspapers) and the Nine network as stand-alone media players of significance, and question marks hang over the long-term future of the former.

As media journalist Margaret Simons put it in a recent essay for The Monthly magazine, Fairfax Media has been in “crisis” due to poor management over an extended period, management which has had “no idea how to unify its business, and no journalistic vision that it wishes to impart”.

Print decline

As the print sector continues its long decline, observes Simons, Fairfax may not survive as “a publisher of quality journalism”, and is in a fight to the death with Rupert Murdoch’s News Limited for a dwindling readership.

Fairfax’s problems notwithstanding, the Australian media remain in a position of relative strength when compared with comparable countries.

According to the latest Pew report on The State Of the News Media, while Australian press circulation declined by 1.5% in the six months to September 2009, that of the US fell by no less than 10.6% over the same period.

While US advertising revenues fell by a whopping 25% in the year 2008-09, Australia’s fell by a less alarming though still damaging 7%. In all the advanced capitalist markets print is fading fast, and the advertiser-funded business model increasingly untenable. Australia is by no means the worst hit market, however.

This reflects, no doubt, the Lucky Country’s avoidance – by a combination of luck and good financial management – of the global financial crisis and its associated economic downturn.

Australia’s economy remains buoyant, and its commercial media have some insulation from the double whammy that hit the US and the UK, where new technologies ate away at the paid-for audience at the same time as ad revenues fell, as businesses in every sector had to tighten their belts and cut their ad spend.

In the US, advertising revenues for the print media fell by an astonishing 92% over the decade 2000-10, hence the run of closures and shrinkages felt by the press in that country. Pew estimates that, judged by staff employed, US newsrooms have shrunk by 30% in that period.

Australia has yet to see trends like that, but its media organisations cannot be complacent. If the impact of the GFC was muted down under, the technologically-driven migration from print to online is global, and irresistible. And with it, the withering of a business model which served the media well for centuries is a certainty.

Necessary step

In this context, the WAN-Seven merger is a sign of the times, and a necessary consolidation of media sectors which look increasingly fragile on their own, but just might prosper when reconfigured in bigger, converged organisational structures. It’s not the public’s appetite for news or journalism that is in decline, after all; just the way they consume it.

News retains its audience, but it’s no longer where it used to be. No longer at the beck and call of big, centralised providers, news audiences have gone online in droves, and from stationary to mobile platforms, and from paid-for outlets to free. Increasingly they access news through search engines such as Google and Yahoo, and share stories through social networking sites.

And as the user base for these new platforms grows, so advertising spend moves out of the orbit of the traditional media. Traditional print-based companies such as Fairfax and WAN are losing control of their core income stream. And since they can’t beat the new boys on the block at their own game, they haved to join with them. To merge, converge, consolidate.

WAN’s merger with Seven gives its newspapers and online sites access to the resources not just of a major TV network, but Yahoo!7 (the search site 50% owned by Seven).

The proponents of the merger believe, and they may be right, that the fortunes of a platform and a medium in decline are potentially reversed if it can harness the distribution and marketing potential of the thriving online sector.

And by linking with TV, as former print companies are doing all over the world, newsgathering and production across the board can benefit from backroom economies of scale and efficiency savings. Multiplatform, multimedia journalism is the way to go.

In Scotland, my home country, where a press renowned for its diversity and strength over three centuries is struggling with the rest of them, print companies are working out innovative new ways of working with TV providers to produce local news and other services threatened in the current industrial turmoil. Previously unthinkable unions of TV and print, of editorially opposed organisations, are emerging as the only route to survival.

The same process may well be underway in Australia, and with the same objective – to sustain and then capitalise on valuable news brands built up over decades but now looking creaky and outmoded. As the emerging digital media marketplace begins to stabilise and settle, as it surely will (though no-one knows quite when that will happen), old media companies must position themselves to take advantage of a crowded news environment in which trust in the quality of a provider will count for a lot.

That means making the familiar brand visible and accessible across platforms, abandoning the set ways of the analogue era, when the customer was nominally king but actually a captive in the print market.

Consumer choice

The digital era is one of unprecedented consumer choice in media content, much of it free. If he or she can’t see you amidst the torrent of bits, you’re done for, or at best relegated to the margins for good.

Merger and convergence won’t be enough, of course. Simons in her Monthly essay is highly critical of Fairfax’s management of its print and digital divisions, seeing this as key to its current difficulties. Fairfax apps are old fashioned and unsexy, she thinks, while News Limited has invested in “a powerful journalistic culture”, able to take advantage of new technologies such as the tablet and the app.

Readers will have their own view on those judgements, but there is no doubt that globally News Corporation and its offshoots are grappling much more effectively with the digital challenge than some companies.

Will Rupert Murdoch’s belief in a future of paid-for journalism distributed through a billion iPads come true?

Who knows, but a glance at, for example, the Queensland-based Courier Mail’s user-friendly, colourful and well-designed app, suggests some grounds for optimism that people can indeed be persuaded to pay for journalism online.

So, alongside merger and consolidation there has to be cultural adaptation and creative engagement with new technologies on the part of media managers, and a rejection of the old tribalism which used to characterise the attitudes of print media workers towards online. No-one likes change, but when change is inevitable those who go with the flow are much more likely to survive than those who stick their heads in the sand.

Wherever you see successful transitions from the analogue to digital environments – the Guardian and the BBC in the UK; ABC in Australia – the user is given his or her place online and on air, welcomed in to the fold as a valued element in the product mix.

Not only is the way we consume our news and journalism changing, the way we produce it is changing too – no longer the monopoly of the professional journalist, journalism is becoming the combination of the professional and the amateur. Today, the content-generating user is king, and woe betide the media organisation which thinks it can buck that trend.

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