Regional news hearing signals potential masthead closures

The House of Representatives Standing Committee on Communications and the Arts began its public hearings on the adequacy of regional news yesterday, 28 February, with both Australian Community Media (ACM) and Seven West Media’s (SWM) West Australian flagging potential masthead closures and job losses for regional newspapers without government intervention.

ACM, whose mastheads include The Canberra Times, Newcastle Herald and Bendigo Advertiser among others, managing director Tony Kendall said that although the News Media Bargaining Code (the Code) had been helpful to ACM’s revenue, it accounted for 5% of ACM’s total revenue.

“The News Media Bargaining Code brought Google and Facebook to the table,” said Kendall, “which they would not have been prior to that. We’ve negotiated terms with both of those parties, but it’s fair to say that regional players negotiated their terms after the metro players had done significant deals. So the Seven Group, the News Limited Group and the Nine Group had taken quite a significant chunk of the available monies that Google and Facebook were prepared to put in this. That said, we’re happy with the deal we’ve negotiated, but they represent only about 5% of our total revenue.”

ACM signed a letter of intent with Facebook in May 2021 pay for news published on its platform. Earlier that year, in February, it signed a deal with Google News Showcase for licence deals that would last at least three years.

On revenue, Kendall further stated that: “People look to Google and Facebook as the thing that really hurt us. And they certainly have, they’ve made it very cheap for some small businesses to reach audiences in regional markets. But more importantly, it’s the rise of Carsales and Seek and[.au] that have really decimated the classified revenues. And that was certainly happening pre-COVID.”

The ACM managing director said that advertising revenue had fallen 45% for ACM over the past five years, with advertising revenue down 15 to 17% behind the previous year this year.

“We had markets that were fully shut down for three months during COVID,” said Kendall. “Particularly in Canberra, Newcastle, Illawarra last year. So year-on-year comparison is too difficult at the moment, but it’s fair to say that by and large, what COVID  has done is also removed the habit from some advertisers. Our ad revenue numbers every week are in the red. Year-on-year and every week they’re in the red, certainly on the budgeted numbers.”

As a result of the revenue decline, Kendall highlighted the possibility of masthead closures and job losses: “From a budgeting point of view and if there is not material change in the support that we can get from government, then those titles and particularly some of our smaller titles will have to close. Jobs will be lost in those markets.

“More importantly… we’re not an organisation that sits around and talks about how we can close papers to become more profitable. We don’t want to close papers. We want to launch papers. Every time we do have to close a paper it grieves us because we know the community is going to lose a voice as well as us having to deal with the staffing implications of that.

“There was no question that, regardless of the pandemic, there is a good size part of our portfolio that, in areas such as Mandurah and Parkes and Horsham and Maitland and Cessnock, that we’ll have to have some tough decisions.”

Kendall also claimed a bias toward regional areas by metropolitan media buyers: “Newspapers have been sadly, depriortised by media agencies more broadly and… It’s very true that metropolitan media buyers have a bias against regional markets, but I also think they have a bias against newsprint.”

SWM’s West Australian Newspapers editor-in-chief Anthony De Ceglie mentioned his pride in his organisation’s regional coverage, including the training of junior reporters.

West Australian Newspaper editor-in-chief Anthony De Ceglie

However, De Ceglie said: “The sad reality is that these regional newspapers are far less profitable than they once were. And without assistance, we will have to raise cover prices, reduce the level of content provided and, eventually, and sadly, close mastheads.

“For context over the past five years, our regional newspaper annual revenue has declined 52% from $32 million to $15 million per annum as local and national advertisers have shifted revenue away from traditional media and into digital. During the same period our earnings have declined by 82%. Four of our 19 regional mastheads are now loss making. We expect that a further three mastheads will be loss-making in 2022. In summary, we forecast all of our regional mastheads will be loss-making from 2023 without significant cost reduction.”

SWM head of regulatory & government affairs Clare Gill said: “We’ve got to commend the government and the ACCC for their groundbreaking approach to the imbalanced bargaining power and addressing that. News journalism and media businesses have very valuable content and it attracts people to the digital platforms and this News Media Bargaining Code certainly addresses the imbalance there.

“But I also want to point to the 2017 reforms where, had it not been for changing the 75% reach role, Seven wouldn’t have been able to merge or take over Prime’s television assets, which we believe is a much more sustainable model having a national TV network and taking out some of the costs there but continuing to deliver local journalism. In fact, due to the trigger events that were put into the legislation 2017, there’ll be more journalism provided in local areas in WA, due to the merger of Prime and Seven.”

Seven began its merger with Prime at the end of last year, with the deal being completed on 1 January 2022. The legislation Gill is referring to is abolished a rule that disallowed commercial television broadcasting licensees from reaching over 75% of Australia’s population through its combined licensed area populations.

Gill continued: “I would want to say about the Code is that we have to be very careful about wrapping this up as a public policy, good for public interest journalism. This is a competition issue. This is a competition issue that we couldn’t negotiate with these platforms because of their strong market position in relation to a product of value.

“Our news content is a product of value and they were deriving value from that and we were unable to negotiate with them. Without actually having this piece of legislation, we weren’t able to negotiate with them. So I can only say if we, as Seven West Media, wouldn’t have been able to strike a deal, it only speaks volumes of how the struggle would be for smaller publishers.”

SWM finalised its agreements with Google and Facebook in May 2021, including a five-year agreement with Google and a three-year agreement with Facebook.

Newswire Australian Associated Press (AAP)’s CEO Lisa Davies, who was two weeks into the job, also spoke to the committee, along with general counsel & company secretary Emma Cowdroy.

On a question of the effectiveness of the Code, Cowdroy said: “We’re all subject to confidentiality agreements with the digital platforms and we have an arrangement with Google, not with Facebook. It is very difficult to know what other regional publications have received under the Code. We’re certainly not getting flooded with customers coming back as a result of having received money under the Code yet.”

AAP joined the Google News Showcase in October last year. In 2020, the AAP faced closure but was later saved through a sale to a consortium led by Nick Harrington and supported by former News Corp executive Peter Tonagh.

Google Australia has made a submission to the hearings, pointed to the reach of Google Search for Australian news publishers, the revenue generated from advertising for publishers, and the Digital News Academy. The Digital News Academy was launched with News Corp Australia to provide digital skills training and opportunities for young journalists in August 2021.  Google has also featured several regional publishers in its Google News Showcase.

Meta, Facebook’s new name, has offered to put in a submission to the committee and is awaiting the committee’s feedback on this request.

When asked for comment, Meta Australia and New Zealand director of public policy Mia Garlick said: “Commercial deals are just one of the ways that Meta provides support to publishers, and we’ve had ongoing discussions with publishers about the types of news content that can best deliver value for publishers and for Meta. Our commercial deals are based on a range of factors including the type of content developed, and reach and engagement. We’ll continue to engage with publishers to support them as they access new audiences on our platforms, benefit from our monetisation products, and other initiatives and investments. We have made a significant contribution to newsroom sustainability through our commercial deals and investments such as the Meta Australian News Fund. These substantial investments cover the vast majority of newsrooms producing public interest journalism in Australia.”

ABC, SBS, Free TV, WIN and ACMA are all set to speak to the committee today.

This article has been updated. Tony Kendall was previously referred to by his full name Anthony Kendall. 


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