Australian Community Media (ACM) has attracted a list of prospective buyers that do not bode well for the group’s 170 regional and community papers.
Prime Media Group (Seven West’s regional TV affiliate), a series of private equity firms and former Domain executive Antony Catalano are all reportedly in the race, following Nine CEO Hugh Marks’ confirmation of the impending sale in an email sent to staff last week. The remarks were released alongside the company’s first half-yearly results since last year’s historic merger with Fairfax Media.
“We are talking to interested parties who see the future potential of each [asset], who are prepared to invest, to realise the potential in a way that Nine could not, due to limitations as a public company,” Marks wrote.
Closures around the corner?
Senior lecturer in journalism at the University of Adelaide Dr Kathryn Bowd says that, regardless of who buys ACM, the closure and consolidation of some local newspapers is almost certain.
“Inevitably in any big group there are going to be newspapers that aren’t doing particularly well financially and aren’t particularly strong performers. It’s a natural progression to look for the low hanging fruit,” Bowd tells Crikey.
A spokesperson for Nine declined to comment on whether the sale was likely to result in closures or consolidation. The Country Press Association also declined to speculate on the consequences of the sale.
Private equity ownership of local media might be a new concept in Australia, but it has been increasingly commonplace in the US over the last 10 years to mixed results. The firms tend to implement aggressive cost-cutting measures to turn the business around, regardless of the resources required in the unprofitable reportage of hyper-local news.
In 2010, US company Digital First (a chain encompassing more than 90 local newspapers) was bought out by hedge fund Alden Global Capital. The extent of the hedge fund’s buy-and-purge cost-cutting measures was so devastating in some areas that the editorial board of The Denver Post asked to be sold. Their 250-employee newsroom had been stripped to 75.
Senior lecturer in journalism at Deakin University Dr Kristy Hess says that local news can’t afford any more draining of resources. “They are operating with very thin staff ratios and the most important aspect relevant to their survival is retaining local knowledge and knowing the needs and wants of the communities they serve. This does not suit a massification model,” she tells Crikey.
Allegro Funds, Anchorage Capital and Platinum Equity have all expressed interest in ACM. The first two are Australian operations specialising in struggling businesses; the latter is a Beverly Hills-based firm focused on large-scale leveraged buyouts.
“I would totally embrace an Australian private equity firm that respects what is required and the importance of local media and was prepared to invest in the sector,” Hess says.
Presently, it is difficult to see a private equity firm with a fiduciary obligation to limited partners placing value in maintaining local resources and local knowledge. Ideally, Hess and Bowd agree that local ownership with strong links to the community they serve is ideal for local newspapers’ civic function.
“Whether it’s sustainable in the current environment is a different question,” Bowd says.
How this affects communities
Significant and varied research from the US shows that the closure and consolidation of local newspapers can have a ruinous effect on the local communities they serve. Civic and political engagement, public finance and local accountability have all seen dramatic declines in the wake of local newspaper closures across hundreds of US municipalities since 1995.
Bowd says there has been a delayed mirror of the US market because of market scaling; the US has far more newspapers, with far more tiers of population to cater to. “For a long time, regional news in Australia really held their own pretty well. They had a strong base in local advertising, a lot of community support and they managed to make money at a time when money was being shed left, right and centre from the major metro publications. That’s changed and I think a lot of publications are struggling.”
If a small circulation town is robbed of its local rag, what turns up in its place? According to Bowd, hyper-local not-for-profit social media operations have increasingly filled the void left by weakened local papers in Australia. Bowd points to former bureau chief of The Australian, Carol Altmann, who set up The Terrier in Warrnambool to “speak up for the environment, social justice and transparency in government”, according to her website.
“It’s not the traditional model of local journalism because it has a really strong focus on advocacy, but nonetheless she’s a journalist who is doing the work of a journalist,” Bowd says.
Though these pages can hold local government to account and fulfill a civic or social function, Bowd says there are sustainability and journalistic issues with unchecked local advocacy. “In a lot of communities there are newspapers that have been there for 100 or more years. A Facebook page, no matter how enthusiastic the local community, is probably not going to be financially sustainable in the same way,” Bowd says.
“Where we’re seeing a shift away from traditional journalists, we are not necessarily going to see all of the sides of a particular issue canvassed.”
The ACM sale will propel media consolidation and potential closures of local newspapers in Australia — already one of the world’s most concentrated media markets. As financiers don’t have an obligation to provide local journalism to small-circulation towns, the worst could be to come for regional Australia.
What would you like to see happen to Nine’s regional papers? Send your thoughts to boss@crikey.com.au.
The problem with academics like Dr Kathryn Bowd is that they are just that: academics.
Instead of pontificating about the theoretical universe she appears to inhabit, I think that Dr Bowd should get out more & she would discover just how sad & bad regional media has become: bereft of any journalistic talent; all focused on appearance over substance; so under-resourced that it hasn’t time to research anything & totally beholden to the spin machines of local business, influence peddlers such as chambers of commerce, real estate agents & developers & most importantly, the corrupt spivs & would-be’s-if-they-could-be’s in local government.
This noisy but empty space is not just the real world in which regional newspapers exist but also local ABC radio, which in many regions has become nothing better than a morning kids show.
It’s that reality that has given rise to wonderful on-line success stories like Eurobodalla Shire’s “The Beagle”, a one man band that has enormous community support (circulation over 30,000) because he is fearless in calling-out the bullshit of local politicians & unafraid of taking-on issues of real concern to the community (as opposed to the views of city hall).
And to further glorify the Beagle’s owner & editor, he welcomes & publishes contributions from anyone who wants to take the trouble to express a viewpoint.
So, while Dr Bowd wrings her hands & worries that the disappearance of regional newspapers would somehow diminish the quality of journalism on offer, I again suggest that she should get-out more & talk to the real people who are just over all the self-indulgent media bullshit.
Our local paper this week ran an editorial criticising the Premier & the Member for Bega for sledging a journalist in Newcastle for doing his job. Now I agree that the behaviour of Gladys & her knuckle-dragging accomplice was appalling, but I also think our local newspaper behaved appallingly for trying to use the incident to “virtue signal” its own self-importance when no-one can remember the last time it published anything of substance.
If our local rag folded tomorrow & ABC Radio moved to Nicaragua, no-one would even notice.
I don’t know where you live JR, but none of that applies to the Newcastle Herald.
For instance, without the assiduous investigative reporting of The Herald and its Walkley-award winning journalist Joanne McCarthy there would likely have been no Royal Commision into child abuse.
There remain other good journos who haven’t been sacked. They cover State politics better than the SMH IMO as well as issues of national sigificance – eg the recent Rocky Hill mine landmark environmental ruling.
Newcastle has the largest coal export port in the world. The Hunter will be a key player in the transitional economy. Currently the City is a hive of controversial development.
In spite of recent cutbacks, the Herald remains a relatively good paper. It will be catastrophic if they wreck it.
I am constantly amazed at the quality of the ECHO, in the northern river region of NSW, with slightly different editions for Lismore & Byron.
It manages to be both a source of excellent reportage on matters local with the nation’s best political commentator, the Sainted Mungo, quite brilliant if idiosyncratic columns of local doings, concerns & musings and, I’m told – not knowing one end of a football from the other, a good local sports section.
Plus local ads.
The common factor in this success is that delightful, relevant 5 letter L word.
I’m a small publisher in Orange NSW (www.orangecitylife.com.au)
Our publication is more a high quality tabloid glossy community newsletter type magazine, usually 56-64 page per week. It’s a free pick up and comes out once a week.
Around 80% of local homes would grab a copy each week. Circulation is 13,500 copies and hasn’t changed for a number of years.
The local Fairfax (Nine) daily has degenerated to 16 – 20 pages per weekday issue, sells for $1.80 and still carries roughly 25% of the space as house ads. Their Saturday edition is 4 – 8 pages more and sells for $2.
Their weekly free has been 8 pages per issue for months and months and it too still carries roughly 1 to 2 pages of house ads. They bulk it up with junk mail and their local 16 – 24 page Domain.
The big question why the two scenarios?
Simple!
Fairfax (Nine) has totally lost touch with their community and it appears they have given no regard to what locals might expect or want from their local newspaper. No matter what business you’re in, simply giving people what you want to give them and then expecting them to swallow it is never going to work well.
There are a number of models that I believe would work for a major owner but failing that, the best thing that could happen is to get ownership of local newspapers back into the hands of locals. One newspaper, locally owned with no interference or competition from the Fairfaxes of this world and you’d see the “heart” appear back in regional newspapers again.
It’s not rocket science but it does need people with more than “muppet” brains to work and solve the problem. The rivers of gold days are gone, so are the streams of silver days, what’s left is the trickle of bronze days and locals are best placed and not as greedy to be able to work with that.
Bob Holland