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Rupert Murdoch's next move

Sep 16, 2020 • 15m 27s

Australia has one of the most concentrated media markets in the world, and that concentration could worsen as Rupert Murdoch’s News Corp launches a new service. Today, Mike Seccombe, on how the Australian Associated Press was nearly shut down, and now faces the prospect of being starved out.

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Rupert Murdoch's next move

310 • Sep 16, 2020

Rupert Murdoch's next move

RUBY:

From Schwartz Media, I’m Ruby Jones, this is 7am.
Australia has one of the most concentrated media markets in the world - principally because of the influence of Rupert Murdoch.

That concentration looks set to worsen as Murdoch’s News Corp launches a new service that could compete with the Australian Associated Press.

Today, national correspondent for The Saturday Paper, Mike Seccombe, on how AAP was nearly shut down, and now faces the prospect of being starved out by News Corp.

RUBY:

Mike, how would you describe AAP and the role that it plays in the Australian media?

MIKE:

Well, it was a keystone species in the Australian media environment. You know, this unique life form that holds the whole system together and upon which many others, particularly small ones, they rely on it. It supplies some 400 different media outlets. That's newspapers, websites, radio stations around the country. More than half of those are in rural and regional Australia, and many are very small.

But, you know, some of the big organisations also use AAP - the ABC, SBS, Guardian Australia, The Daily Mail. So it's a big deal. It's been around a long time. It covers all manner of subjects, from courts to sport to politics to grain plantings. And it might not be doing so for much longer. You know, it's facing both financial and political challenges at the moment. And the big irony here is that the biggest threat to AAP’s continued survival comes from the son of its founder. And that's that's Rupert Murdoch.

RUBY:

Right ok. So tell me about the first threat that AAP encountered, back in March.

MIKE:

In March, on March 3, to be precise. The company announced that it was shutting up shop.

Archival tape -- Unidentified Reporter:

“The closure of AAP is imminent. That's Australian Associated Press.”

Archival tape -- Unidentified Reporter:

“The 85 year old service suffered a significant loss after major media outlets Nine and News Corp severed ties. AAP chief executive Bruce Davidson…”

Archival tape -- Bruce Davidson:

“It is my duty as CEO of AAP. My sad duty to announce the closure of an Associated Press today. The newswire will cease at the end of June. Too many of our customers are now not wanting to pay for our content. Too many of our customers are, I guess, relying on what is on Google, what is what is out there on Facebook in terms of their content generation and their content supply.”

MIKE:

The current reality is that AAP, like almost all media players in Australia, has been struggling financially for for a long time and for largely the same reason, you know, which is the global tech giants, Google and Facebook in particular, are sucking away the lifeblood of traditional media. But there are other factors involved here as well. Privately, another reason was given by AAP’s Chairman Campbell Reid, who is also a senior executive at News Corp.

You know, he's a former editor of The Australian and The Daily Telegraph and he's currently the group executive for corporate affairs policy and government relations. And he told AAP staff down in Melbourne that News Corp and the Nine Media, who are the two big owners of AAP, were quite tired of subsidizing a service used by their competitors.

Reid also said that News Corp would now develop its own breaking news service to supply its own outlets around the country and would no longer, you know, obviously need AAP which was shutting down. And the former Fairfax, which is now Nine, is expected to do something similar. So, you know, their expectation was that AAP would shut down and they would develop their own in-house equivalent that would supply their various outlets.

RUBY:

Okay, so this was as much about corporate politics as a decline in advertising revenue. So what happened next?

MIKE:

Well, six weeks later, the executive who was in charge of setting up the new News Corp service, bloke by the name of Mel Mansell gave an interview to The Australian. In which he expanded a bit on the plan. He said the new operation, which was going to be called the NCA Newswire, be an independent unit within the company, which is important to remember.

But the more important thing, too, was that he said that the content would not only be made available to News Corp itself, to its internal mastheads, but would be available, quote, as required to clients outside our business, which is to say that, you know, six weeks after they announced they were getting out AAP because it was no longer financially viable, NewsCorp was planning to get back into the wire service business, wholesaling it and replicating AAP services.

So this, I've got to say, further fueled widespread suspicion that the real agenda behind the plan to shut down AAP was about damaging smaller competitors.

RUBY:

Hmmmm and as things transpired, though, the corporate owners of AAP didn't actually succeed in shutting it down because it was then bought by this consortium of philanthropic investors.

MIKE:

Yeah, that's right. But that only happened after stern warnings from the ACCC, the Competition and Consumer Commission, that if the previous owners attempted to block any sale, you know, if there was a willing buyer, they were required to sell it. And that if they didn't, that would raise concerns as the ACCC said, under competition law.

So a deal was done and the terms of that deal included a six month non-compete clause, which means, of course, that News Corp cannot begin marketing the content of its AAP alternative, you know, to other media outlets for that six months. But, of course, AAP in the meantime is bleeding cash. And, you know, I spoke to AAP CEO Emma Cowdroy, who just was very frank about it, said that this was the worst advertising market, in fact, the worst period for the media industry that she'd seen in her 20 years at AAP.

Archival tape -- Emma Cowdroy:

“I recall writing contracts for three years and I’m now writing them for three months. That is, that is a fact.”

MIKE:

And so, you know, on top of that, of course, the two biggest players, News Corp and Nine, are no longer going to be using AAP. And, and a lot of other organizations are either not resigning or signing very short-term contracts because, you know, they're uncertain about their own future revenues.

Archival tape -- Emma Cowdroy:

“We have a number of contracts that are very short-term and that is concerning to anyone when those contracts are what you’re basing your revenue on.”

MIKE:

So, you know, a lot of people, too, are going to be waiting to see how things play out, you know, between AAP and the potential News Corp alternative once that non-compete expires in six months. Essentially, the situation is for now, AAP is being kept alive by its philanthropic donors and contributors to a crowdfunding campaign which began this week.

And it's been broadly viewed, I guess you'd say, as kind of a public service, as much as a media company. You know, it's a bit like the ABC - independent, has no corporate owners, isn't beholden to advertisers. And then, of course, there's one other similarity, too, which is that the Morrison government doesn't seem to have much interest in supporting it.

RUBY:

We'll be back after this.

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RUBY:

Mike, let's say that News Corp is, as you suggest, looking to monopolize the newswire service in Australia. What would the consequences of that be?

MIKE:

News Corp, Murdoch's company, is already the dominant player in the most concentrated media market in the developed world, which is what Australia is. It has, you know, roughly two thirds of all newspaper circulation, and various other interests. And now it's looking to expand beyond its sort of retail news business into the wholesale news business, which means that given that there's likely only going to be one news agency standing at the end of this process, that gives us the prospect that not only would News Corp content be going into its own very dominant outlets, but would be distributed through a whole lot of other outlets that it doesn't own.

So we're looking at, you know, 100 or more FM radio stations, some AM radio stations, rural and regional newspapers. And, you know, even theoretically, the national broadcasters, the ABC and SBS, which are now the customers of AAP, could wind up being customers of Murdoch. So we could see the sort of News Corp idea of what, what constitutes news, penetrate right through the market because as we know, News Corp doesn't just deal in news, straight news. It's a very, very political player, you know, and everywhere and always where it does business it's a strong supporter of right wing politics. So, you know, that's that's a prospect that concentrates the minds of a lot of people, I must say, including the ACCC.

RUBY:

And you mentioned that the federal government doesn't support AAP or shows little interest in funding it. Can you tell me about that?

MIKE:

The government has recognized that these are desperate times in the media. You know, they'd be blind not to, quite frankly. But earlier this year, they offered $50 million pot of money of grants that media organizations could apply for. It was called the Public Interest Newsgathering Scheme, ‘PING’. So applications for PING opened on May 7 and they closed roughly three weeks later on May 29.

According to the office of Paul Fletcher, who's the communications minister. AAP wasn't eligible to apply for any of that money because at the time it was still… still hadn't completed the transaction between its former corporate owners and this consortium of philanthropists that was rescuing it. So that was Fletcher's story, that they weren't allowed to apply because they were ineligible at the time. But when I spoke to the CEO of AAP, Cowdroy, she told a different story. She said that the government had actually granted an exception from the cutoff dates that would apply to AAP because of its unique circumstances.

Archival tape -- Emma Cowdroy:

“We were told an exception would be made so we applied on the 7th of July. We’ve followed up numerous times and we’ve not heard anything.”

MIKE:

So I thought I'd ask about this. So I sent off some questions to Fletcher's office and got a written reply back saying, and I'm quoting, ‘AAP, like other news businesses, is facing challenging times, plays an important role in supporting public interest journalism in Australia. And the minister would, quote, continue to engage with AAP.’ Now, this doesn't gel with what Cowdery is saying at all. There has been no engagement with AAP It would seem.

Archival tape -- Emma Cowdroy:

“We’ve not had a dollar and we’ve not had a response.”

MIKE:

The government appears to be brushing them off.

RUBY:

OK. So not much interest from the government then. So as it stands, we have two newswire services, one of them, a legacy service considered impartial by every news organization in the country, but it's struggling for all of the reasons that you've outlined. And then we have its competition, the new newswire, which was recently launched by Murdoch. So what do you think will happen, Mike?

MIKE:

The non-compete still has a few months to run. I think about four and a half months to run. So we'll know a few months from now. But it looks like being a contest between two entirely mismatched teams, one with the resources of Australia's biggest media company behind it, and the other one running, you know, on meagre charity and high ideals. In this country, the Murdoch media has shown itself to be ferociously partisan, in political terms, always in support of the conservative parties in recent years. You know, and a number of commentators have linked the government's inaction in support of AAP against News's attempt to kill it with the sort of healthy, symbiotic relationship, shall we say, that News Corp enjoys with the Morrison government.

So there's suspicion that there's a bit of foot dragging going on because it's seen to be to the mutual advantage of the government and News Corp that the legacy version of AAP should die. The question now becomes whether anyone could do anything to stop it.

RUBY:

Can they?

MIKE:

Well, I don't know. On ABC Radio last week, ACCC head Rod Sims warned that the commission would be watching carefully for any evidence of predatory pricing or other means by which News might try to force AAP out of business. And he mentioned predatory pricing, which is illegal, but it's also very hard to prove. I mean, I spoke with Michael Bradley, who's the managing partner of Marque Lawyers and a specialist in regulatory law.

He tells me, ACCC, in spite of a number of attempts, has never succeeded with a predatory pricing prosecution. And he suggests it would be particularly difficult in this case. When I spoke to Bradley about this, he said it was very cunning and the exact quote was “As rapacious strategies go, News Corp's is a good one.” Unless, of course, you care about media diversity or informed democracy, in which case it's a shocker.

RUBY:

Mike, thank you so much for your time today.

MIKE:

Thank you.

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RUBY:

Also in the news today…

Victorian Premier Daniel Andrews has announced that regional areas of the state will have restrictions eased further from today. The new rules will allow members of one household to visit another nominated household, outdoor gatherings of up to 10 people, and cafes will be able to seat up to 50 people outdoors. Metropolitan Melbourne will remain under tougher restrictions for at least the new few weeks.

And the Western Australian Government has said that it is willing to take on more Australians travelling home from overseas if they can be quarantined in Commonwealth facilities.

Since July, the number of international arrivals allowed into the country has been capped, and federal and state governments are under significant pressure to ease the restrictions as tens of thousands of Australian citizens remain stranded overseas.

I’m Ruby Jones, this is 7am, see ya tomorrow.

Australia has one of the most concentrated media markets in the world, and that concentration could worsen as Rupert Murdoch’s News Corp launches a new service. Today, Mike Seccombe, on how the Australian Associated Press was nearly shut down, and now faces the prospect of being starved out.

Guest: National correspondent for The Saturday Paper Mike Seccombe.

Background reading:

Murdoch grab: The other story behind AAP’s sale in The Saturday Paper

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7am is a daily show from The Monthly and The Saturday Paper. It’s produced by Ruby Schwartz, Atticus Bastow, and Michelle Macklem.

Elle Marsh is our features and field producer, in a position supported by the Judith Neilson Institute for Journalism and Ideas.

Brian Campeau mixes the show. Our editor is Osman Faruqi. Erik Jensen is our editor-in-chief. Our theme music is by Ned Beckley and Josh Hogan of Envelope Audio.

New episodes of 7am are released every weekday morning. Subscribe in your favourite podcast app, to make sure you don’t miss out.

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310: Rupert Murdoch's next move