In the Australian Financial Review today, Tony Boyd takes a ‘look’ at the performance of Nine Media over News Corp It includes burns like:
Shock, horror: Nine beats Murdoch at his own game
First, the results confirm that Murdoch’s newspapers in Australia are losing the bitter and long-running competitive fight with the mastheads created by John Fairfax & Sons.
Now, questions must be asked about the strategic and operational moves by News Corp Australia’s managers who have overseen successive years of poor financial performance.
They appear to have squandered News Corp Australia’s dominant position by failing to transition fast enough to a digital and data-driven business model.
It is in this area that Nine’s publishing arm, which includes The Sydney Morning Herald, The Age and The Australian Financial Review, stands head and shoulders above Murdoch’s publishing assets, which include The Australian and tabloids in every major city except Perth.
On the readership front, Nine’s publications are showing News Corp’s publications their heels.
Beaten at his own game
When it comes to earnings, Nine appears to be comprehensively beating Murdoch at the newspaper game. That’s got to be galling for a man who mastered the art of newspapers at the age of 23 at a small afternoon tabloid in Adelaide.
In 2021, Nine’s publishing arm had earnings before interest, tax, depreciation and amortisation (EBITDA) of $117 million, up 28 per cent on the prior year. This was on revenue of $504.5 million.
The News Media arm of News Corp had EBITDA of $US52 million ($72 million), which was about the same as the previous year. This was on revenue of $US2.2 billion.
News Corp insiders will argue that the performance of the Australian publishing business cannot be fairly compared with Nine’s because News loads some international costs on to the local business.
News Corp’s snail’s pace approach to cost-cutting in editorial, which includes another round of redundancies this month, is in stark contrast to the hiring in Nine’s publishing business.
News Corp’s digital strategy appears to be repeating a decision that was made by Nine some years ago and reversed because of its damage to masthead brands.
To save costs, News Corp is centralising its news-gathering across all its tabloid mastheads, except for its political coverage. This goes against the fundamental principle that each city in Australia is different and deserves its own unique coverage.
Fairfax, before it was taken over by Nine, merged the business reporting newsrooms of the Financial Review, SMH and Age. This was rapidly unwound after a more sensible analysis of the commercial implications.
In the context of retail newsagency businesses, newspapers play only a small role in our businesses. Bottom line wise, they are almost irrelevant. Foot traffic wise, they count for something, but not that much. Their key value recently has been tom provide products that bestow upon us essential status, and that is worth something.