QUENTIN DEMPSTER. BuzzFeed out: So much for diversity in Australia’s media

Two years after Australia’s competition watchdog green lighted the biggest consolidation of media ownership here in more than 40 years, the withdrawal of online start-up BuzzFeed has exposed its misjudgment.

In 2018 BuzzFeed, which started here in 2014, was put up as a burgeoning media diversity justification for the historic approval the Australian Competition and Consumer Commission gave to the merger of Fairfax Media and Nine Entertainment.

ACCC chairman Rod Sims ruled:

While the merger between these two big-name media players (Nine and Fairfax) raised a number of extremely complex issues, and will likely reduce competition, we concluded that the proposed merger was not likely to substantially lessen competition in any market in breach of the Competition and Consumer Act. With the growth in online news … many other players, albeit smaller, now provide some degree of competitive constraint. These include, for example, The Guardian, The New Daily, BuzzFeed, Crikey and The Daily Mail.

The ACCC’s ‘competitive constraint’ justification was laughable then and tragic now as the Australian media industry bids farewell to BuzzFeed in the local news market.

At the time former prime minister Paul Keating attacked Mr Sims and the ACCC for having ‘relegated the Fairfax mastheads to the ethical dustbin of Channel Nine’.

While by 2020 all local media outlets have lifted their audiences through their coverage of the bushfires and COVID-19 national emergencies, nothing, it appeared, could save BuzzFeed as a local content creator.

A watchdog charged by its legislation with building competitive job-creating industries, and not allowing more powerful vested interests any unfair advantage, should reflect on what has happened.

Local market conditions, including COVID-19 lockdown impacts on ad spend, may well have changed since the ACCC waved through the Nine/Fairfax merger. But this merger is unfolding as the biggest anti-competitive consolidation since the scandalous 1987 Rupert Murdoch News Ltd. takeover of the Herald and Weekly Times. A less diverse media is not considered healthy in any functioning, robust democracy.

Also now in the balance is the future of Australian Associated Press, the syndicated local wire service bankrolled by big media companies, including News Corp. BuzzFeed was a subscriber to AAP, believed to pay up to $5000 a week for its service. AAP’s closure was announced for June 29 but staff redundancies were put on hold as the AAP board negotiated with potential new owners. The result of confidential due diligence and price negotiations with at least one potential buyer remains unknown, but with an announcement one way or the other, expected soon. News Corp has announced it will start a ‘breaking news’ subscriber service to partially offset the loss of AAP. If AAP survives it may be as a not-for-profit entity of no competitive threat to News or Nine. So much for competitive diversity.

 

With regional and community newspaper production suspended during COVID-19 and the still unresolved advertising marketplace battle between Google, Facebook and the paywalled news companies News Corp and Nine, it is widely acknowledged that Australia’s local media industry is in crisis.

Many regional and community print mastheads are unlikely to return and Australia’s metropolitan newspapers have been declared ‘terminal’ within a few years by former News Corp CEO Kim Williams, an expert analyst of the digital economy. The metro masthead names may survive as online brands, like The New York Times and The Washington Post, but such survival will depend on solid subscriber and advertising support.

This week Nine Entertainment chairman Peter Costello asserted that Google and Facebook should pay Australian media companies $600million a year through mandatory revenue sharing regulations now being formulated by the ACCC.

Under direction from Treasurer, Josh Frydenberg, and Communications Minister, Paul Fletcher, the ACCC has told media companies it will circulate a ‘concepts paper’ on May 19 seeking stakeholder feedback on its mandatory revenue sharing code. It will be seeking submissions by June 5. The Morrison government will urgently legislate the world’s first tech giant revenue sharing laws with penalties for non-compliance after July. The Anthony Albanese Opposition has indicated its bipartisan support. The ACCC is anticipating litigation from Google and Facebook all the way to the High Court to test Australia’s competition and copyright laws. The world’s media will be watching.

Mr Costello told Nine masthead The Australian Financial Review: ‘We think that Google and Facebook are driving advertising revenue of about $6billion in Australia and roughly 10 percent of that is as a result of news content.

‘So, if you apply those figures, Google and Facebook are taking about $600million of advertising revenue out … which otherwise could have, or should have, been going to the media’.

Mr Costello implied that with such massive revenues Google and Facebook would barely miss $600million. Mr Costello’s AFR also reported this week that Google Australia made $4.8billion in revenue in 2019 but transfer payments to its US parent clipped its gross profit to $823million and its tax bill to just $100million.

Google’s local tax arrangements are now an aggravating factor for all advertising-dependent Australian media companies struggling for solvency.

The future of Australia’s local media now lies with Rod ‘diversity’ Sims’ concepts paper.

This article was first posted on The New Daily on 16 May. Reprinted with permission of the author.

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Quentin Dempster, former chairman of the Walkley Foundation, is a contributing editor at The New Daily.

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5 Responses to QUENTIN DEMPSTER. BuzzFeed out: So much for diversity in Australia’s media

  1. Avatar Richard Ure says:

    Television killed the afternoon papers but there were no calls for revenue sharing as the newspaper interests owned the television stations. Morning television might be helping with the same for the remaining print media.

    Because of high barriers to entry, newspapers had comfortable monopolies for decades leading to complacency. In https://tinyurl.com/yaqjg62h Erich Beecher wrote in 2013 “I now realise I was seeing evidence for a prediction made a decade earlier by media savant Marshall McLuhan. “The classified ads (and stock-market quotations) are the bedrock of the press,” he observed. “Should an alternative source of easy access to such diverse daily information be found, the press will fold.”’ Perhaps he might have added the form guide and even sports reporting which rarely if ever carries advertising in its pages.

    But now print media are exposed to a much cheaper delivery system that could still have been financed by superior forms of (electronic) advertising if Fairfax, in particular, had had more foresight. It remains curious to me that the body charged with promoting competition is now charged with compensating for its effects.

  2. Avatar Gavin O'Brien says:

    Well written Quentin,
    We stopped buying the Canberra Times when it went silly a while back so now depend on the ABC and SBS for” real” news. This latest collapse is a clarion call for proper funding for both SBS and the ABC .The Commercial media is a joke! The Conversation is OK although I don’t like been “censored” by them and obviously the Pearls and Irritations which seems to be improving too. While Eureka Street concentrates more on religious and social issues I have been a subscriber to it for several decades. Can’t understand Rod Sims’s determination for the life of me.

  3. Avatar Paul Tocchini says:

    The Sydney Morning Herald was a leader in journalism for years. I have bought it for the last 50 years ,but no more. It is now sadly in the gutter with the Murdoch press . Last week I said enough; stories about the” Fantastic” Alan Jones and his successor Ben Fordham … who ? then a story about a rugby league player who broke the rules ,but is ” a good bloke” finally finished me of.The SMH now spends its time propping up Chanel 9’s content, and overlooking the real stories of the day. The fact that this merger was allowed beggars belief, now there is no newspaper in Sydney worthy of the name. I guess we will all be on line now.

  4. Avatar (Dr) John CARMODY says:

    While there is no doubt that ACCC ought to have been more circumspect in its consideration of the Nine Entertainment-Fairfax merger, it is arguably the case that without that television moneys, Fairfax might well have imploded. What would our “diversity” now be if that had happened?

    Quentin Dempster quotes ACCC as citing a list of on-linc media outlets as their justification for approval of that merger — and he’s right: it’s a line up of prats, set against a pod of media whales. Even so, “Buzzfeed” seems the most trivial of them and (significantly perhaps) he has provided no details of that group’s reach. It’s disappearance seems hardly consequential in the big-picture view. A speculated weekly contribution of “up to $5000: seems unlikely to make the difference between financial viability and failure for AAP.

    Overall, then, it seems that a stronger case needs to be made than simply citing the disappearance of the nugatory contribution of an American group (which has also withdrawn from Britain to “concentrate” on the dreary scene in the USA). Certainly, things are deeply troubling here; but regrettably this piece hardly makes case for their seriousness.

  5. Avatar Sam Lee says:

    ‘Different’ media players are all competing for dollars not points on a civic scoreboard. Other articles on P&I today want to solve the problems of funding of aged care and the funding of higher education with the same self-imposed blinkers. Neoliberalism by any other name would smell just as undemocratic.

    True competition in the media would require at least one (big) player for whom competing for dollars is not the core business, like our Medicare and pharmaceutical Buying scheme. We used to have true competition with Aunty (recently renamed the Global Times of Australia) now sheep-wolfed. Buzzfeed gone? Bzzzz……

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