Mining moves to control the media

There’s lot’s of stuff going on at Fairfax. Printing plant closures. Job losses. A reorientation towards internet delivery. It’s all very difficult and my sympathies go out to those families affected. Sadly, however, I am not confident that the transformation can succeed. It simply does not address the core challenge confronting the company: declining advertising efficacy and revenues.

Judging by the plan, described in brief above, Fairfax does not yet realise what its core problem is. 85% of a newspaper’s revenues are derived from advertising. Cutting costs doesn’t solve a big decline in this revenue stream, neither does changing your distribution mechanism. What Fairfax needs is innovation in how it delivers its core product to its core customers, which are its advertisers, not its readers.

There is an answer, mastered by many a niche publisher. Embrace fragmentation and creative advertising solutions, tailored for clients, delivered in continually refreshing ways for targeted audiences.

But such is the stuff of small and nimble operations, with deep entrepreneurial reserves. Anyone who has seen Fairfax’s bureaucratic advertising staff at work (or, for that matter, any other large media group), waiting for the phone to ring, will know how impossible this is for a big operation.

Thus, Fairfax as a stand alone firm appears to be in a death spiral.

Ironically, as the firm flails seeking a market solution to its woes, it is also in the process of passively securing its future. That is, not via any new plan, but rather the takeover that is underway by Gina Reinhart. This is the future now for Fairfax, to slip behind the skirts of a billionaire. It has worked for Rupert Murdoch and News in its Australian operations for many years, which has operated its local general interest newspaper, The Australian, as a loss leader. That’s no bad thing, although it’s important to remember that this is not some innocent contribution to Australian civil society. It is also a means through which to control policy and national agendas to the benefit of the group’s broader operations.

Which is where we come back to Fairfax. I prefer not to think of it as Gina Reinhart taking over Fairfax so much as it is mining doing so. No point personalising it. Given Fairfax’s troubles as a company, there is no other reason to buy it than its loss leader value to the mining sector. Perhaps there is no difference between this ownership and any other sectoral plutocrat owning newspapers. Conrad Black owned Fairfax for short time in the early nineties. Then again, a media group owning media assets has at least some motivation to keep the flow of information as broad as possible. Can the same be said of a mining owner?

There will be apologists of course. They will profess great knowledge of a sector about which they know little, when their true motive will be to reposition themselves favourably with the new regime. And that is the power that mining will now influence over the media in general. Every mining-related editorial and journalistic decision will henceforth be weighed against career prospects. This is no indictment of the people involved. I will be doing the same. I’m doing it right now. It’s simple realty if you’re not already independently wealthy and have a family.

The influence will be all the more salient since Fairfax is the training ground of Australian journalism. Far more so than any other Australian media group. We can look forward to generations of mining-sympathetic journalists issuing forth from the Fairfax womb.

Of course the same forces that are making Fairfax vulnerable to takeover are also promoting a new wave of media operations that can grow into the spaces vacated by the old duopoly. MB is just one example. There is Crikey, The Conversation and others, including the ABC. Some of these can bring balance to the debate and if the Australian market is dissatisfied with any new editorial orientation at Fairfax then these options will grow all the faster.

But it will still take a long time. Fairfax mastheads are a part of the fabric of Australian civil society. Mining has a powerful new voice.

David Llewellyn-Smith
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Comments

    • I thought it was pretty obvious from day one when Reinhart who was worth approx $20 billion at the time decided she needed a stake in Fairfax and a seat on the board.

      She was never in it for the financial rewards of owning failing newspaper.

    • Aristophrenia

      Yep, even worse are the nuff nuffs arguing for it.

      What happens when there is an issue affecting them that Gina and her cohorts do not agree with – and there is no voice at all.

      • dumb_non_economist

        Aristo, their intention is to latch onto a tit and suck for all it’s worth and will follow whatever direction she takes.

      • You owe me a cup of coffee…..to replace the one I just blew all over my keyboard 🙂

        • I think when (if ever!) we upgrade the comments section, we need a “coffee spilt” icon – because by Dog, I don’t know how many times I’ve lost my coffee/tea across my monitors/keyboards/cats reading some of the stuff you chaps and chapette’s write….

          I like Turd Fergusons comment board – you can award each other “big yellow hats”, kind of like the like buttons on Disqus.

    • reusachtigeMEMBER

      Nah, he’s a laugh. Let him/her (it?) be, it isn’t being offensive and it has every right to post its position even if that is its job.

    • Don’t you see the irony in what you’re saying though Mav? In a post lamenting the censorship/bias of the newspapers in the name of mining, you’re requesting to censor one of their local adherents?

      Don’t stoop to their level. Provided the discourse is civil, there should be no need to censor.

      • I’d agree, but I do think the MineBot should disclose who he/she/it is working for.

        FWIW, the MB bloggers know who I am, and know that I’m not being paid by some green-left conspiracy to discredit the resources sector. I’m just a victim of the downside of the mining boom with too much time on my hands.

      • Ok.. Guys.. You spoilt it for me. I just wanted to give Minebot a taste of what the Fairfax editors will feel when Gina takes over.

          • I am not a mining squillionaire robber baron – So not a lot of harm is done if I do indeed have a “censorial dictatorial tendency” and exercise it within the safe confines of my home/workplace.

            You are yet to convince us that Gina does not have the same tendency, when there is overwhelming circumstantial evidence that she does. Why indeed, she appears to be a megalomaniac and you her well-paid Corporate Goebbels.

  1. I feel sorry for the people effected, and I hope they can find jobs quickly; have to be another field however. I heard it might be good to have a lot more independent journalists, and I assume they’ll become bloggers or maybe they can start a new paper?

    One thing though I just see papers of all sorts dying as young people just don’t read them on mass. Even if they focus on a paywall model; who’s going to pay?

    The young people I ride with don’t have a clue about politics, mining etc., and at that age I was the same. In fact I’ve only in the last few years paid any attention.

    I see sites like MB getting stronger. News Ltd are about to lay people off as well.

    • Your age?! My sis-in-law is 60 and she told me the other weekend that (in the property market) “It’s a sellers market!”. “Why”, I asked, “Because the lady at the supermarket check-out told me”. No hope…..

      • Statistics says that 50% of the population is under the average level of intelligence. From the other 50% above this level half (e.g. 25% from the total population) are under the level of the other half, so there are almost 25% left with a reasonable level of intelligence, who are not bogans and read something, which is not fiction.

      • I heard it might be good to have a lot more independent journalists, and I assume they’ll become bloggers or maybe they can start a new paper?

        Hard to “monetize” a blog though as I’m sure Mr Holes is aware. In fact, its hard to monetize just about everything on the internet unless you’re Google or selling a physical product. Ask Zuckerberg how much money he earns from each Facebook user.

        And please a63, its affected and en masse.

        • There’s an IT saying, Lorax, “if you’re not paying for the product, you are the product”. Internet outlets serve exactly the same as local freebie newspapers – the product is eyeballs.

  2. Stop thinking in terms of false left/right dichtomies.

    We need to have a mature discussion about this.

    It’s all horses for courses. Nothing to see here. All part of the melting pot.

    Rinehart is actually quite charming – she has hidden depths. Why the personal attack ?

    Broaden your horizons, stop your blinkered thinking.

    There is an article in last month’s Foreign Affairs which deals with the interwoven nature of vested interests, government and media – you should read it.

    Leave the Greens in power and there will be even less diversity of views.

    Finkelstein review.

    Link to a Greek philosopher…

    http://www.youtube.com/watch?v=IdtYVKUz-pY&feature=relmfu

    • Leave the Greens in power and there will be even less diversity of views.

      What power? Are you tripping?

      When Abbott/Mining regime takes power next year lets hope the Greens can cling to the BOP in the Senate. God help us if they don’t.

      • The very LAST thing this country needs is Greens anywhere near power. If they had their way the mainland would just be an outpost of that hive of economic activity : Tasmania

    • As I said yesterday, the richest Americans are widely admired by a majority of US citizens — either because they created something from nothing, or through their philanthropy.

      • Interesting comment, Lorax. A big contrast to Australia. The only rich Australian I can think of offhand who is admired by many of his fellow citizens is Dick Smith, and that is largely because he’s a crazy eccentric. I suppose Kerry Packer had his admirers as well, especially when he got stuck into the senate committee. But at the moment it seems to be open season on billionaires.

        • Ronin8317MEMBER

          Dick Smith gave back a significant part of his money to society via philanthropy, and the other major philanthropist is Andrew “Twiggy” Forrest. Everyone else only gives a pittance. Then there are the ‘other aspects’ of our rich citizens :

          Pratt family : fined for running an illegal cartel.

          Gina Rinehart : Inherited her wealth, and is involved in a nasty legal battle over inheritance with her own children.

          Frank Lowy : Westfield shares might have tanked, but enumeration for himself and his son shoot up instead. I guess you’d like him if you’re a soccer fan.

          James Packer : Casino might make money, but it’s not a ‘respected business’.

          Clive Palmer : Mostly donates to the Liberal Party, and his crazy comments about CIA conspiracy and Bob Brown doesn’t help his cause to be respectable.

          Compared to someone like Charles Feeney (anyone else heard of him here?), an American living in Brisbane. He gave away $350 million!! So is it a wonder most Australians don’t think much of our ultra rich brethren?

          • You’re being a little unfair to Gina in the wealth creation department. Turning $50m into $19b is no mean feat. But the rest of it is fair comment. You could have added Nathan Tinkler – jumping ship.

            Also re Twiggy, he should also be given kudos for his efforts in promoting aboriginal employment.

      • Meh.

        debate is always appropriate and this was just the public domain facts as reported by Aunty.

        To hot in the lil-kitch there Minebot?

        HnH also sees it that way I guess.

        oh wellz.

        TM.

      • dumb_non_economist

        Lorax, I wouldn’t necessarily agree with that. Most of the philanthropy is getting museums/galleries/medical wings named after them.

    • Aristophrenia

      Foreign Affairs ……do you have any idea what this magazine is ? No seriously do you ?

      It is the preserve of far, far waaaaaaaaay out right wing American foreign policy hawkes, disguised as well considered International Relations theory. It is published by the council on foreign relations, a non elected, unaccountable self controlling organisation which is almost entirely in control of US foreign policy since it is an executive operation.

      Foreign Affairs might as well just change its name to The Battle Plan – a manifesto for world domination.

      You quote FA and you leave yourself hanging in the wind – might as well just quote the Spectator and be done with it.

        • I think of FP as the national geographic of international relations just as I think of Forbes and Fortune as the same of business. Lots of pictures, little content.

      • Ahh yes. The Spectator, a favourite of mine, although a little light-on. Good book reviews too, plus Latham’s column.

      • I don’t think that’s fair. I’ve been a subscriber for some time and have found that the views published are pretty mixed though yes, their editorial board does seem to have a number of ‘right wing’ scholars like mead, et al.

        As for CFR being unaccountable and self controlling, what’s your point?

      • A bit of a long bow to characterize the Council for Foreign Relations as a far right organization. Its members include Jimmy Carter, both Clintons, Mike Dukakis, John Edwards, Dianne Feinstein, Thomas Friedman, Frances Fukuyama, Mikhail Gorbachev, the Dalai Lama, Angelina Jolie and Paul Krugman.

  3. ‘Of course the same forces that are making Fairfax vulnerable to takeover are also promoting a new wave of media operations that can grow into the spaces vacated by the old duopoly. MB is just one example.’ lol! MB is owned by fairfax!

  4. A provocative headline. Untrue of course. Followed by routine hand wringing and anxious presumption of intent and prediction of outcome, best left to the realms of fiction.

      • Evidence: Buying almost 20 percent of a dying media company. Why else would you do this unless you wanted to exert editorial control?

      • Fictional content: Rinehart has yet to acquire directorships. If and when, a couple of seats on the Board unlikely to exert significant influence. No statement of editorial intent exists to confirm your allegations that Fairfax would then push for a pro-mining (or for that matter, anti-climate change) bent.

        Aside from the above – so what if it did happen. We are free to choose our media. Equally, privately owned media is free to prefer a particular editorial line. Those that don’t like it can stick with the ABC!

  5. My favourite part of this story is how people like Bolt are creating stories about how Fairfax are up the duff because they’ve gone too far to ‘teh left’.

    Yep, that’s why The Australian makes a profit and that radio station you were the big drawcard for didn’t go broke.

    • Aristophrenia

      AS in American media, there is the right wing version (far right wing version in reality) and anything, anything at all which does not agree with it is left wing.

      Its so asinine, but people fall for it.

  6. … how it delivers its core product to its core customers, which are its advertisers, not its readers…

    Well, I am not in the media business but I would like to think that if I am paying for something then I am the customer. And if I am not treated like a core customer I just refuse to pay. A bit like with MB – I know I am not your customer, I don’t pay for your content and it is all good.

    Maybe the newspapers should get back to the investigative journalism and rely more on the income from people buying the paper and less on the advertising income. This would make them less dependent on vested interest and hopefully bring up higher quality content.

    It is a difficult route though. With so much good content (including MB) available for free it would be hard to charge enough to make it a sustainable business.

    OTOH selling out to the mining is a bit like selling a lot of advertising space. Then it is up to us – the buyers of the papers – to be aware what we are buying and trim our expectations accordingly.

    • If 85% of newspaper revenue comes from its advertisers, who are its core customers?

      That doesn’t mean the readers aren’t important. Of course they are.

      But ignoring the advertisers and failing to innovate for 200 years is a pretty poor record of customer care.

      • Well, experience shows that such high dependence on advertising is not exactly a sustainable business model.

        There are the “free” newspapers – also known as local rags – which rely on advertising only. They certainly are not an example of high quality journalism.

        I recall I spoke to a media person ages ago. She told me that they aim to recover the costs with newspaper sales and any advertising income would go towards the profit of the business. This seemed like a lot more sustainable model because the loss of advertising revenue would not bankrupt the business.

        Nowadays fear of not offending advertisers affects the quality of the content, this reduces the quantity of the readers, the papers try to compensate with more advertising which … It is a positive feedback loop (a vicious circle if you like) that can – and will – run the whole business to the ground.

        I hope you guys at MB manage to avoid this somehow.

      • Like Facebook, if you are getting something for free you aren’t the customer you’re the product.

        They are all selling our eyeballs, it’s just that fairfax is getting less for them than they used to.

  7. Just ask Yellow Pages what happens when you ignore the Sellers part oh the connection with Buyers. Ie print fail.

    You have to look after your Advertisers first by having/goung where the eyeballs are or you will end up alone in a big warehouse with a loudhaler shouting to yourself.

    By being with the masses or niche masses you are ‘on target’ so if the eyeballs are there then the advertisers will come.

    But what no one has mentioned so far is that there is virtually an infinite supply of advertising space on the interwebs compared to fixed print space that commanded premiums for both display and reams of pages that you never see anymore the Classifieds.

    Google and eBay killed the Classifieds 10 years ago.

    So now we have a medium which fundamentally has been commiditised to death. And as a commodity it fits perfectly into Gina’s portfolio. 😉

    In my opinion we will see ever greater falling yields online for display/text ads unless you are Now Marketing (Twitter) or are building out relationships like niche blogs, social experiences and via systems that enable relationship managementn which is dynamic.

    So the chances of revenue growth in Media houses in my opinion is dire.

    We will see more fragmentation or diversification into many-many light times that are highly specialised creators of content like MB.

    But they two also will suffer from reduced revenues overtime.

    The future it will be Traffic, returninig traffic, time on site, engement, advocacy, all of these will be required for a successful site.

    Don’t underestimate the most imortant of all Engagement.

    TM.

    🙂

    (by the way MB it would be great if you could upgrade the WP instance of comments to handle Andriod Tabs and iPads etc. Comments section is so buggy on my Tab)

    • But what no one has mentioned so far is that there is virtually an infinite supply of advertising space on the interwebs compared to fixed print space that commanded premiums for both display and reams of pages that you never see anymore the Classifieds.

      I have not heard it explained better. Great observation.

  8. I am totally indifferent to this. The corporatised media is just in-bed with the corporatised party system, and will never seriously question their financial bed-fellows.

    Which aristocrat is pulling the strings is neither here nor there.

  9. Good follow on from yesterday’s article, H&H. I wonder how much longer it will be until the personalized “newspaper” sent to your tablet every morning will become a reality. The media company that can swing that will really put some runs on the board. Think about it.

    • For sure. Getting personalised content delivered — stories you’re actually interested in and other stuff filtered out — would give you a warm glow. You’d feel like the media company is actually at your service.

      • SabreOfParadise

        There’s an App (Apple and Android) called Flipboard that basically does this already.

        • They just need to take it further with their algorithms I think, customising not only by categorisation but also content.

      • dumb_non_economist

        The next step from that is to deliver content to meet your bias, a paper for/to all people!

        • Totally circular, hence totally useless.

          Imagine here at MB, if everyone agreed. Confirmation bias on speed. Not to mention boring.

          • dumb_non_economist

            I wasn’t being serious! It was a joke that they will send individuals epapers to their personal bias.

  10. this may really spur a seeking out of independant media sites, MB, the converseation, crikey, new matilda, indepedant australia etc etc..

    if alan kohler can make a fortune then surely many others can?

    did anyone see him on the ABC news last night talkiing about he warned fairfax owners in early 90’s…”If only they’d listened to me!!”

  11. General Disarray

    I see it playing out in a couple of scenarios.

    1.

    – Mining gets its way and Fairfax becomes a conservative group

    – Fairfax loses its old audience and picks up some of the News LTD readership

    – News and Fairfax go to war for the hard right and end up unreadable to all but the diehard wingnuts

    2.

    – Papers are dead in 5 – 10 years

    – Gina decides to buy the internet

    – All websites become either mining propaganda or porn

    – MB become a big hit with the gay FIFO bear community, both “The Prince” and “Houses and HOLES” monikers are considered somewhat prescient given their new professions.

  12. So be it. Its’ not like we had a cantankerous, obstinate, adversarial media anyway. Well Fairfax’s new boss to be may be all of the above.

    It is only changing for the same. One difference we may see spewed out the Neo-Fairfax media is, not a bad word about mining.

  13. ceteris paribus

    Any truth in the rumour that the miners will be frontrunners in a tender for a privatised ABC in 18 months.?

  14. One thing is certain after today. Any doubts that 3d1k is an astroturfer are gone.

    His fingers are going at one million miles per hour and the display of slippery thinking is really something to behold.

    I’m not sure if his lack of ethics or ability are bigger. As usual, nothing but the best PR for mining.

  15. The bit that confused me about the Fairfax statement was that they are going to move to a tabloid format?

    I thought the SMH already *was* a tabloid…

  16. The bit that confused me about the Fairfax statement was that they are going to move to a tabloid format.

    I thought the SMH already was a tabloid…

  17. Ironic if Rinehart’s interest in Fairfax was fueled by the Leveson Inquiry. *sigh*

    With The Oz already a loss making tool for influencing Canberra it would be a shame if the Fairfax papers take on a similar role.

  18. russellsmith55

    In theory whether she controls 1 news empire or 100, it shouldn’t make a difference; as long as sites like this exist as well as independent broadcasters like ABC and SBS etc then unfiltered journalism should still exist for those seeking it.

    Its sad that some use their power not to get their message out, but to silence as many opposing opinions as possible.

    Its sadder that this technique works so effectively because so many don’t question what they hear, or seek other points of view before making up their mind.

    No matter how much we talk about an ideas-driven democracy, we will never quite get there.

    • In reality, Rinehart currently controls no media empire, and may not. Much ado about nothing.

      As for some using power not to get their message out “but to silence as many opposing opinions as possible” – when executed by government is exactly the reason to tread carefully where there is any attempt at increased government (political) intervention into editorial content via committees, board, overseers, or blunt legislative force.

      • Yep, Andrew Bolt magically got his own gig on channel 10 without any intervention from Gina.

        Well, call me a sceptic, but how does possibly the lowest rated show on the whole planet – The Bolt Report – still continue airing on the idiot box?

        • Mav,
          The Bolt Report is outdoing the luvvie leftie ABC show Insiders these days. Why is it that the Left are so scared of a little balance?

          The Govt propganda machine aka ABC isnt enough? We must also be force fed Leftist spin from SMH, The Age, Sunrise et al?

          This panic over Rhinehart really is such a beat up and looks like panic. People afraid to justify their worth or what?

          • dumb_non_economist

            GSM, The “Dolt Report” is not balance to The Insiders, that’s completely funny.

            Andrew Bolt is the right wing version of Philip Adams without so much talent.

        • Your doing a top job at MB. I tip my lid.

          “We cannot look to the conscience of the world when our own conscience is asleep.”
          Carl von Ossietzky

          “Silence in the face of evil is itself evil: God will not hold us guiltless. Not to speak is to speak. Not to act is to act.”
          Dietrich Bonhoeffer

          Now that 3d1k is a confirmed mining troll/turfer can you keep it on a tight rein ala the housing trolls?

      • russellsmith55

        Whether its a government legislating against negative press about them, or its a super-rich vested interest exercising editorial filters to stop negative content being printed about them, its the same thing.

        A power of some sort using their influence to protect/grow that power, for the good of itself alone.

        The food libel laws make it possible for an individual to be sued for ‘defaming’ beef in Texas and other US states – are we supposed to believe this law was created to protect consumers from iron deficiencies?

        Alternatively, imagine if MB was floated – then a housing lobbyist started buying up shares and innocently asked only for an editorial say over what content gets published.

        I guess its the old one man’s terrorist is another man’s freedom fighter argument. Only when you look beyond your own agenda can you really evaluate the true consequences of actions.

  19. It’s not the first time a Hancock has tried to run a newspaper.

    [The Independent (Perth)
    From Wikipedia……..
    The Independent (also known as The Sunday Independent) was a Perth…. based weekly newspaper owned by mining entrepreneurs Lang Hancock and Peter Wright.
    The paper was launched on 27 April 1969 as a Sunday only publication and its founding editor was Maxwell Newton.
    Circulation was claimed to be 70,000 copies at its peak, however it never seriously challenged that of its rival, the well established Sunday Times.
    In 1973 it ran as a daily for four weeks, as The Independent Sun, in direct competition with The West Australian [1]
    The Sunday Times’ owners, News Corporation acquired it in 1984 and it was wound up in May 1986.]

    It was a very feeble effort.

    I get the feeling that the only beneficiary of Gina’s gambit will be Rupert Murdoch. If she succeeds in buying Fairfax, she will wreck it in no time, leaving News Corp as the last publisher still standing.

    What a dire thought!!