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GUEST OBSERVATION
Over the past decade the profits of 160-odd regional and rural publications that make up the former Fairfax business division known as Australian Community Media (ACM) have <a href="https://thenewdaily.com.au/money/finance-news/2018/07/26/regional-newspapers-risk-nine-takeover-fairfax/" target="_blank">fallen steeply</a>.
In 2012 the division made a A$169 million profit. In 2018 it was A$67.5 million.
Nine Entertainment Co acquired the division with its $3 billion takeover of Fairfax Media last year. It has been keen to get rid of it <a href="https://www.smh.com.au/business/companies/nine-boss-flags-divestments-in-matter-of-months-20181209-p50l5b" target="_blank">ever since</a>.
There are grounds for some optimism about the long-anticipated <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2019-04-30/nine-sells-fairfax-community-newspapers-to-the-cat/11058066" target="_blank">sale</a>. It may signal better fortunes for regional publishing. But any optimism must be tempered by ongoing concerns about the viability of the local news business model.
What’s in the deal?
ACM’s new owner is a 50:50 partnership between real estate advertising mogul Antony Catalano and Thorney Investment Group. They are paying Nine A$125 million for the 160-odd mastheads and 130 associated websites. The deal involves Nine getting $10 million of advertising space, and content and printing sharing arrangements for a period of time.
Thorney Investment Group has established itself over the past 25 yeas as one of the most profitable investors in Australian property and resources. Its foray into local news may appear somewhat peripheral to its general investment profile, despite an ongoing investment in Domain, Fairfax’s real estate brand, which was listed as a separate entity on the <a href="https://www.asx.com.au/asx/share-price-research/company/DHG/details" target="_blank">Australian Stock Exchange</a> in 2017.
Catalano, on the other hand, has a long and colourful history with Fairfax’s real estate classifieds business. He is expected to chair the new company.
A one-time property editor at The Age, he was made redundant in 2008 and went on to found, with the backing of major real estate brokers, the free property magazine The Weekly Review.
The magazine took off, winning business away from The Age’s real estate pages. In 2011 Fairfax bought half of Catalano’s Metro Media Publishing business <a href="https://www.urban.com.au/news/14874-fairfax-pays-35-million-for-half-of-the-weekly-review" target="_blank">for A$35 million</a>. It bought the other half in 2015 (for <a href="https://www.domain.com.au/group/press_release/fairfax-acquires-100-interest-mmp/" target="_blank">A$72 million</a>). It then merged the business with Domain, putting Catalano at the helm.
He left his role with Domain in January last year, just two months <a href="https://mumbrella.com.au/antony-catalano-buys-nines-regional-newspapers-576941" target="_blank">after its successful listing</a> on the Australian Stock Exchange. Reportedly his resignation came amid complaints of a <a href="https://www.afr.com/business/media-and-marketing/antony-catalano-the-fall-of-a-party-boy-20180207-h0v13z">party-boy culture</a> in the Domain workplace.
Catalano’s successful bid for Domain is a particular coup. He <a href="https://mumbrella.com.au/former-domain-ceo-antony-catalano-makes-play-for-fairfax-media-552799" target="_blank">attempted to thwart Nine’s takeover bid</a> of Fairfax at the 11th hour by proposing to buy 19.9% of Fairfax shares.
Bidding against him and Thorney were private equity giants Anchorage Capital Partners and Allegro Funds. Seven West’s regional TV affiliate, Prime Media Group, and News Corp were also rumoured to have been interested.
Changing priorities
A few months ago Crikey labelled ACM’s impending sale a “<a href="https://www.crikey.com.au/2019/02/28/nine-regional-papers-community/" target="_blank">blueprint for disaster</a>” regardless of who won the bid, describing closures and consolidation of some local papers as “almost certain”.
Catalano, on the other hand, has talked up the potential of the larger daily regional mastheads. These include The Canberra Times, The Newcastle Herald, The Border Mail (based in Albury), The Illawarra Mercury (in Wollongong), The Ballarat Courier, The Examiner (in Launceston), and the Bendigo Advertiser. Between them, these papers reach about half ACM’s total audience of <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/radio/programs/am/how-will-antony-catalano-revive-regional-newspapers/11061236" target="_blank">up to eight million</a> people.
Catalano says he is looking to invest “<a href="https://www.illawarramercury.com.au/story/6098933/new-owner-vows-to-beef-up-mercury-after-buying-regional-newspaper-group-from-nine/" target="_blank">aggressively</a>” in these areas.
Without offering much detail, <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/radio/programs/am/how-will-antony-catalano-revive-regional-newspapers/11061236" target="_blank">he has intimated</a> there were ways to monetise ACM’s audience that didn’t happen under Fairfax, due to it having “bigger priorities in the face of very significant structural decline in the newspaper business”.
“Under us, it’s our only priority,” he said.
However, when pushed on whether there would be efficiencies, including redundancies and closures, he conceded there was likely to be some “consolidation” <a href="https://www.illawarramercury.com.au/story/6098933/new-owner-vows-to-beef-up-mercury-after-buying-regional-newspaper-group-from-nine/?src=rss&amp;utm_email=b9ee389143&amp;utm_source=Illawarra+Mercury&amp;utm_campaign=5ada9e8bb5-NEWSLETTER_EDITORS_PICK_DAILY&amp;utm_medium=email&amp;utm_term=0_63532331c1-5ada9e8bb5-65999933" target="_blank">in print operations</a>.
Such consolidation might echo Fairfax’s 2017 <a href="https://mumbrella.com.au/fairfax-to-shut-six-community-newspapers-11-jobs-to-go-482887" target="_blank">merger of six Western Sydney suburban newspapers</a> into a single North West Magazine.
The state of local journalism
It would be naive to be overly hopeful about a new dawn for regional newspapers given the broader context of the Australian news industry.
According to the journalists’ union, the Media Entertainment and Arts Alliance, at least <a href="https://www.meaa.org/download/meaa-submission-to-public-interest-journalism-inquiry-170714/" target="_blank">3,000 journalism jobs</a> have been lost since mass redundancies began about seven years ago. Cutbacks, the union says, have seen “rural and regional audiences lose their "voice” and their access to local information".
At the regional daily with the largest readership, The Newcastle Herald, the editorial staff has been cut from about 100 to less than 24.
Workloads have escalated in consequence. Veteran journalist and union rep <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/mediawatch/episodes/newcastle-herald-cuts-hit-hard/9973134" target="_blank">Ian Kirkwood told ABC’s Media Watch</a> that journalists, perhaps once expected to produce one or two news stories a day, were now required to produce six, including headlines and photographs.
The New Beats study, a <a href="http://www.newbeatsblog.com/" target="_blank">comprehensive longitudinal study</a> of redundancies in Australian journalism since 2012, calculates the total revenue of Australian newspapers <a href="https://ses.library.usyd.edu.au/bitstream/2123/19938/2/New%20Beats%20Submission%20to%202018%20Future%20of%20Work%20Inquiry.pdf">fell</a> from A$6.2 billion in 2007-08 to A$3 billion in 2016-17.
The New Beats researchers say the “market failure of regional journalism” is that local advertising is simply insufficient to make a local newspaper financially viable. How Catalano is going to change that, given his stated <a href="https://mainstreetwiththeabcspeterryan.blogspot.com/2019/05/antony-catalano-dismisses-paywalls-as" target="_blank">opposition to paywalls</a>, is an open question.
But given the unrelenting bad news faced by newspaper newsrooms over the past decade, it’s no surprise journalists are hoping for the best. The <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2019-04-30/nine-sells-fairfax-community-newspapers-to-the-cat/11058066" target="_blank">ABC reports</a> that sources within the Canberra Times regard the deal as the best of available options. The Media Entertainment and Arts Alliance has expressed cautious optimism, <a href="https://www.illawarramercury.com.au/story/6098933/new-owner-vows-to-beef-up-mercury-after-buying-regional-newspaper-group-from-nine/" target="_blank">tempered by concerns</a> investment in the larger regional mastheads will come at the expense of smaller publications.
Only time will tell whether it is the hopes or the fears that are the most prophetic.<img src="https://counter.theconversation.com/content/116359/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;">
Steinar Ellingsen, Senior Lecturer in Journalism, Communication and Media, University of Wollongong
This article is republished from <a href="http://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/after-a-dark-decade-for-australias-regional-newspapers-a-hopeful-light-flickers-116359" target="_blank">original article</a>.
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j.ballantyne1990-6AQqhLzZaK

After a dark decade for Australia’s regional newspapers, a hopeful light flickers

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GUEST OBSERVATION
The Newcastle Herald has won eight Walkley awards for journalistic excellence over the past seven years. This includes a Gold Walkley for the groundbreaking reportage that led to Australia’s royal commission into institutional responses to child sex abuse. It has told stories of national and international importance.
But this local newspaper, serving the NSW regional city of Newcastle and the surrounding Hunter region, is not profitable enough for Nine Entertainment Co, which acquired it in the takeover of Fairfax Media last year.
Nine has offloaded it and the rest of Fairfax’s Australian Community Media (ACM) division, comprising about 160 regional news titles, 130 community-based news websites and 650 editorial staff.
But this is the best news the staff of the Newcastle Herald have had for a long time. There’s a cautious optimism among both staff and readers that the newspaper (which began as the Newcastle Chronicle and Hunter River District News in 1858) could undergo – like the city itself – revitalisation.
Cautious optimism
<img src="https://images.theconversation.com/files/272289/original/file-20190502-103063-pwor6g.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=237&amp;fit=clip" alt="">
The Newcastle Herald, Saturday December 8, 2018. The Newcastle Herald
The new owner is a consortium of former Fairfax real estate supremo Antony Catalano and the Thorney Investment Group, a company that “concentrates on producing <a href="https://www.thorneyopportunities.com.au/news-announcements" target="_blank">absolute returns for shareholders</a> over the medium to long term”.
Catalano has said he plans to “grow the business, not shrink it to greatness”. He has assured Herald staff that he is about “hiring, not firing”. That’s comforting following cutbacks and two brutal rounds of redundancies in the past seven years.
Yet these inspiring assurances may prove hard to keep.
Newspapers – and journalism more generally – still face structural headwinds. Neither platform prophets nor philanthropists have found a dead-cert solution to the dried-up rivers of gold once richly fed by classified and display advertising streams.
The ACM division is still profitable, but its revenue in the first half of the 2019 financial year was down 8% on the previous year (A$194.1 million, against A$212.1 million), with advertising revenue down 13% (to A$121.2 million).
So optimism about the benevolence of the Herald’s new owner must be cautious indeed.
Benefiting the community
<img src="https://images.theconversation.com/files/272273/original/file-20190502-103049-1hdomjp.png?ixlib=rb-1.1.0&amp;rect=27%2C22%2C1496%2C2129&amp;q=45&amp;auto=format&amp;w=237&amp;fit=clip" alt="" width="235" height="334">
The Newcastle Herald, Monday, October 22, 2018. The Newcastle Herald
But optimistic we must be. Research provides empirical evidence to support just how important a local newspaper is to a local community.
According to a US study published in the <a href="https://www.cjr.org/united_states_project/public-finance-local-news.php" target="_blank">Columbia Journalism Review</a> in 2018, local government becomes more wasteful without a local newspaper.
The researchers compared local government costs in counties where a newspaper had closed with demographically comparable counties still with a newspaper. It’s evidence media scrutiny is essential to governments being kept accountable.
Local media coverage is also associated with better informed voters and higher voter turnouts, the study’s authors suggest.
Good local journalism sees, knows and cares about the local community. It reflects that community’s history, present and where its future might lie.
Setting the agenda
This is certainly the case with the Newcastle Herald.
Newcastle is the nation’s second-biggest non-capital city, with a population of about 325,000; the population of the Greater Hunter Region is about 625,000. The Newcastle Herald is the only newspaper serving the region six days a week.
As such the newspaper plays a significant role in setting the news agenda for other local media.
Journalists and production staff at remaining commercial news outlets in Newcastle all operate – in the words of one senior newsroom contact – on the smell of an oily rag. Repeated savage cuts and increased networking have played their part in reducing commercial radio bulletins to rip-and-reads of the day’s Herald. Even the ABC has decreased the number of local radio bulletins it provides.
The Newcastle Herald clearly influences the city’s only local commercial television news bulletin (from NBN Television, owned by Nine Entertainment).
Local, original stories
The Herald has maintained its relevance largely because of the local, original stories it has pursued. It has done this despite its own newsroom being slashed, with a third of the journalists it had seven years ago.
Its much admired reporting on child sexual abuse (the Catholic diocese of Newcastle-Maitland was a hotspot of crimes and cover-ups) is just one example.
The paper has also led the way with coverage of the <a href="https://www.theherald.com.au/story/5309813/a-catastrophe-for-some-women-pelvic-mesh-report/" target="_blank">medical traumas of local women</a> that propelled a <a href="https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Community_Affairs/MeshImplants" target="_blank">Senate inquiry</a> into pelvic mesh devices in 2017.
It also exposed the story of Cabbage Tree Road, a cluster of 50 cancer cases near a drain carrying toxic chemicals from the Williamtown RAAF base. The Herald’s reporting came from journalists knocking on the door of every home on the road. (The NSW Health Department <a href="https://www.theherald.com.au/stry/5229588/outcry-as-study-dismisses-williamtowns-cancer-cluster-fears/?cs=6099" target="_blank">has dismissed</a> there being a link.)
Investigative journalism is expensive to produce. No other local commercial outlet in the area has the resources to do public-interest and accountability journalism. They all rely on the Newcastle Herald to set the agenda.
For the good of Newcastle and dozens of other local regional and rural communities, we can only hope the Herald’s new owner can do better than its last.<img src="https://counter.theconversation.com/content/116276/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;">
Paul Scott, Lecturer, School of Creative Industries, Faculty of Education and Arts, University of Newcastle
This article is republished from <a href="http://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/what-a-local-newspaper-means-to-a-regional-city-like-newcastle-116276" target="_blank">original article</a>.
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