I give the print papers one more year… tops.
So things took a horrible turn for the print media this week.
Fairfax media held an auction…
… and no one showed up.
Fairfax media (The Age, SMH etc) put themselves up for sale. Two parties were sniffing around, coming to the open inspections, getting their finance sorted. But then come auction day, they just never showed up.
That’s a tad embarrassing for Fairfax, but I don’t think people realise what a huge cultural turning point this is – or that we’re in the middle of right now.
For me, there were some really interesting things about this auction.
First, pretty much everyone agrees that the print media divisions are practically worthless, and pretty much the only thing of value in the whole enterprise is Domain.
Hooray for property. Saving the day again.
If they were trying to sell Domain by itself, they would have done it easy. But add the print papers into the mix, and the deal quickly starts to stink.
And it’s not that the papers are just inconvenient. It’s that right now, they’re a ball and chain around Fairfax’s neck.
Take this sum-of-the-parts valuation from Goldman Sachs.
They figure that at a fair share price of 96c per share, The Metro Media division is worth 2c, while Domain is worth 89c.
That’s nuts right? What kind of business is that?
The Age and the Sydney Morning Herald – all those journo’s and ad space and glossy liftouts – that’s all worth 2% of the total business.
Domain, the real-estate portal, is worth 90%!
It’s not a media empire with an interest in property. Fairfax is a property empire that dabbles in news.
To make matters worse, things are just going from bad to worse for Metro Media. Fairfax project Metro Media revenues to be down a further 12% this year.
Let me give you a number. $2,988,564.
That was our total marketing spend for the last financial year.
And how much of it went on print advertising?
Our marketing budget consistently runs into the millions – it’s one of our key activities – and we just don’t touch print.
Actually, all of it was spent with Facebook. They’re just that effective. And over the past 5 years, Facebook, with no local offices or journalists or anything, has gobbled up most of the Australian marketing spend.
The writing is on the wall for print.
So Fairfax obviously has some problems. But we don’t even know the half of it.
The Fairfax board were being courted by two private equity parties – TPG and H&F. They decided to open up the kimono and give both parties a confidential look at the books.
What happened next?
Well those parties took a look at the books, and said, actually, you know what, I don’t think we’re going to bid.
It’s like a buyer getting a building inspection before auction and deciding not to bother showing up.
It’s suggests that things inside the business are actually much worse than they seem. (And they don’t seem that great.)
There’s no good news here for Fairfax. Seriously, it’s looking dead in the water. I wouldn’t be surprised if The Age was off the shelves by the end of the year.
But this is huge right? I’ve grown up with The Age. I haven’t always loved it, but I did think that it would always be there.
It’s hard to imagine it disappearing from the cultural landscape.
That’s what I mean there’s some huge changes underway.
And this isn’t just a Fairfax story.
Over at Murdoch, they’re jettisoning any illusions to impartiality, and bringing back the “Australia needs Tony” propaganda.
Light on detail, heavy on scare-mongering, The Telegraph has been condemned for ‘taking sides’, and Rupert is being attacked for trying to shape Australia to his liking.
But this misses the point.
This isn’t propaganda. This isn’t what Rupert wants. This is what sells with Telegraph readers.
Over the last few years, print media have been forced to find their niche. People didn’t want balanced news. They wanted stuff that confirmed the stuff they already believed. If the papers weren’t going to give it to them, then there were niche, online publications that would.
And so you saw the media landscape split up almost exactly along party lines. Rupert went centre right and the Coalition. Fairfax went centre left and Labor. The Guardian went far left into the Territory where the Greens were hanging out. So far we haven’t seen anything set up in the far right where One Nation is, but there’s a business opportunity there.
Print media figured out what their niche wanted, and served it up.
The thing is though, no niche is big enough for a broadsheet.
This is the custom economy. This is an age where my iphone can be practically any colour I want it to be. I expect everything I touch to be finely calibrated to my own personal tastes. That’s just how the economy works now.
But media hasn’t caught up. They are still “broad”casting, even though people want the media they consume to be exactly what they expect and want.
Mass publications just aren’t nimble enough to do this.
Last weekend, we saw Fairfax’s last gasp. The last hand in the air before she sinks below the surface.
She was waving, but no one came to save her.
So now she’ll take care of the messy business herself. Fairfax will sell off Domain and close down print. The Murdoch press will follow soon.
This isn’t just about a revolution in business models. This is a revolution in the way we engage with the world. This is about the way receive information, and the customised, algorithmically-personalised, narrow-casting that we now expect.
And what does politics look like in this brand new world?
Well, the major parties are facing the exact same problem as the papers. People want the parties to represent their interests exactly. Fringe parties are popping up all over the place because broad-base political parties aren’t nimble enough to meet everyone’s needs.
And the fact they will soon no longer have the tools to broadcast popular messaging doesn’t help.
Soon, major parties will go the way of the major papers.
This is the custom economy.
I’ll miss The Age, but bring it on I say.
What do you think? Can Fairfax survive?