Yesterday I had lunch with a group of retirees who aren’t particularly connected to technology. It was a contrast to the previous three days spent with startup and media companies talking about social media and the internet.
One thing that really seemed to disturb them was the idea that printed daily newspapers may not be around in a few years time.
Which makes Elizabeth Knight’s Media Rivals Facing a Brave New World this weekend a timely read in the contrasting strategies of News Limited and Fairfax.
From Knight’s report it’s hard not think News Corp CEO Robert Thomson is deluded;
”Print is still a particularly powerful medium … 43 per cent of Wall Street Journal readers are millionaires.”
Old millionaires. Like the people I had lunch with yesterday.
The problem Thomson has if this is indeed the strategy of the New News Corporation then he’s locked into a dying, declining market.
A bright spot for both News and Fairfax are the digital properties that evolved out of their old classified and display newspaper advertising, specifically the real estate sites Domain and realestate.com.au.
These sites don’t involve substantive news reporting or journalism beyond regurgitated realtor media releases, although if you take the attitude that newspapers were really only advertising channels with some news to attract an audience then this is a natural development.
For journalists, and those who want to be informed about the world around them, that view is a problem as it doesn’t answer the question of how do you pay for news.
With earnings expected to be 30% lower this year compared to 2012, this is something concentrating the minds of Fairfax’s management given they don’t have the profitable Pay-TV revenues of News.
The problem for the legacy news operations is that the focus is on cost cutting while denying the reality that expensive printed newspapers are dying in both readership and advertising revenue.
Desperately hanging onto the daily printed newspaper model threatens to consume resources needed make both Fairfax and News successful online.
Which makes the venues of the investor events that Knight describes a interesting counterpoint to the ruthless cost cutting going on at both News and Fairfax.
Sydney’s Mint and the Four Seasons Hotel are lovely venues and no doubt the executives and analysts enjoyed some nice canapes and drinks after their briefings.
But genuinely cost conscious management would have put their status to one side and held the meeting at their own premises and, if the analysts were nice, offered them a cup of tea and a biscuit, just like shareholders get.
At time when fast, responsive and small management is needed to make fast decisions in rapidly changing markets it seems the companies most threatened by change are those with the most inflexible, and entitled, managements.
It may well be that Fairfax or News discover the magic formula that makes digital media profitable, but it’s not going to happen while they deny the realities of today’s market places and a radically changing economy.
Not that this will worry the older executives of over-managed businesses who will spend their sunny days of retirement enjoying nice lunches and wondering what happened to the days of the printed newspaper.