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Is the future of news dependent on rich oligarchs?

By John B
June  29th 2012


In the wake of a punch to the face from phone-hacking, and a kick to the balls from shrinking print revenues, News Corporation is contemplating splitting its TV assets from its print ones.

The plan would be to remove the newspaper drag from the share price, and hopefully bypass some of the regulatory fallout from News International’s behaviour. An obvious problem here is that Bad News would be, well, bad news.

Analysts at Nomura have worked out that future profit declines will only be in the region of 5% a year – and that the global newspaper division (including digital) revenues will show slight overall growth. To me, that sounds optimistic.

2012 is going to be particularly awful for the newspaper division because it’s the financial year after the cash cow of the News of the World was killed, sure. Nonetheless, looking atFairfax’s position, the Guardian’s position, News Limited’s announced cuts in Australia, the Times and Australian’s massive losses, and the ongoing march of often free, often superior (albeit seldom both) online news sources, growing sales even at the rate of inflation seems like a pipedream.

Supposedly, the WSJ’s finances are in a better state than most of the other titles, because people actually pay for business information online (*). The four remaining sensational big city tabloids in the group – the UK Sun, New York Post (*), Sydney Daily Telegraph and Melbourne Herald Sun – likely still make money, since they were never reliant on classified advertising. But the Times and the Australian are reported to lose vast sums annually,despite the imposition on both of draconian paywalls which very few people have taken up, and which mean that they form no part of the online conversation.

Rupert Murdoch is 81, and his children show absolutely no interest in taking over the print business. And Bad News would be a publicly traded company with shareholder obligations.

When you’re a vehicle for an oligarch to promote his corporate interests to politicians, in the way Mr Murdoch has used his papers for the last 50 years, bunging tens of millions of dollars a year into a respectable-opinion-leading project like the Australian or the Times can get you results far in excess of your investment: tax reliefs, exemptions from competition laws, broadcasting licenses, etc.

But once you break the link with the corporation that benefits from the regulatory corruption, lose the oligarch to retirement/senility/Old Father Time, and lose the ability to shape national conversation by excluding your pieces from most modern forms of sharing and discussion, then really, what’s the point?

So the only way for the Times and the Australian to survive is to be sold to some kind of oligarch who’d benefit from their advocacy. In London, you can barely throw a stick and not hit some overseas billionaire or other, so that should be easy enough. It’s the same in Australia.

But while that might be great news for otherwise unemployable right-wing pundits, it’s not going to do wonders for the public debate, even compared to the status quo under Rupert…

(*) UPDATE:  According to Michael Wolff, the WSJ and the NY Post are also money pits. In which case, the only money in the News Corp News operation is coming from the Sun, the Aussie city tabloids, and the rapidly diminishing provincial Aussie local press.

Originally published by Liberal Conspiracy

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