The Last Gasp is a wry take on the week’s biggest stories, every week. This week, the media bubble finally pops, Fairfax cuts everything in favour of collapsing and Gillard tells Europe to do economics the 'Australian way'.
Saw it coming
A huge week in media news has seen announcements from industry pillars Fairfax Media and News Ltd that will change the very nature of the sector, as well as a debate over editorial direction that extended into the heart of democracy itself. Pages and pages have been dedicated to the issue this week, which is an outstanding effort considering how many journalists have lost their jobs. Those last two guys left must be knackered. The saga kicked off on Monday when Fairfax unveiled a long-awaited plan to save its skin, the result of its highly touted ‘Fairfax of the Future’ strategy. The plan, the product of the finest corporate minds in the media industry, boiled down to firing staff and charging for a product that is currently free. Fairfax will cut 1900 jobs over three years, shut two of its printing facilities and drastically alter the format of its two biggest mastheads, in reaction to a market that no longer has high demand for physical newspapers. Despite the troubles, Communications Minister Stephen Conroy has said he can’t see the ALP ever subsidising newspapers. Which is a fair call, given the current government is not known for propping up dying industries.
Leading the blind
The job cuts came amid heavy debate surrounding the ownership of media companies, and whether major shareholders should be able to exert influence over editorial and staffing matters. Fairfax is perhaps a bad example for such a debate, given consensus among experts that it doesn’t matter who is running the group, as they would be steering a sinking ship anyway. Federal Treasurer Wayne Swan believes board impartiality is important in the sector, and called fair and balanced news the cornerstone of democracy. New Greens leader Christine Milne has also weighed in, suggesting that responsibility for policing such concepts could fall to the Australian Securities and Investment Commission. The idea received some criticism, as while the concept was sound, the media is not exactly an area of expertise for the market watchdog. Unperturbed, Milne reportedly listed a number of suitable alternatives, including consumer affairs, neighbourhood watch and the AFL tribunal.
Julia Gillard drew sighs of embarrassment from her constituents this week when she told Europe that the only true method of solving its continuing economic problems was to embrace the ‘Australian way’. Evidently Gillard thinks global economic policy should better reflect Australian culture, by being laid back, excessively friendly and a little bit racist. Gillard's message did not go down as well as she hoped, with diplomats at the G20 meeting where she made the speech reacting cooly to the suggestion. Back home, opposition Treasury spokesman Joe Hockey called the comments the ‘height of arrogance’. Tony Abbott told the PM she was in no position to lecture, in a long winded lecture delivered to reporters. Labor sources defended the claim, maintaining Australia’s current prosperity was the result of a good government, and not simply a coincidence that it took charge the moment China took an interest in all of our shiny rocks.
Don’t pass go
If you think the media industry has had a big week, spare a thought for the Australian Competition and Consumer Commission. The corporate watchdog now faces the unenviable task of sorting through News Ltd’s $1.97 billion takeover offer for ConsMedia to see how much of (note how we didn’t say ‘if’) it will affect competition in the sector. ConsMedia owns 25 per cent of Australia’s only major pay television provider, Foxtel, and holds a 50 per cent stake in Fox Sports. News owns the other half, and, along with Telstra, a quarter of Foxtel. A completed deal would turn all this upside down and give News unprecedented control of the assets.
Lower your standards
Australia and New Zealand Banking Group’s Australian chief Phil Chronican has gone into bat for the struggling banking sector, claiming investors need to lower their expectations on returns from investments. Chronican reportedly said the industry was so strapped that banks needed to keep the billions of dollars they turn over every month to themselves. Elsewhere, Macquarie Group has said there are too many investment banks in Australia, and some international groups are struggling to turn a profit. It’s a generous move from the lending giant, which clearly has only others in mind when it urges competitors to get out of the market and leave the spoils to Macquarie.
It’s hard to tell if JP Morgan chief executive Jamie Dimon was trying to defend his traders or not when he said the unit behind a $2 billion dollar trading loss earlier this year had little understanding of what they were doing. Dimon told a US political inquiry that the traders failed to grasp the risk they took when they made the deal, and said the strategy was not vigorously reviewed (surprise!). It must be comforting for investors to know that years out from the global financial crisis, there are still cowboys out there playing around with billions of other people’s dollars that they literally don’t know what to do with.
The Prime Minister spent the days before a United Nations climate summit this week talking down the chances of any real action happening at the meeting. She did say, however, that she would welcome a draft document that sets out a commitment to change. She later said she would also accept a proposal to form an idea to move toward completing a plan to act on a sturdy concept.
– Woolworths announced this week that some of its supermarkets would now stock sushi, giving suppliers yet another reason to say that supermarkets stink.
– And finally, unions have called on Fairfax to explain the logic behind its decision to cut 1900 jobs, because obviously the current health of the industry is still a little unclear.
– The latest census figures have shown the mining boom has led to a notable spike in the population of Western Australia, showing that for the right cash, people will even live in Western Australia.