As Ken Parish’s post below shows, there is now a widespread view that Gina Rinehart will win control of Fairfax, publisher of the Sydney Morning Herald and The Age, and then seek to move their editorial stances well to the right. From people who believe that, you hear both wails and cheers, depending on their point of view.
Many of these people still seem to believe that rather than customers choosing a newspaper, newspapers shape the minds of their readers*. That’s a little bit true, but mostly wrong, and getting wronger every year the Internet is with us. If a newspaper doesn’t reflect the readers’ world-view and interests, then the readers leave.
Gina Rinehart’s billions might well help shape opinion on a single issue like the mining tax, where they’re employing emotive 30-second TV spots to tap existing beliefs that the mining industry keeps the nation from penury. Those same billions can’t make people keep buying a newspaper they don’t like, though.
There isn’t enough money in the world for that.
If Rinehart does move the Fairfax general newspapers’ political and cultural outlook substantially, she will learn a sharp business lesson.
It’s the same lesson that Fairfax last learnt in 1992-1995. Back then they tried then to move The Age towards the centre, bringing on columnists like Des Moore and writing editorials saying Japanese whale-hunting was just fine really.
The move to the centre did indeed make business sense.
Just as Moreso than today, in 1992 The Age was overall well to the left of the political centre. That, as Harold Hotelling could tell you, is a dangerous place to be in a two-product market. The UK’s Guardian newspaper can maintain its current positioning because it sells to a customer catchment area of 50 million people, and because it’s one of many newspapers. The Age’s catchment is one-tenth that size, and it’s one of just two major newspapers**.
The result of The Age’s 1992 shift to the centre was a truly spectacular loss in circulation. From memory, The Age dropped 15,000 circulation in short order.
Why did that happen? Because customer acquisition for a general newspaper tends to be an assymetrical process. You win customers slowly, but you lose them fast. General newspaper reading is a gradually acquired habit, like smoking, but less addictive and more sensitive to changes. You get hooked on a very particular formula that fits with your own political and cultural outlook. If someone suddenly messes with that formula, they break your habit. All that was true pre-Web***; it’s even more true today.
So moving the political outlook of a general newspaper is, even in theory, a decade-long task. In practice, it has usually happened only where one newspaper withdrew from the market. London’s Sunday Times is the only general newspaper I can recall pulling off this trick, and the London newspaper market of the 1980s was a very unusual one. (Moving the political and cultural outlook of a specialist newspaper may be easier, especially when its customers mostly buy it for information. The Financial Review has moved rightward in the last few months, so we’ll get some interesting numbers on this soon.)
Making a gradual shift to the centre from 1992 on could have yielded benefits for The Age. But it would have yielded those benefits very slowly – so slowly that the chances are they would not have been noticed. This inability to measure long-term shifts is one reason why few boards and even fewer management groups think in terms of decade-long market repositionings. The Fairfax management of 1992 clearly wanted The Age repositioned fast. That didn’t work then. It won’t work now.
Steven Conroy had this right on ABC AM this morning:
“If she [Rinehart] was to directly interfere … it would actually lead to a crisis of confidence in the, among the readership, and if the readership deserted, then the share price for every shareholder would decline.”
Gina Rinehart may decide to mess severely with the political outlook of the SMH and The Age. But if she does, she won’t do it for long. The market understands newspaper readership dynamics fairly well. The smallest suggestion of a hit to circulation and profit will provoke an unforgiving sharemarket reaction, and the new proprietor will have to decide how long she wants
her Fairfax shares to stay at 1 cent each.
* Not the writer’s mind, of course, or yours, but the minds of other, more sheep-like readers :-)
** The Australian’s Victorian circulation is not big enough to upset this picture.
***Technically 1992 isn’t pre-Web, but you know what I mean.