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.
