Best of the Week: Bet you can guess the topic

[View web version]( BEST OF THE WEEK And another thing... Welcome to Best of the Week, at the end of media’s biggest reshaping in decades. There’s no writing soundtrack today, because it’s the middle of the night and I’m trying not to wake the house while shuttling back and forth to the balcony to watch the lunar eclipse. Meanwhile, here on Earth, Nine’s takeover of Fairfax Media - it’s not really a merger; they never are - was the industry-redefining media story of the year. Moonstruck And the problem is knowing where to start, when there are so many ramifications, and so much has already been said about the deal over the last 48 hours. First things first. Fairfax shareholders have much to thank CEO Greg Hywood for. Not many businesses survive the disappearance of their primary business model. Eight years ago it was by no means certain there’d be anything left to sell. For shareholders, Hywood’s multi-million dollar salary represented good value. But former staff will be unlikely to enjoy the shareholders’ relief. The price of saving the company was the termination of a lot of careers, as jobs were axed and printing presses closed. For the remaining staff - and indeed for readers of the Fairfax newspapers - what happens next remains to be seen. For those on the regional and local newspapers side of the business, I suspect the worst may yet be to come. I could see Nine flipping those papers on to a private equity player or similar, in much the same way News Corp seems to be contemplating. For staff on the big mastheads - The Age in Melbourne, the Sydney Morning Herald and the Australian Financial Review - their trepidation is understandable, as is their anger at the apparently casual way that Hywood and his board addressed the end of the Fairfax name. Indeed, if there was a communication misstep it was failing to anticipate the impact of the abrupt disappearance of the Fairfax name. It wouldn’t have been a particularly honourable course, but weasel words around retaining a Fairfax newspapers division within Nine could have blunted the impact. That said, the Band Aid has been ripped off, and nobody doubts that it’s a takeover, not a merger. Ironically given the focus this week on the newspapers, the real drivers of the deal were Fairfax’s stakes in real estate site Domain and streaming service Stan. Yet Nine will be judged by the wider industry on how good a custodian it proves to be for the news mastheads. The pessimists look to Nine’s tabloid broadcast instincts. The likes of A Current Affair - with its love of shonky tradesmen and money-saving tips - provides an argument for those who want to believe the worst. But that’s somewhat unfair in the context of Nine’s wider news heritage. Nine News delivers serious but popular bulletins in every state nightly, with serious local resource behind them. The company’s journalism is always represented in the big awards. Until Laurie Oakes’ retirement, Nine had arguably the best political journalist in the country. And while some of the anger of the Fairfax journos is understandable, it risks getting things off on the wrong foot with their new colleagues if they attack Nine’s news credentials too harshly. Being in the same stable as 2GB didn’t seem to hurt their own independence. But does the Fairfax name matter? In truth, it should have died as a media brand the first time the Fairfax family was ousted in the early 90s. The Fairfaxes’ brief return a decade ago, via the Rural Press merger, didn’t count for much. But it remained one of the big beasts. Yet in readers’ minds, the mastheads were always what really mattered. You won’t meet a reader of The Age, The SMH or the AFR who thinks of him or herself primarily as a Fairfax Media reader. When shared online content began to drive the appearance in copy of phrases like “told Fairfax Media” over the last decade, that was a relatively new branding exercise for readers. Remember how awkward it sounded until we got used to it as readers? Not that many of them would have conceded it on Thursday, but journos feel the same way as the readers. Every newspaper or magazine I’ve ever worked for it’s been about the masthead, not the company. In some cases, I can’t even remember the name of the company I worked for any more, but the name of each masthead is still carved somewhere on my heart. So the moral challenge for Nine Entertainment Co is to be a worthy owner of those three iconic mastheads, assuming it chooses to keep them all. Meanwhile, seismic as the deal between the two rivals felt, it’s worth remembering that another earthquake was occuring overseas that put it into perspective. Or eclipsed it, if you like. Nothing underlines the fact that Australian media’s real challenge comes from the likes of Facebook and Google better than the end-of-week dramas on Wall Street. Facebook’s shares fell by about 20 per cent after surprising the market with bad news about its profit prospects. But the slightly startling reminder is that the $160bn fall in value is 40 times bigger than the entire $4bn market capitalisation of Nine and Fairfax put together. Compared to Facebook’s value shift, Nine and Fairfax are rounding errors. And that’s not the only reminder. We wake up this morning to discover that Twitter shares have fallen by nearly 20% too. (Is there a tech correction starting?) Again that means that in the time since you went to bed last night, Twitter’s overall value fluctuated by more than the entire worth of Nine and Fairfax. And the likes of Facebook and Twitter (and Google, and Amazon, and Netflix) are the real challenge for Australian media. Of course Nine wants to bulk up. This race to scale will now focus the minds of the remaining players. It’s late at the disco and the last slow song has just started playing. It’s time to make a move. And with Fairfax and Nine now paired up, a move by News Corp on Seven West Media seems almost inevitable, even if it doesn’t happen immediately. If the Stan joint venture was a signal that Fairfax and Nine would one day be together, you could look to WA for a similar pattern for News Corp and Seven. News Corp sold The Sunday Times to SWM about 18 months back. Open it tomorrow morning though, and it will feel like it’s still a News Corp product, in both design and content. But even if News does decide to go after Seven (and it admittedly feels almost unthinkable to visualise Seven without Kerry Stokes at the helm), it might not be quite as straightforward as one might assume. The changes to the media ownership laws may have opened the way for Nine’s Fairfax takeover. Previously under the two-out-of-three rule, the same owner would not have been allowed to hold TV, radio and newspaper assets in the same city. But there are still some rules around media diversity. In effect, at least five voices across newspapers, TV and radio must remain in each metro area and four voices regionally. I’m oversimplifying slightly - if you’re masochistic enough, [you can read up on the 4/5 rule on the Australian Communications and Media Authority website](. Lachlan Murdoch’s ownership of Nova Entertainment then comes into play, as it would likely be seen as part of the News Corp family by the regulator. Once Nine and Fairfax have consumated, that reduction in voices could in theory block a News Corp and Seven tie-up in some parts of the country, unless the rules change yet again. Which they might. The likes of The Guardian and The Daily Mail are bringing new digital voices, even if they’re not currently counted in the rules. Still, the growing likelihood of News Corp acquiring Seven will also focus the thinking over at Ten’s owner CBS, which must soon make up its mind whether they want to stick with sales house MCN. MCN also represents Foxtel and Fox Sports, and News Corp is its biggest shareholder. It only took on Ten in the expectation that it would become part of the empire, before CBS stepped in. (Not that anybody at CBS will be thinking much about MCN anytime soon. Longtime CBS boss Les Moonves has been hit with a string of sexual misconduct allegations, which broke overnight. He’s one of the most powerful TV executives yet to be caught up in the #MeToo phenomenon.) And one of the things that has dawned in the two days since the announcement is that although the possibility of Nine and Fairfax getting together was always there, nobody has thought through all of the implications. What will happen to the NZ assets? Nobody quite knows. The regional titles? Nobody quite knows. The forthcoming Your Money TV joint venture with News Corp? Nobody quite knows. But there will be a few months to work it out, as the Australian Competition and Consumer Commission runs the rule over it and the lawyers do their thing. And should you want to hear more of our thoughts on the takeover, we recorded [a quick turnaround edition of the Mumbrellacast which you can find via this link](. Clouds across the Moon But big deal as it was, there were other oddities in the TV world this week, including an absolute debacle at Ten, which somehow ended up announcing a nasty prescription-only weight loss product as a sponsor on The Bachelor. And icky as the idea of using The Bachelor to push weight loss products is anyway, it’s also illegal. Unlike the US, prescription products can’t be marketed to the general public. That’s why we sometimes see those general information ads about impotence paid for by Pfizer in the hopes that somebody will go and talk to their doctor, who might in turn prescribe Viagra. (And I do hope my mention of that brand in this email doesn’t consign it to your spam filter.) Admittedly, we were slightly slow to spot the story when Ten issued a press release naming sponsors for the new season, which features Nick ‘Honey Badger’ Cummins. [We wrote it straight](. One of those sponsors named was Duromine, which is distributed by Inova Pharmaceuticals. Later that day, AdNews was first to call out the moral dubiousness of targeting body conscious young women watching the show. Our messages to Ten meanwhile went unanswered, until late in the afternoon when we had an aggressive call from Inova Pharmaceuticals’ in-house lawyer who threatened us with all sorts of legal consequences if we didn’t delete our article. Meanwhile, the AdNews piece disappeared, presumably after a similar call. We decided to leave ours up, updated with the information that Inova claimed there was no deal. The next day Ten claimed in a statement it had all been a “miscommunication”. Meanwhile, Inova conceded that it had been planning to run ads featuring Cummins promoting “medically-managed weight loss solutions” without mentioning the brand name. So there seems to be little doubt that the target audience for those ads - whether branded or not - were the young female audience that watches The Bachelor, in the hope they’d ask their doctor to prescribe them the drug. But having been [busted by their own press release](, the deal was pulled. Well done everyone. With the eclipse over, it’s perhaps time to pop back to bed. Not for too long though sadly, as I’m on newsdesk this weekend. You can reach me as usual at tim@mumbrella.com.au Have a fantastic weekend. Toodlepip... Tim Burrowes Content director - Mumbrella Mumbrella | 46-48 Balfour Street Chippendale NSW 2008 Australia [Unsubscribe](| [Manage Subscriptions]( [Facebook]( [LinkedIn]( [Twitter](