A television network absorbs a newspaper empire in a joint bid to survive
Ever since John Fairfax took over the fledgling Sydney Morning Herald newspaper in 1841, the Fairfax name has straddled Australia’s media. After 177 years, it is to disappear. On July 26th Fairfax Media and Nine Entertainment, Australia’s oldest television network, announced they would merge in a deal worth A$4.2bn ($3.1bn). Nine will take control with 51.1% of the new company. One of the biggest media conglomerates Australia has seen, it will be known simply as Nine.
The merger is the first big result of changes to the law on media-ownership that the conservative coalition government, under Malcolm Turnbull, made last year. Dating from before the internet, it had included a “two out of three” rule: proprietors were banned from owning more than two of a newspaper, radio or television outlet in the same city. With the arrival of Facebook, Google and other global media outfits, Australia’s firms complained the rule left them handicapped. Mr Turnbull’s government abolished it. It also scrapped the “reach rule”, which had stopped any commercial television network from broadcasting to more than three-quarters of the population.
Australia’s media industry was once dominated by three powerful dynasties: the Fairfax, Packer and Murdoch families. One by one, the dynasties have declined. The late Kerry Packer built Channel Nine, founded by his father, into Australia’s most successful television network. His son, James, later sold control to a private-equity group.
The Fairfax family lost control of its newspaper empire 28 years ago, after a bid by Warwick Fairfax, a descendant of its founder, to privatise the company saddled it with debt and sent it into receivership. Revenue from classified advertising once made Fairfax newspapers among the world’s richest titles, but the shift of advertising to the internet hit them hard. On July 18th Fairfax said that it would share printing presses with News Corporation, Rupert Murdoch’s company and its biggest rival. Not long ago, such a deal would have been unthinkable.
Before he entered politics, Mr Turnbull once worked for Kerry Packer, as both a journalist and a lawyer. A market champion, he started the process of changing media-ownership laws after becoming prime minister three years ago. Mr Turnbull thinks the Nine-Fairfax merger will make both businesses stronger competitors and put them “in a stronger position to support quality journalism”.
The merger certainly offers Fairfax a financial lifeline. But some worry that the new media law that made it possible will make both media ownership and opinion less diverse. At 87, and the last of Australia’s earlier dynasty moguls on the scene, Mr Murdoch already controls about two-thirds of newspaper circulation in the country’s big cities. Editorially, they are right of centre. Fairfax’s three papers, the Herald, the Age and the Australian Financial Review, mostly occupy the political centre ground. Channel Nine takes a more tabloid approach to news.
Hugh Marks, currently Nine Entertainment’s chief executive and expected to keep that role in the new company, has pledged that Nine will adopt a Fairfax charter that guarantees its journalists independence from commercial or management interference. But Paul Keating, a former Labor prime minister who helped introduce the rule limiting “cross-media” ownership that Mr Turnbull has abolished, dismisses this as worthless. As the laws stood, he says, they guaranteed “various streams and alternatives within which to think”. He reckons Nine’s majority stake in the merged company means it will set editorial policy. “The problem with this is that, in terms of news management, Channel Nine, for over half a century, has never other than displayed the opportunism and ethics of an alley cat.”
The Australian Competition and Consumer Commission, a regulator, will review the planned merger to see if it is “likely to substantially lessen competition in any market”. It says the “impact of technology on the media sector” will be central to its analysis. It is already conducting a separate inquiry into the effect of digital platforms, such as Facebook and Google, on competition and the supply of news. If it clears the Nine merger, as most think it will, the effects could be far-reaching. More mergers may follow. Tim Dwyer, of the University of Sydney, predicts a cut in diversity, and the loss of some regional papers that have “played a key civic journalism role”.