What can be done about the ‘crisis’ facing regional media?

Australian media executives disagree about almost everything but there was one issue in 2019 where there was no contest: regional media companies are in serious trouble.

Most news organisations have felt the corporate purse strings tighten this year after one of the worst periods in advertising spend many sales executives have seen in decades. A severe drought and raging bushfires across the country has exacerbated this even further in the bush.

Antony Catalano was one of the Prime shareholders who blocked a planned tie-up with Seven, though he agrees the sector is in "crisis".
Antony Catalano was one of the Prime shareholders who blocked a planned tie-up with Seven, though he agrees the sector is in “crisis”.Credit:Jesse Marlow

Yet regional and local media has been on its knees for years, cutting staff and reducing services, and now it is being kicked while it’s already down.

Since 2009 there has been about a 15 per cent decline in local and regional mastheads, or about 106 closures, the Australian Competition and Consumer Commission found in its final report into the impact of tech giants Facebook and Google on news organisations.


The hollowing out of the regional newsrooms should be a concern for everyone regardless of whether they live in the city or in the bush. The Newcastle Herald, one of the biggest of the regional city papers, has been the powerhouse behind multiple major investigations including a 2013 Gold Walkley-winning series on child sexual abuse in the Catholic Church by Joanne McCarthy. This reporting helped prompt a NSW inquiry and a royal commission into the issue and is one example of the type of journalism that benefits us all.

The competition watchdog has warned the trend of local and regional newspaper closures is “likely to continue”, adding it would represent a significant loss of public interest journalism that would “seriously undermine” the accountability of local government and public institutions.

“Recent international research has demonstrated that declines in local media coverage directly contribute to less efficient administration of local government, less active civic engagement and reduced competition for local government office,” the ACCC found.

There is a widening gap between people living in the bush and in the cities and 21 local government areas are now without a newspaper.

News Corp closed two regional Quest titles in Queensland this year, and has looked at selling its regional newspaper arm. Nine Entertainment Co sold regional newspaper division Australian Community Media to Antony Catalano in mid-2019, who has since described the sector as being in a “crisis”.

However, the biggest shock for many in the industry came when Bermuda-based billionaire Bruce Gordon-backed WIN TV slashed multiple NSW and Queensland newsrooms in June citing financial pressures making it difficult to justify keeping reporters and production staff in these areas.

“It must be really tough if he has allowed that to happen,” one media executive said in the hour before the news was publicly revealed, after initially expressing disbelief that Gordon was making such significant cutbacks.

The current sufferings of regional media is a classic case of market failure. But there is no easy answer about what intervention, if any, will be able to fix the problem.

Google, grants and government

Most of media in 2019 was focused on how the competition watchdog, and then the government, would act on the issues of the digital behemoths and their dominance in digital advertising.

One of the recommendations the government has agreed to is for a targeted grants program, particularly for local government and courts, totalling about $50 million a year.

While grants are a good first step they are unlikely to cut it in the long-term as they do not provide certainty for media organisations who would be required to rely on handouts.

One of the suggestions put up for consideration by the regional businesses themselves, who have lobbied Canberra exhaustively on the issue for the last 18 months, has been a change in media ownership laws. Several media executives have floated the idea of a combination of two of the rural broadcasters, such as WIN, Prime or Southern Cross Austereo, and potentially newspaper companies like ACM, to create a regional news powerhouse.

Prime Media Group chief executive Ian Audsley, alongside outgoing chairman John Hartigan, have spoken extensively about the difficulties in funding news bulletins at a time when advertising is heading online and audiences are streaming content and have pushed hard for this policy change.

The crux of the argument is that scale matters more than ever and smaller players do not have the resources to attract advertisers or audiences who head online to global behemoths. The push for greater scale was one of the reasons given by Nine, owner of this masthead, for its decision to takeover Fairfax Media in 2018.

Scale was also one of the reasons Prime attempted to merge with Seven this year, in a deal that was ultimately blocked by shareholders Catalano and Gordon, and will continue to try securing a deal with the metropolitan broadcaster.

But could changing the ownership laws actually save these businesses?

It would almost certainly buy them some time. Tethering struggling companies together can slow a rapid decline in revenue, and allow cost-cutting, but there hasn’t yet been a clear case that a bigger regional company would be able to actually reverse the ongoing declines.

The changes are a fraught issue as Australian media is already among the most concentrated in the world in terms of ownership, though this concern pales next to the risk of losing a media organisation altogether.

Regardless, Communications Minister Paul Fletcher seems to have little appetite to change these laws at least in the short-term.

Another option could be increasing the role of the public broadcasters in the rural areas. But the ABC, while doing an admirable job in the regions, does not have the resources to fill the gaps that will undoubtedly be left behind. There is also not a huge desire politically to increase the ABC’s $1 billion-a-year funding, particularly after freezing the broadcaster’s budget.

Outside deals that are currently allowed under the regulatory framework, such as the failed Seven-Prime approach, the alternative options seem scant.

Former Domain Group chief executive Catalano has touted a major digital overhaul and has dabbled with the idea of a regional real estate service involving other media companies. It will be interesting to see how his innovative ideas play out and whether these levers are the right ones to pull. The relatively small population in the regions can make paywalls hard to pull off and there’s no certainty that regional Australians are willing or able to afford subscription costs.

Ultimately, there isn’t a silver bullet answer to this problem. But there are pretty good indications of what might happen if brave and forward-thinking choices are not made at both a business level and at a policy level.

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Source: Thanks smh.com