News Corp boss pushes media reform forward arguing consensus is not ‘in media lexicon’



CEO of News Corp Julian Clarke has pushed the government to move ahead with media reform, arguing consensus is not achievable between media outlets.

“The competitive landscape is changing before our very eyes, to an extent that has not occurred before and obviously a government, which is always trying to balance how much political equity it wants to spend in trying to rearrange media laws, breach laws and media ownership laws, is struggling with this very issue,” Clarke told the Westpac Lander & Rogers Economic Breakfast held at the Westin Hotel in Sydney this morning..

“Of course, the concept of consensus between media players is not something that appears at all in our lexicon at all, we don’t believe in consensus, We have a very different view about the way we line up competitively.

Communications Minister Malcolm Turnbull has previously said the government will not pursue changes to the much-debated media ownership rules until “more consensus is achieved” between executives from the major companies.

Clarke also highlighted how the media industry is changing as companies shift away from more traditional products in favour of digital. He described the ‘digital disruption’ as “like dropping a rock in what has been historically a very calm and organised pool”, suggesting the digital age has seen audiences and advertising revenues dispersed and arguing Rupert Murdoch was one of the first in the western world to realise the need to move to a subscription-based model.

He said: “It’s pretty well accepted that the publishing business has been hit harder and earlier by this digital disruption than any other industry. What’s happened is it’s been a bit like dropping a rock in what has been historically a very calm and organised pool and the reaction of dropping that rock from a great height is something to remark on. It’s had two effects actually, it’s had the effect of audiences being dispersed completely and of course advertising revenues being dispersed.

“The leading advertising agency here in Australia, media agency – and keep in mind that advertising spend in Australia is about $14 billion a year so if you’re talking about the leading advertising agency you’re talking about many many millions of dollars – are the first to tell you that 40 per cent of their billings are being placed in media that did not exist five years ago. It gives you some idea of the sort of disruptions that have been going on in our industry.”

Clarke continued to suggest organisations such as News Corp have had the time to respond to the digital trend more “strategically”.

“Our view on life is, actually and there’s some irony in this, is that the technology in fact is not the problem at all, it’s in fact part of the solution,” he said.

“The real issue for us have been the business models that go with it. So one of the questions that I’ve been wrestling with over recent years is how do you manage the displacement from a printed newspaper where a person was prepared to spend up to $2 a day buying the newspaper, what’s the gross profit generated from that sale versus the gross profit that you can determine from a digital subscription which of course is priced much lower.”

Clarke argued that the gross profit from a digital subscription is now just as high as it is in a physical newspaper, once remove large costs associated with the newspaper production.

“In our business we have such a fixed cost basis of printing operations all around Australia, so there’s a huge fixed cost component in the way we do business. The important thing from our point of view is that 60 per cent of our total costs is associated with printing a newspaper,” he said.

“Here you have an opportunity to create a business around a subscription model where you have eliminated 60 per cent of your costs, and therefore what is quite clear to me now, and to our organisation, is that the gross profit return in a digital sale is just as high as it is in a physical newspaper.”

Clarke credited Rupert Murdoch with identifying the need to move to a subscription model, with the future of news publishing lying in apps.

“The subscription model, Rupert was the first person certainly in the western world to determine that things had to change, we had to get to a subscription model that people were prepared to pay,” he said.

“What we do know is that the free model that goes with those websites had to change and it’s been a phase change. What we have done is introduce pay walls which require someone who have used the website free to a certain level to subscribe. The latest development has been the newspaper apps. They’re a  terrific development and a statement from our industry about where the future lies.”

Miranda Ward 


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