Mon Feb 13

News Corp's job cuts cast a shadow over the future of its newspapers

Written by Denis Muller, Senior Research Fellow, Centre for Advancing Journalism, The University of Melbourne

News Corporation is cutting its staff ^[1] by 5% globally, including in Australia, after its news media division recorded a second-quarter earnings decline of 47%. The decision inevitably reopens questions about the future of the company’s newspapers, particularly once Rupert Murdoch is gone.

The company’s chief executive officer, Robert Thomson, said a surge in interest rates and inflation caused the earnings decline, and that these effects were “more ephemeral than eternal”.

However, structural complications in the corporation suggest these “ephemeral” factors are only part of the problem.

“Eternal” factors – such an interesting word where Murdoch is concerned – include the performance of the tabloid newspapers that have played a pivotal role in the development of the organisation. It casts a large shadow over the organisation’s future direction and structure.

A glimpse of this has emerged since the public became aware in October 2022 of a proposal to reunite ^[3] News Corp, which is the newspaper division of the empire, with Fox Corp, which focuses on television and streaming services. The two were split in 2013 to quarantine Fox from the taint of scandal arising from the phone-hacking in the UK, perpetrated by News International, a subsidiary of News Corp.

The reunification proposal ran into strong resistance from the market for two reasons. First, there were misgivings among shareholders in News Corp about the business merits of Fox Corp, and vice-versa. Second, there were lingering reputational concerns hanging over from the hacking scandal.

In January 2023 it was announced ^[4] that reunification would not proceed, at least for now.

in January 2023 it was announced the merger between Fox Corp and News Corp would not go ahead. Richard Drew/AP/AAP

As if to reinforce the relative strengths and weaknesses of the News and Fox divisions, in the same quarter that the newspapers showed such a dramatic earnings decline, Foxtel Group’s subscriber base grew 10%, and the subscriber base of the organisation’s streaming services in Australia grew 25%.

This growth came largely from the fields of sport and entertainment, not from news. In this context it may be observed that last year News diversified into gambling via a new online service called Betr ^[5]. This diversification away from news is one of the structural issues that will confront whoever succeeds Murdoch.

However, eternity may have some way to run. It should be remembered that his mother, Dame Elisabeth, lived to be 103. Rupert will turn a mere 92 in March 2023.

It is reasonable to suppose that his attachment to newspapers – one colleague has referred to them ^[6] as his “favourite toys” – is grounded in his experience that they give him power. It is unlikely to have much to do with nostalgia.

He has used that power to wring concessions out of prime ministers to the benefit of his businesses, and used the profits those concessions engendered to accumulate more power.

Perhaps the most egregious example was Margaret Thatcher’s decision as Britain’s prime minister to bypass the country’s Monopolies and Mergers Commission and approve his takeover ^[7] of The Times and Sunday Times in 1981, after Murdoch’s mass-circulation Sun newspaper had supported her to the hilt in the election of 1979.

Despite a decline in readership and profits, newspapers are far from dead in Australia. Shutterstock

Moreover, the printed newspaper’s precipitous decline since the onset of the digital revolution in the early years of this century has been simultaneously compensated for to some extent by the substantial presence their associated news brands have built online. This has not repaired the hole in their revenue, but it has kept them in the game.

The 2022 Digital News Report ^[8] produced by the News and Media Research Centre at Canberra University shows that while the ABC remains Australia’s most watched news brand, News Corp’s news.com.au ranks second among online news brands.

What the report also shows is that tabloid brands are faring worse than broadsheet brands in the online world. This is a striking development when it is considered that for centuries the reach of the mass-circulation tabloids far outstripped that of the broadsheets.

The Digital News Report shows that now, with the exception of the Herald Sun, News Corp’s metropolitan Australian tabloids – the Daily Telegraph in Sydney, Courier-Mail in Brisbane, Advertiser in Adelaide, Mercury in Hobart and NT News in Darwin – are languishing.

It is clear that a mass-circulation history in the print world is no guarantee of a mass following online, and yet online is critical to a brand’s future.

At the same time, there remains something about the physical, visible, tactile existence of newspapers that enables them to retain a significant place in the public square. They are there, staring you in the face. They present themselves unbidden to the eye, strewn about in cafes and shops. Their posters are displayed in the streets.

They can be carried around and pulled out as required without the need for a series of electronic steps. They have what one-time SMH news editor Angus McLachlan called “the dignity of type”.

Historically, when it comes to political influence, it is not a question of how many read a newspaper but who reads it. It was that which gave the broadsheets their edge. The influence of tabloids rested on their mass readership, and this gave them influence of a different kind: electoral influence.

A consequence of their decline in reach is that this electoral influence may also be in decline.

Nationally, the Murdoch press campaigned relentlessly for a return of the Liberal-National coalition government at the federal election of May 2022. The government was heavily defeated.

In Victoria, the Herald Sun campaigned viciously against incumbent Labor Premier Daniel Andrews at both the 2018 and 2022 elections. Andrews won both in a landslide.

However, electoral influence is one thing: political influence is another. The concerns voiced by two former Australian prime ministers, Kevin Rudd and Malcolm Turnbull, about the effects of the Murdoch press on the workings of Australia’s democracy testify to the political influence ^[10] News Corp can still exert in Canberra’s corridors of power.

As has been argued before ^[11] on this site, journalism is not and never has been the primary purpose driving News Corporation. It is a means to an end, that being the enrichment and empowerment of the Murdoch family.

So long as that axis between enrichment and empowerment continues, there is no reason to suppose there will be fundamental change in the organisation’s approach to its business. However, the trends in media consumption that are now well-established might ultimately force change, regardless of Murdoch’s longevity.

What that change would look like, and the place of journalism in any major structural reform, cannot be foreseen, but diversification away from news is already under way. How far it goes will depend on the contribution journalism can make to maintaining that empowerment and enrichment.