John Drinnan on business

John Drinnan is a Herald business writer and media commentator

Media: News Ltd ups pay-TV ante

5 comments

News Limited now runs dominant pay television firms on both sides of the Tasman with the purchase of James Packer's Consolidated Media.

News Limited owns a 43 per cent controlling stake in Sky TV, which dominates New Zealand pay television.

The Australian arm of the Rupert Murdoch empire has always had a major role in the consortium that runs Foxtel.

But the deal for Consolidated allows News Ltd to increase its stake in Foxtel - the dominant pay TV company in Australia - from 25 per cent to 50 per cent.

It will increase its stake in Fox Sports from 50 per cent to 100 per cent.

The A$2 billion ($2.5 billion) purchase is still to be finalised and pass regulatory oversight.

The other half of Foxtel is owned by Telstra, the dominant telco in Australia.

News Ltd's parent company - News Corporation - is a key player in satellite broadcasting around the world.

Recently the British arm of Murdoch's interests - News International - became mired in scandal over unethical conduct and controversy over its relations with British politicians.

It was forced to abandon a takeover of the UK pay TV service BSky-B.

What does the emergence of a stronger cross-Tasman relationship mean?

In theory it makes a merger of Foxtel and Sky TV more plausible.

However, Forsyth Barr media analyst Rob Mercer doubts a merger of Foxtel and Sky TV is ever likely to happen.

He said pay TV companies like Sky and Foxtel had to be focused on local markets and tastes.

Sky TV has benefited from its links with News Corporation.

The MySky personal video recorder (PVR) is identical to one used by BSky-B, and the Soho channel is broadly based on BSky-B's Atlantic channel.

Mercer said politically issues over pay television were particularly sensitive right now.

In both Britain and Australia governments are making numerous attempts to regulate media.

Murdoch companies and their dominance of media have come under scrutiny.

In this country Sky has little editorial impact, but dominates the industry.

PUBLIC TELEVISION

New Zealand On Air is comfortable with the final shape of the TV3 series The GC, but indicated TV3 might have to pay their own way if it backs another series.

The funding agency has been criticised for giving $420,000 for the eight-part series about young Maori living on the Gold Coast, that some criticised for being mindless.

The funding agency does not get early screenings, but spokeswoman Gina Rogers said the first episode of the reality show was "more glam" than it expected.

But cultural issues came to the fore in later episodes.

She said The GC had been popular, and it may be that if TV3 backed similar shows, they would fund the entire budget themselves without taxpayer support. TV3 is considering whether to back another series of the reality show.

SPINNING, SPINNING

The media world is spinning like a top as the upheaval of the digital revolution coincides with the economic downturn.

Twenty years ago the "revolution" was the move to new technology and computerising newspaper production. It was the end of the typewriter in modern newsrooms, to be replaced by computer monitors.

Now, the debate is whether newspaper presses will continue to roll. A lot is at stake.

At Fairfax head office in Sydney this week, management and the embattled board placed themselves on the frontline as they announced 1900 job cuts including 380 among editorial staff.

Fairfax is to set up paywalls on its Australian websites - which will diminish their uptake.

It is to adopt smaller "compact" pages for the Age and Sydney Morning Herald to make it easier for readers.

And perhaps dramatically, Fairfax appears to be ambivalent about the future of print media.

Fairfax Media New Zealand chief executive Allen Williams' comments suggest the local company is in a sort of limbo-land, saying New Zealand is outside much of the upheaval across the Tasman.

It seems there will be no paywall at the Stuff website, no move to compact and local staff will not be affected by job cuts.

Williams rightly points out that Fairfax in this country has already addressed some of the issues facing newspapers in Australia, as has APN News & Media, publisher of the Herald.

Unions are not powerful in the New Zealand media industry and publishers have made many changes already - shedding staff in dribs and drabs through natural attrition - that have been too hard to introduce in a unionised Australian environment.

In my opinion it would be surprising if the two arms of Fairfax - each side of the Tasman - were to diverge into two distinct strategies in Australia and New Zealand.

Fairfax papers the Dominion Post, the Press and Waikato Times will surely go compact eventually, though the decision might be made at a more leisurely pace than it is across the Tasman.

Creating some sort of paywall for Stuff and moving some revenue away from advertising to subscriptions would be a bigger decision.

But these are questions it will have to ask, just as APN News & Media is doing with its review of its New Zealand media assets.

GOING LOCAL

Williams confirmed Fairfax is going ahead with its plan to regionalise the Sunday Star-Times into three editions in Auckland, Wellington and Christchurch, starting soon.

It's not clear whether there will be any extra staff to provide editorial content for the regional editions.

But earlier this year there were talks between Fairfax and APN over rationalising printing facilities. Williams said that was not an option being considered.

MORE TO COME?

There were no surprises about Fairfax's decision to divest a further 15 per cent of Trade Me - the sell down was expected after the 34 per cent float last year.

Clearly there was a market for the stock and the total raised of $524 million for 49 per cent was needed.

But you'd think a digital company which dominates the classified business is exactly what Fairfax wants to become, rather than discard.

Fairfax says it is committed to maintaining its 51 per cent of Trade Me, but a market source suggests that might depend on Trade Me's buoyant share price.

At $3.75 - up more than 30 per cent since the float - it is inflated by sentiment among New Zealand investors who like the brand.

One view is that Fairfax underestimated New Zealanders' affinity with the local brand when they set the float price at $2.70 but that Trade Me is overvalued, and ripe for a sell-off of the remaining 51 per cent.

GINA V FAIRFAX

Amid the dramas at Fairfax this week - and more speculation about up to 1000 jobs going at News Limited - there has been debate about Gina Rinehart increasing her stake from 13 to nearly 19 per cent and demands for three places on the Fairfax board.

Reportedly Rinehart - with strong political views on the right - has sought to have a hiring and firing role in regards to editors.

But chairman Roger Corbett has ruled that out.

For that reason her bid is being depicted as a fight for the soul of Australian media institutions, albeit as the institution fights for its financial life.

Some will agree with her stance and the view that media and journalists are lefties.

The view - expressed by Rinehart's mate John Singleton - is that editorial line is too much a fundamental part of the business to be out of reach for shareholders.

The other argument is that is what you hire editors for, to make their own judgements.

The danger - from a business point of view - is that editorial instructions from a director with a vested interest could alienate more readers and hasten the demise of a paper.

Even if fellow directors share Rinehart's views, allowing her to influence editorial matters creates risks for other investors.

That will be why Corbett is holding firm.

- NZ Herald

Have your say

We aim to have healthy debate. But we won't publish comments that abuse others. View commenting guidelines.

1200 characters left

Sort by
  • Oldest

© Copyright 2014, APN New Zealand Limited

Assembled by: (static) on production apcf04 at 23 Dec 2014 01:46:10 Processing Time: 595ms