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Home / Business

Fran O'Sullivan: Aussie media shake-up can reach to NZ

Fran O'Sullivan
By Fran O'Sullivan
Head of Business·NZ Herald·
15 Jul, 2014 05:00 PM5 mins to read

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Rupert Murdoch. Photo / Getty Images

Rupert Murdoch. Photo / Getty Images

Fran O'Sullivan
Opinion by Fran O'Sullivan
Head of Business, NZME
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Any changes across the Tasman could trigger newspaper consolidation here and lead to a stronger industry.

Two key players in the Australian media space are sharing airtime this week - media titan Rupert Murdoch, founder of News Corp's Australian, celebrating the 50th anniversary of a great newspaper institution, and investor Simon Marais virtually reading the last rites for some newspapers in the Fairfax Media group in which his company Allan Gray has a 5.7 per cent stake.

The big question from a New Zealand perspective is just what impact another shakeout in the Australian media market might have here.

More of that later.

But back to those who are calling - or signalling - the shots this week.

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One player (Murdoch) with ink in his veins and still every inch the newsman even though newspapers are just one part of his bustling global media empire.

The other player (Marais) ever so slightly placing a giant short under some of Fairfax's Australian papers by flagging the Age and the Sydney Morning Herald could be merged; while some papers would survive in some form - digital or mostly digital with some print, he didn't know.

But there was also a chance Fairfax's lifetime had come to an end.

One player (Murdoch) still revelling in the role his newspaper has played in the public life of Australia where its journalists are still pursing rigorous journalism and scoring national agenda-setting scoops.

The other player (Marais) signalling the end to the age of quality newspapers featuring exclusive stories and investigative journalism, ironically enough in an interview with the media editor for the Australian from where the above Marais insights are taken.

Both Murdoch and Marais have demonstrated realism when it comes to the future of media companies.

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In an interview carried on Sky TV, Murdoch conceded the print version of his cherished flagship the Australian may not be around for ever.

"There could be a time - I'm not saying there will - when it won't be economical to print." What was interesting was Murdoch's contention that when/if that happened the Australian brand would still be strongly carried on various digital platforms including mobile phones which had considerable capacity to drive greater engagement with readers.

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In an interview with the Australian's respected editor-at-large Paul Kelly, Murdoch reckoned the "paper" would last another 50 years as a powerful brand transmitted across different platforms.

"Only a few weeks ago we brought in a new app, with a new version of the Australian.

"The average engagement ... in the last few weeks has gone to 20 minutes but that will go to 40 minutes as the Times [of London, also in Murdoch's stable] has," Murdoch told Kelly.

Back to the Marais interview and it was clear there was just no celebration at all of the values and influence that a great "newspaper" can bring in the life of a nation.

In the Australian interview he argued consumers weren't prepared to pay for investigative journalism any more; which while sad for society was the unintended consequence of consumer behaviour and advertising moving online.

What does catch Marais' eye is two Fairfax Media digital properties, Domain Property Group and dating site RSVP. This is where value is being built.

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The differing perspectives come down to Murdoch being an entrepreneurial newsman with the confidence to launch a newspaper in the first place and an investor who has gone on to build a global media empire which has launched many new media brands.

Marais has a reputation as a contrarian investor who has invested in companies across multiple industries.

One has emotional skin in the game but knows when to cut losses. The other doesn't play to emotions, but he still has skin in the game and is focused on business drivers such as cost-cutting to bring companies back to profitability.

What's interesting from a New Zealand perspective is the same debates are being held here - just not in the open.

Marais has suggested that if the Fairfax empire is broken up some of its newspapers here "may reappear with somebody else in New Zealand".

This raises another interesting possibility given that Allan Gray is also the largest single shareholder in APN News & Media which publishes the Herald and a range of regional newspapers and owns The Radio Network.

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Marais' judgment was right on the button when he blocked plans for a capital-raising two years ago which resulted in a board spill at APN.

But along with other prime shareholder Baycliffe, Allan Gray did strongly support APN's subsequent moves to buy Clear Channel out of their joint Australasian radio assets, sell off inappropriate assets and refocus the company.

Recently APN and Fairfax Media have announced plans to print the latter's Sunday papers and Waikato Times at the former's Ellerslie plant.

There are other opportunities for cross media efficiencies.

Where the game gets interesting is if Fairfax Media does put its New Zealand papers on the block. If so, would APN be a potential acquirer?

Such a prospect would have been unthinkable a decade or so ago due to Commerce Commission considerations.

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But if Marais' musings are a pointer to the future Fairfax Media has deep financial problems.

Ironically, the commercial lens that Marais focuses on Fairfax Media within Australia - and the power wielded behind the scenes alongside other main shareholders - has the potential to result in big changes.

If the upshot is a consolidation of newspaper assets on this side of the Tasman there is the possibility to develop a national newspaper which could survive across multiple channels.

This is pure speculation on my part, and any shakeout is not likely in the medium term. But having stronger New Zealand media would be great for nationhood - something Murdoch would also approve of.

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