Is the future of news dependent on rich oligarchs?


9:30 am - June 27th 2012

by John B    


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In the wake of a punch to the face from phone-hacking, and a kick to the balls from shrinking print revenues, News Corporation is contemplating splitting its TV assets from its print ones.

The plan would be to remove the newspaper drag from the share price, and hopefully bypass some of the regulatory fallout from News International’s behaviour. An obvious problem here is that Bad News would be, well, bad news.

Analysts at Nomura have worked out that future profit declines will only be in the region of 5% a year – and that the global newspaper division (including digital) revenues will show slight overall growth. To me, that sounds optimistic.

2012 is going to be particularly awful for the newspaper division because it’s the financial year after the cash cow of the News of the World was killed, sure. Nonetheless, looking at Fairfax’s position, the Guardian’s position, News Limited’s announced cuts in Australia, the Times and Australian’s massive losses, and the ongoing march of often free, often superior (albeit seldom both) online news sources, growing sales even at the rate of inflation seems like a pipedream.

Supposedly, the WSJ’s finances are in a better state than most of the other titles, because people actually pay for business information online (*). The four remaining sensational big city tabloids in the group – the UK Sun, New York Post (*), Sydney Daily Telegraph and Melbourne Herald Sun – likely still make money, since they were never reliant on classified advertising. But the Times and the Australian are reported to lose vast sums annually, despite the imposition on both of draconian paywalls which very few people have taken up, and which mean that they form no part of the online conversation.

Rupert Murdoch is 81, and his children show absolutely no interest in taking over the print business. And Bad News would be a publicly traded company with shareholder obligations.

When you’re a vehicle for an oligarch to promote his corporate interests to politicians, in the way Mr Murdoch has used his papers for the last 50 years, bunging tens of millions of dollars a year into a respectable-opinion-leading project like the Australian or the Times can get you results far in excess of your investment: tax reliefs, exemptions from competition laws, broadcasting licenses, etc.

But once you break the link with the corporation that benefits from the regulatory corruption, lose the oligarch to retirement/senility/Old Father Time, and lose the ability to shape national conversation by excluding your pieces from most modern forms of sharing and discussion, then really, what’s the point?

So the only way for the Times and the Australian to survive is to be sold to some kind of oligarch who’d benefit from their advocacy. In London, you can barely throw a stick and not hit some overseas billionaire or other, so that should be easy enough. It’s the same in Australia.

But while that might be great news for otherwise unemployable right-wing pundits, it’s not going to do wonders for the public debate, even compared to the status quo under Rupert…

(*) UPDATE:  According to Michael Wolff, the WSJ and the NY Post are also money pits. In which case, the only money in the News Corp News operation is coming from the Sun, the Aussie city tabloids, and the rapidly diminishing provincial Aussie local press.

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About the author
John Band is a journalist, editor and market analyst, depending on who's asking and how much they're paying. He's also been a content director at a publishing company and a strategy consultant. He is a regular contributor to Liberal Conspiracy and also blogs at Banditry.
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Reader comments


If you believe that print journalism is going down, it is eminently sensible to separate out the newspapers from the rest of the business to ensure that they can be closed or sold off without affecting the profitable rest of your business.

Alternatively, there may be a different business model that will be tested. Last time NI tried something different, the rest of the print media was left standing, with the unions and the Labour Party screaming “unfair” at them.

2. Shrugged...

Unemployable right-wing pundits? Most of whom actually have jobs and through those jobs have accumulated some wealth.

Compared with whom? Owen Jones, Laurie Penny and Sunny?

Seriously…

Shrugged: They have jobs *saying right-wing things in unprofitable broadsheet newspapers*. In any other context, they’d be the first to decry a lossmaking industry as unsustainable, and workers’ jobs in that industry as worthless.

4. Shrugged...

John B: Who are ‘they’? An example please, of a right-wing pundit/blogger whose only source of income is their payment for their contributions?

5. Shrugged...

John B: An example please of a right-wing pundit/blogger whose only source of income is their contribution to print media?

On the other hand, let’s think of some left-wing contributors funded by unions and the public purse… It’s not so hard.

I don’t even understand what you’re getting at here.

“Are there any broadsheet newspaper pundits who are paid solely on the basis of their broadsheet jobs and take no freelance work at all outside of broadsheet papers”? Don’t know, don’t care, isn’t relevant. I’m a consultant with several clients in various industries that are tangentially related to each other, but I’d still be screwed for work in the medium term if one particular industry disappeared.

“Is there a whole stable of hacks who rely on broadsheet punditry for much/most of their income and who’d hence be screwed if the market for broadsheet punditry went away”? – yes, they’re the people writing words in broadsheets. Have you ever read a newspaper?

7. Shrugged...

Nah. Never read a newspaper.

Don’t be riduculous.
Expect you’ll apply Godwin’s law next.

Because only Nazis (read/don’t read) newspapers? Really, what the fuck are you talking about…?

Has Lebedev’s ownership of the Independent had any bad consequences?

(Other than the survival of the Independent that is!)

Right wing rich business tycoons and communist dictators have so much in common. One of which is they both hate free speech.

11. Planeshift

” who’d hence be screwed if the market for broadsheet punditry went away”? ”

Perhaps not, there is a massive overlap between the market for broadsheet punditry and the market for dishonest hacks capable of doing PR and lobbying for industries doing unpopular things.

9: not sure to be honest. His ownership of the Standard has had a predictable Boris-crony-boosting impact.

11: this may be what Shrugged was getting at, I suppose.

13. So Much For Subtlety

Nonetheless, looking at Fairfax’s position, the Guardian’s position, News Limited’s announced cuts in Australia, the Times and Australian’s massive losses, and the ongoing march of often free, often superior (albeit seldom both) online news sources, growing sales even at the rate of inflation seems like a pipedream.

Sorry but this is an absurd statement of the position. Take News Limited and the Guardian. According to your own sources, the Guardian has five years left at the present rate of losses before the Scott Trust Plc (incorporated in a tax haven) runs out of money. News Limited is buying assets – they are trying to acquire both TV and the other major newspaper chain in Australia. They may get rid of some number of editorial staff as they flatten their management structure, but nothing like Fairfax getting rid of 1,900 people.

The problem is not with newspapers, but with Left wing newspapers. OK the Times and the Australian are exceptions to that but they aren’t particularly right wing.

Supposedly, the WSJ’s finances are in a better state than most of the other titles, because people actually pay for business information online.

And because it is not on the Left.

The four remaining sensational big city tabloids in the group – the UK Sun, New York Post, Sydney Daily Telegraph and Melbourne Herald Sun – likely still make money, since they were never reliant on classified advertising.

And they are spectacularly not on the Left. The New York Post is an excellent example of a newspaper that Murdoch bought in order to give the people of New York what they wanted. Competing, to some extent, with the New York Times which continues to patronise them by giving the proles what the elites think they need. The NYT is, needless to say, bleeding money. The Post is not. To some extent the Sydney Daily Telegraph and the Melbourne Herald Sun are competing with the Fairfax titles, the Sydney Morning Herald (is it? I am not sure) and the Melbourne-based Age. Which are losing more money than I would have thought possible. Leading to the ironic situation that the Upper Middle classes do not read anymore while the working class does.

But the Times and the Australian are reported to lose vast sums annually, despite the imposition on both of draconian paywalls which very few people have taken up, and which mean that they form no part of the online conversation.

Reported? By whom? Isn’t it nice of Murdoch to keep running these two public services?

In London, you can barely throw a stick and not hit some overseas billionaire or other, so that should be easy enough. It’s the same in Australia.

Really? It has been a while since I have been in Australia but I can’t say I remember all that many Russian oligarchs about the place. How many overseas billionaires do you think live Down Under and where do they all come from?

But while that might be great news for otherwise unemployable right-wing pundits, it’s not going to do wonders for the public debate, even compared to the status quo under Rupert…

Except that the newspapers are not failing. The Left is. They are, as I often say, intellectually bankrupt. Sucking up to the Soviets did not work for the Guardian. Nor has their warm embrace of the Islamists. While Page Three girls and a robust sense of nationalism seems to be working for the Sun. So we are this odd situation where the Upper Middle Class snobs no longer read their newspapers while the patriotic working class does. Irony really.

Scott Trust Plc (incorporated in a tax haven)

Scott Trust Ltd (like many not-for-profit organisations, the ‘ltd’ status is legally mandated as guarantee while its constitution remains not for profit) is incorporated in England & Wales, which is only a tax haven according to Richard Murphy.

(when Scott Trust diversified its revenues by selling a part-share in Auto Trader magazine to outside shareholders and taking a part-share in EMAP with them, part of that deal was routed through a tax haven by the partners in the deal.)

Lesson: don’t ever read Guido.

News Limited is buying assets – they are trying to acquire both TV and the other major newspaper chain in Australia

No, they emphatically are not trying to buy Fairfax; Gina Rinehart is. Where the hell did you get that one from? Meanwhile, the TV acquisitions are funded by “Good” News, ie Sky and cable TV – the bit which will not include the newspapers.

Lesson: read something, although not Guido, on matters on which you’re commenting.

And because it is not on the Left.

The FT is centre-left and profitable. Incidentally, apparently my data on the WSJ and the NY Post is out of date: Michael Woolf reckons they’re both also losing money.

Lesson: I shouldn’t assume old forecasts are true just because they’re coming from secretive companies that aren’t obliged to disclose public data.

Leading to the ironic situation that the Upper Middle classes do not read anymore while the working class does.

Not really.

Most broadsheet papers (SMH, Age and NYT right til the end) are descended from classified advertising papers. That’s why the front of 19th century copies of the Times is made of adverts, with the news a distant second. They continued to fund themselves through classified advertising until the idiots in charge let it all go to Google before they’d even noticed.

Tabloids never had a major classified revenue stream, so were brutally cost- and sales-driven from day one. The Australian never had either financial advantage, hence why it’s never made any money.

Lesson: understanding newspaper revenue structures is handy if you’re going to comment on newspaper revenue structures.

Reported? By whom? Isn’t it nice of Murdoch to keep running these two public services?

Times here, Australian here. You’re welcome to reject those numbers given their relative sources, but there is unanimous consent throughout the newspaper industry that neither title has turned a profit in recent memory.

How many overseas billionaires do you think live Down Under and where do they all come from?

Finally, a complaint where you actually have a point.

Sunny edited this piece (which as originally published, led into the suggestion that Gina Rinehart, the homegrown billionaire who is trying to buy Fairfax, should buy the Australian instead) down to the point where that paragraph became arguably ambiguous.

Of course, London imports its mineral oligarchs; Australia has its own.

13. Thanks a lot for demonstrating once and for all that you hate democracy. So only right wing newspapers can stay in business. This is the usual claptrap that is put out by the right.

If it was true the Daily Mail would have gone bankrupt in the 50’s. The Times would go bankrupt now, and Murdoch’s New York rag would have gone bust years ago. But of course they can rely on massive corporate deep pockets to keep them afloat. Murdoch was once asked why he wasted $70 million a year propping up his New York paper and he replied that he would only have to pay the money in tax if he scrapped it. Rush Limbaugh was for years run as a loss on American Radio. But the corporates kept backing him because it was good propaganda for their cause.

The left has no such luxury. Print anything the elites dont like and bye bye advertising. I am no great fan of Piers Morgan but when he was editor of The Mirror he took a stance against the Iraq war. This did not play well with The Mirrors major shareholder Fidelity. Seeing as they were big financial donors of Bush.

In a corporate state, the corporate media is the state media. And the beauty of the system for the right is you don’t need censorship laws because the corporate media is self censoring. Hence every Murdoch paper came out for the Iraq war. Because if you did not agree with him, you would not be editor. The internet is new and offers more left wing voices. So surprise,surprise the Right want to kill it by letting the corporations become the gate keepers that allow the rich to have quicker speeds and getting rid of net neutrality. The Right always have to game the system.

16. So Much For Subtlety

14. John B

No, they emphatically are not trying to buy Fairfax; Gina Rinehart is. Where the hell did you get that one from? Meanwhile, the TV acquisitions are funded by “Good” News, ie Sky and cable TV – the bit which will not include the newspapers.

I did not say they are buying Fairfax. I said they are looking to buy assets. Where did I get that idea? Well your source claims it for one thing:

News Ltd chief executive Kim Williams revealed the restructure in a video message to staff on Wednesday – hours after the company confirmed it was seeking to buy James Packer’s Consolidated Media for $1.97 billion, acquiring in the process ConsMedia’s 25 per cent stake in pay TV operator Foxtel. …. Mr Williams also confirmed News Ltd has bought online publisher Australian Independent Business Media, which produces Business Spectator and Eureka Report.

Rhinehart, as I understand it, already owns a large chunk of Fairfax. Her aim is to get a seat on the Board. Which is being rejected by the cozy oligarchy that runs it.

Lesson: read something, although not Guido, on matters on which you’re commenting.

Why? It seems to work for you. The fact is any honest account of what is going on would point out that News Limited is doing so well it is acquiring assets. While the Left wing media is running out of readers and cash.

The FT is centre-left and profitable. Incidentally, apparently my data on the WSJ and the NY Post is out of date: Michael Woolf reckons they’re both also losing money.

Because, as you say, people will pay for business news. It is the Trade Union journal. Australia has an equivalent doesn’t it? The Australian Financial Post? Something like that. How’s it doing?

Most broadsheet papers (SMH, Age and NYT right til the end) are descended from classified advertising papers. That’s why the front of 19th century copies of the Times is made of adverts, with the news a distant second. They continued to fund themselves through classified advertising until the idiots in charge let it all go to Google before they’d even noticed.

This is interesting but irrelevant. The fact is the Right wing papers are doing fairly well. The Left wing ones are not. Yes, historical legacies are nice, but that is not the point is it?

Lesson: understanding newspaper revenue structures is handy if you’re going to comment on newspaper revenue structures.

Well it serves as a neat distraction for you, but as there is nothing in the shape of a newspaper that determines whether or not they are focused on providing what the customer wants, it is irrelevant. The fact is the tabloids of the Right have to provide a product people want. The broadsheets of the Left got lazy and thought they did not. Tabloids of the Left? Well there aren’t that many any more are there? Revenue stream or not. What happened to them?

Times here, Australian here. You’re welcome to reject those numbers given their relative sources, but there is unanimous consent throughout the newspaper industry that neither title has turned a profit in recent memory.

And yet honest reporting would have made the situation at the Times clear:

Times Newspapers Limited, the parent company of the Times and Sunday Times, reported a pre-tax loss of £11.6m for the 53 weeks to 3 July 2011 in a filing to Companies House.

This is just a quarter of the £45m pre-tax loss reported for the same period in 2010 – and a fraction of the £87.7m loss in 2009 – and was attributed to a “partial recovery” in the economic climate.

TNL’s revenue grew by 2.3% to £401.7m, with income from circulation increasing as a result of cover price increases on the Times and Sunday Times. The company added it now has a relatively low exposure to classified revenues, less than 15% of total income.

In other words the Times was hit by the downturn but they are recovering strongly. Historical revenue streams or not. The Guardian is not.

Sunny edited this piece (which as originally published, led into the suggestion that Gina Rinehart, the homegrown billionaire who is trying to buy Fairfax, should buy the Australian instead) down to the point where that paragraph became arguably ambiguous.

The Australian has a billionaire who is willing to pour money in to save it. They do not need another. Fairfax does not. The sensible suggestion is for Rhinehart to buy Fairfax. Except she already has a goodly chunk of it. What she needs now is control.

Of course, London imports its mineral oligarchs; Australia has its own.

That is nice. But are they, as with the Independent, willing to p!ss away a fortune on a vanity project?

You said “they [News] are trying to buy the other major newspaper chain in Australia”. The other major newspaper chain in Australia is Fairfax.

Picking up a couple of websites and a handful of writers for small change (the ABM deal was for a few million dollars in total) is not a major investment.

Buying the Fox Sports and Sky News stakes is indeed a major investment. But not one being made in assets that will end up in the Bad News business.

As I’ve noted throughout, the big change that is about to hit the News Corp newspapers is that the vast profits from News’s cable TV business will no longer cross-subsidise the barely profitable newspaper business, so whatever profits the cable TV business is making, and whatever huge investments are made in the cable TV business going forward, are entirely irrelevant to the newspapers.

The Times is still lossmaking in double figures of millions. It has reduced its losses slightly by deploying its paywall, which has also seen it lose 90% of its readership.

The Guardian’s losses are falling, and it is now one of the top five most read newspapers worldwide. GMG has made a deliberate decision not to follow the Times route, but to focus on building its audience.

On Gina & Fairfax: the staff and readers at Fairfax are centre-left-leaning. Gina is very firmly right-leaning. As is frequently pointed out by Mr Murdoch’s defenders, newspapers mostly tailor their content to their audiences, rather than vice versa. So a Gina buyout of the SMH and Age would be far more of a kill than a cure, alienating writers and readers alike.

So if she wants to buy a major newspaper as a personal mouthpiece, then buying the one with writers who’ll happily do what she says, and readers who’ll happily read what she says, and which has adopted a paywall strategy like that of the Times, which has been comparably disastrous for its readership figures, would be wise. She could then subsidise it to follow a similar strategy to the Guardian, taking a major role in shaping and leading political debate, and edging out newspapers that are being forced to follow a solely commercial model.

Obviously, I’d rather she didn’t do that: the scenario where the Australian withers away behind a paywall in a gradually dying Bad News business is an outcome I’d prefer to the one where it becomes a Guardian-style thriving online community for right-wing commentary. But it’s the outcome that would best suit her tactical needs, as someone who wants to push Australian public debate further in the pro-mining, climate-change-disbelieving, socially conservative direction.

Rich oligarchs will go on-line and take the right-wing pundits with them.

http://liberalconspiracy.org/2012/06/27/is-the-future-of-news-dependent-on-rich-oligarchs/

22. So Much For Subtlety

17. john b

As I’ve noted throughout, the big change that is about to hit the News Corp newspapers is that the vast profits from News’s cable TV business will no longer cross-subsidise the barely profitable newspaper business, so whatever profits the cable TV business is making, and whatever huge investments are made in the cable TV business going forward, are entirely irrelevant to the newspapers.

That is true. And it will remain to be seen if whoever takes over from Murdoch cares for the press as much as he does and is willing to continue to pour money into prestige projects like the Times.

The Times is still lossmaking in double figures of millions. It has reduced its losses slightly by deploying its paywall, which has also seen it lose 90% of its readership.

Slightly? It is recovering strongly and may well be in profit next year. The pay wall was stupid in my opinion, but then I don’t own a major newspaper.

The Guardian’s losses are falling, and it is now one of the top five most read newspapers worldwide. GMG has made a deliberate decision not to follow the Times route, but to focus on building its audience.

They have five years of cash left and depend on government advertising. It will remain to be seen if their attempts to buy into the American market work. Given their hatred of all things American.

john b

On Gina & Fairfax: the staff and readers at Fairfax are centre-left-leaning. Gina is very firmly right-leaning. As is frequently pointed out by Mr Murdoch’s defenders, newspapers mostly tailor their content to their audiences, rather than vice versa. So a Gina buyout of the SMH and Age would be far more of a kill than a cure, alienating writers and readers alike.

Except it wouldn’t. Most Fairfax readers no longer read Fairfax papers. They have moved so far to the Left that they are losing their readership. The papers need to come back to the centre. Rhinehart would be good for that. Sure she would alienate some employees but it is not their newspaper group. They do not own the papers. They don’t like it, they can go and work for the government broadcaster.

So if she wants to buy a major newspaper as a personal mouthpiece, then buying the one with writers who’ll happily do what she says, and readers who’ll happily read what she says, and which has adopted a paywall strategy like that of the Times, which has been comparably disastrous for its readership figures, would be wise.

Except that newspaper is not for sale. The Fairfax employees have rendered the group essentially worthless. The newspaper business was assessed as worth precisely nothing the other day. What remaining value they have is from other assets. So she can buy one cheap. Or someone else will if she is forced to sell and the price collapses further.

She could then subsidise it to follow a similar strategy to the Guardian, taking a major role in shaping and leading political debate, and edging out newspapers that are being forced to follow a solely commercial model.

As if the Guardian has been doing that. Why would she want to? She has a major newspaper group that is essentially worth nothing despite the fame of its name. She should pick it up for a song. After all, if the left wing media is running Fairfax into the ground, someone else should take over their assets.

Australians are not stupid. Anymore than British people are. So they do not buy dreck like the Age. Just as the Guardian is now being forced to scour the world for people in basements with tin foil hats that happen to endorse Hamas, the Age might survive if it likewise tries to go global. But I doubt they have the clout. The future for both papers is not good because you cannot run newspapers as protected workshops for the intellectually bankrupt loony left.

Oh look as if by magic another example of the rich oligarchs censoring media they don’t like……..

http://www.guardian.co.uk/media/greenslade/2012/jun/28/censorship-canada?CMP=twt_fd

Right wing media stays afloat because they serve their masters. Not their readers, their real masters.


Reactions: Twitter, blogs
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  2. Double.Karma

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  3. The Dragon Fairy

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  4. Martin Steel

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  10. BevR

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