Media Watch is questioning the state of the media industry as two of Australia's largest media companies, Ten and Fairfax, face an uncertain future.
Zoning in on the job cuts at Fairfax, which sees 125 journalist positions slashed from the Sydney Morning Herald and The Age, Media Watch host Paul Barry said the cuts reflect a bigger trend of cost reduction in the media industry.
“Savage as the cuts may be, this is a crisis that besets the industry,” Barry said on last night’s program that aired on the ABC.
“Fairfax’s biggest rival News Corp is also cutting staff to save $40 million although with much less publicity or protest.
“As former Sydney Morning Herald editor Eric Beecher warned Media Watch viewers last year, the big city news sites are all facing potential disaster.”
Barry also referenced Ten as an example of a media industry in crisis, as it continues to shed viewers, advertising revenue and its market value tanks.
Last week Barry said Ten was "operating at the mercy of its bank".
Despite significant cuts at the two biggest newspapers in Australia, the problem isn’t a lack of audience. In fact, both News Corp and Fairfax’s audience continue to grow.
“Remarkably, Fairfax’s big city papers are still profitable. But revenue is falling at around 10% a year. Because print ads are still declining and digital ads can’t fill the gap since they bring one 10th or maybe even one 100th of the revenue per ad,” Barry said.
While traditional publishers are "bloodletting" money and staff, Google and Facebook are cleaning up.
AdNews appeared on last night's Mediawatch
In 2015, Google and Facebook increased Australian revenues by $1 billion, while local news sites lost $700 million. Last week Facebook announced its ad revenue worldwide grew another 51% last year.
Referencing the criticism of CEO Greg Hywood, former Fairfax journalist Michael West said it's Hywood’s incentive to drive cuts to ensure he picks up his bonus.
“You've got the journalists and you've got management and their situations are entirely at loggerheads because management want the share price to go up so their share options rise and they become more wealthy,” West said.
In an independent report by West, it was revealed Hywood, corporate counsel Gail Hambly and CFO David Housego have between them, been awarded 48 million share options in the last three years, worth around $14million. And as Fairfax’s share price rises, more millions come their way.
Maserati-driving Hywood recently cashed in some of his for $5.4 million and picked up a bonus of $2.5m which could employ 16 journalists for a year
So what does the future hold?
With an offer on the table from TPG Capital, a takeover bid could help keep Domain and the big city mastheads together, while cutting regional papers and radio stations adrift.
“Deal or no deal, the job cuts will go ahead. And the problem will still remain. After 25 years of the internet, no one has yet found a way to make news pay like it used to,” Barry said.
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