2012: The year in newspapers

In January the Newspaper Works repositioned as the peak industry body, taking on issues such as advertising, government lobbying and advocacy.

Fairfax Media showed its first signs of the tumultuous year which was to follow, announcing in February its profits had slumped by 41%, led by its metro media division, which dropped 27.4% of its earnings in the six months to December 2011.

News Limited announced that, from March, the Herald Sun would have a paywall around its website, and released figures from The

Australian’s paywall showing 40,000 users, 30,000 of whom were paid subscribers. These figures were borne out when it was submitted to audit in the third quarter of the year.

Seven West Media, which owns The West Australian, pulled out of the Australian Press Council, criticising it for a lack of bite, and started its own complaints body.

In response the Press Council announced an overhaul to its own system, based in part on the recommendations of the Finkelstein Inquiry, which controversially called for a government funded complaints body for the whole of the press.

The beefed up Press Council was designed to “guarantee accountability”, and doubled its funding to increase staffing levels and rigour, as well as making members serve three years if they wish to quit the organisation.

Australia’s richest person Gina Rinehart made a play for two seats on the Fairfax board, increasing her stake in the company to 15% as she lobbied to get representation, as the share price plummeted.

However, the directors held firm and refused her claim, saying she refused to sign a declaration of journalistic independence for the company.

After several swipes at the board, and voting against its fiscal plans for 2013 at the AGM, Rinehart eventually backed down, selling a number of her shares.

Changes proposed to split News Corporation’s profitable entertainment arm from the less successful publishing arm were announced in August, with all Australian assets of the company, including News Limited, to sit in the publishing business in what many saw as a move to distance it from the phone hacking scandal.

August’s annual results reporting season made for mixed reading for many. Fairfax was the biggest loser, shedding a $2.7bn loss for the year on the back of asset write-downs, with profits down 6%.

However, Seven West Media posted its first full-year profits since the merger, doubling profits to $226m, with healthy revenues for the West Australian, the only newspaper to continually report increasing circulations throughout the year.

The final round of ABC figures for the year, released in November, showed a double-digit decline for Fairfax’s metro mastheads, while News Limited’s papers also fell back.

However, national papers held relatively firm in their circulations.

News and Fairfax feel the pain

After months of speculation and hints at overhauls both News Limited and Fairfax jumped within days of each other in June, cutting hundreds of journalism and production jobs and shifting their business models to a digital-first approach.

Fairfax blinked first, announcing 1,900 staff would go over three years and its Chullora and Tullamarine printing plants would close, to save $44m annually.

The company also announced it would turn the Sydney Morning Herald and The Age from broadsheets to compact papers, and erect a paywall around both websites by early 2013, as it looked to monetise its burgeoning digital audience.

Chief executive Greg Hywood said: “No-one should be in any doubt that we are operating in very challenging times. Readers’

behaviours have changed fundamentally and will not change back. As a result we are taking decisive actions to fundamentally change the way we do business.”

Two days later, News Limited CEO Kim Williams circulated a video to staff outlining the changes they would be undertaking, including an undisclosed number of job cuts, thought to be around 1,500, and collapsing the structure on the east coast from 19 to just five. Williams said: “The new model addresses areas where we have skills shortages and are duplicating functions. We will hire new people where required, but regrettably some roles will become redundant.”

On top of this they would also move to a more digital strategy, with the purchase of Alan Kohler’s Business Spectator.

In both companies a number of senior journalists were the first to take redundancy, leading some observers to ask if there was a skills and knowledge gap developing in the press.

Christopher Warren, federal secretary of the Media Entertainment and Arts Alliance said the union warned newspapers would be “crunched” by digital in a 2008 report.

“It’s taken another four years before the big newspaper groups restructured their businesses to take up the opportunities that digital brings,” he said.

Comment: Tony Hale, CEO The Newspaper Works

Every year it seems the newspaper industry is confronted by new challenges. Last year started with cyclones, floods and earthquakes. The efforts undertaken by journalists, editors, production crews and even drivers to publish and distribute their local newspapers in dangerous circumstances were nothing short of extraordinary.

In 2012 the industry has had to weather different challenges. In a period of sustained economic downturn, structural transformation has accelerated. Different publishers are pursuing different business models, trying to find a sustainable balance between the printed product and a digital portfolio.

Significant restructures have led to disruption and a fair amount of pain as they prepare for a strong and profitable future. Reduced advertising revenue has added further pressure. And while this is going on, threats to self-regulation and freedom of the press have emerged as the government ponders the Finkelstein Inquiry and Convergence Review.

It is only natural that these factors fuel conjecture about the future health of the newspaper industry, especially as most of the positive truths fail to break through.

One truth is that we have never had more people read our mastheads than we do today.

Newspapers have transformed into a unique cross-platform medium with readers now accessing content whenever they want to.

Newspapers are delivering 24 hours a day.

We are starting to see these trends emerge clearly as publishers are starting to report digital sales through the Audit Bureau of Circulations. Next year will see the launch of a new readership metric, enabling us to report readership across any platform and provide insights into how advertisers can reach their customers more effectively.

Perhaps 2013 will the year that pundits start to take a more optimistic view of the future of newspaper publishing.