The Business of NEWS


Antony Loewenstein argues in New Matilda that the news media are dysfunctional in Australia, and quite as bad in the US and UK (link here). He’s right, of course. He also says their condition wouldn’t be cured if the Murdoch empire ceased to exist. Dead right again.

But then he suggests they are all as bad as Murdoch worse, perhaps. This is wrong, and potentially counter-productive.

Thanks to Paul Batey

The problem of the Murdoch operation isn’t that random tracts of The Australian compare well or ill with slabs of Fairfax or the New York Times. Nor is it the special nastiness of tabloidspiel in New York and London (although the News of the World has been remarkably vile lately). And it’s quite true that the CBS network is taken far more seriously than Fox by far more Americans.

The problem is that the Murdoch family is in a line of business unlike any other media combine. And it has pushed that business into territory that rivals haven’t even attempted to enter.

Privatised Political Propaganda

My own term for the Murdoch product is ‘privatised political propaganda’; that is, governments’ own ideologies, made to order. The return it generates is business concessions in print and broadcasting monopolies preferably which enable a basically mediocre outfit to pump itself up to world rank. (I will address the cost in terms of political culture later.)

The New York Times is international media royalty, like the BBC. Its reputation therefore is always under the lights, and this illuminates some ugly scars. The worst may be the one left by Walter Duranty’s reporting from Moscow during the Stalinist terror for which he won a richly ill-deserved Pulitzer for his descriptions of an enlightened workers’ State.

Given its resources and connections, the Times was also culpably slow with conclusions about the Holocaust in 1944. Possibly its owners, the Ochs family, feared accusations of pro-Jewish bias when US anti-semitism was deadlier than it is today. But that would not explain the paper’s wretched decision to suppress what it knew about the Bay of Pigs caper in 1961.

Still there have been as Loewenstein agrees heroic achievements, and getting the Pentagon Papers into its readers’ hands in 1971 offsets many bad calls and shoddy instances.

The Murdoch heritage doesn’t include such noble exceptions its relationship with living power is consistently sordid and timorous. Sir Keith’s ‘Gallipoli letter’ of 1915 was a self-serving propaganda exercise, irrelevant to the Dardanelles campaign his actual role in World War I was as Billy Hughes’s agent, campaigning to send conscripts into the Western Front bloodbath.

It’s not true that Keith’s posterity never challenge governments or other grand concerns. But they seek moribund specimens like the British Tories after Thatcher’s Grand Guignol exit. One must salute the steadiness with which Rupert waited until Tony Blair was a signed-up friend of the Sky satellite monopoly before he eased John Major into concrete footwear and rolled him over the stern.

Something you can be sure of if you spend time with a serious media outlet is that opportunities will arise to get into deep, frightening trouble with State authority. And it turns out that people who take the opportunity one day will decline it on another; people are inconsistent, even those who try to cultivate civil courage.

Everyone remembers Émile Zola tearing out 4000 searing words of J’Accuse in 1898. Not everyone remembers him scarpering to London when they fitted him up for criminal libel. Likewise, many American reporters took government dictation under fierce political pressure in the aftermath of 9/11. Notice, however, that many of them have recovered their poise: if not, there would have been no exposure in December of Bush’s massive, illegal domestic espionage.

But the Murdochs are consistent. In 90 years of worldwide operations they have never chosen to take issue with serious power and see the matter through.

As a young publisher in 1950s Adelaide, Rupert had the chance: his News editor Rohan Rivett was campaigning in general against White Australia and, specifically, to save Rupert Max Stuart from a murder charge that would only have been brought against an Aborigine. The News briefly stood its ground. But then Murdoch apparently agonised fired Rivett, reasserted the paper’s support for White Australia, and apologised for the Stuart campaign’s excessive fervour. (Fortunately it lasted long enough to put hanging out of the question.)

Liberating the Press

By the 1990s Murdoch was so practised in ‘liberating’ democracies from their broadcasting rules that he thought China ripe for similar exercises. Of course China’s one real rule is that the Communist Party makes all the rules, and freedom isn’t on offer. Grovelling furiously, Murdoch got Beijing to see he would never disturb a government still lively enough to put business opportunities his way.

Not that Murdoch minds China turning democratic; he just declines to share the cost and danger of pushing politicians that way when they don’t fancy it. Clearly some Chinese folk are willing to risk their skins doing so and who knows, they might succeed. Rupert will operate happily under any democracy they turn up, as he skillfully does elsewhere.

This defines Murdoch’s essential business model: he is the free rider who can’t be caught. Free riding is a famous problem in economics, where dodging tram fares is just the beginning. A specimen of Homo economicus may refuse to contribute to public goods on the grounds that he never uses them. Why should his rates go to a public park he never enters?

The problem with political freedoms including liberty of the press is that they can only be supplied free, with no compulsion to make use of them. And nobody can be refused ‘liberty’ for having given nothing towards its construction.

Murdoch, Fox News and the New York Post thus enjoy perfect freedom to offer their influence to any political authoritarian currently Bush in the US case who may find it useful. For appearance’s sake this is accompanied by furious campaigning against non-existent menaces like ‘liberal totalitarianism.’

In Britain, Murdoch’s system was constructed with the aid of Right-wing politicians, cynically expecting to gain his propagandist help. The US case was similar but more complex Murdoch initially had neither the money nor the legal standing to bid legitimately for Fox.

In Australia it was the cynical ‘Left-wing’ ALP that facilitated Murdoch’s bid for the Melbourne Herald group and subsequent domination of the Australian newspaper industry. The ALP acted out of hostility to Fairfax, but not to Fairfax’s real sins. The ALP loathed the presence of modest amounts of independent thus unpredictable journalism. With Murdoch they saw reliable deals in prospect. And as elsewhere, media law was adjusted to give the outcome required.

All this occurred because Murdoch’s media assets are predictable once given their orders. They are not dysfunctional they function on a simple business model quite remote from journalism.

A first reason for dysfunction in real journalism is that people with complex aims in mind are apt to make mistakes. Walter Duranty got the USSR wrong as did much of the political Left. The New York Times believed the official story about Iraqi WMD as a trigg
er for the ‘War on Terror.’ It seemed desperately credulous to me, but I wasn’t living in Manhattan in the aftermath of the attack on the Twin Towers.

Beyond this, the larger reason for the dysfunctional inconsistency of news media generally brave occasionally, craven increasingly often is that unlike Murdoch, they don’t have a rational business model.

The Business of News

There is good historical basis and some support in audience figures to believe that media outfits that break major stories (and run big risks) can build a solid following and reliable revenue. I reckon a serious newspaper is in fair shape if it gets hold of three major chunks of real exclusive news per year but it must take large risks to get them, for such items are outliers, found far from the centre of the bell curve. That, to be sure, is why they have impact and resonance. News, on this definition, is a highly speculative product.

There is, of course, another thing called news: regular happenings that can be harvested quite sedately. This is the commodity news agencies deal in. Newspapers used to have it largely to themselves, and made good money from it. You can account sensibly for profits in a business so described, just as you can with power engineering or construction.

To perfect the Murdoch approach you then take no risks you can rationally foresee. That this means abandoning the political justification of news media the rationale of the First Amendment to the US Constitution, echoed in every democratic system has never been a problem for Rupert. But it is to some degree or another for virtually all other media groups and the people who work for them.

Most still aspire to perform that political role indeed, must know they will lose their remaining audience if they don’t but they can’t set out a business rationale for doing so. And this is becoming a sharp, unavoidable problem, especially for newspapers, since investors suspect that their business in commodity news and classified ads will migrate to small-scale online competitors.

The present state of the US Knight Ridder group shows how the predicament can take shape. Knight Ridder owns 32 daily papers, including large, distinguished ones like the Miami Herald and the Philadelphia Inquirer. None lose money, and Knight Ridder’s operating margin in 2004 was 19.3 per cent, roughly twice the average for Fortune 500 companies.

But Wall Street analysts hold that this must rise in the short term because the future for newspapers may be bleak. The analysts want further cuts in editorial resources additional to heavy ones already made saying, truly enough, that nowadays commodity news can be handled with vestigial editorial staffs. This is a business model that points to swift profit improvement, and makes eminent conventional sense is ‘normal’, in the words of Colby Atwood of the media research firm Borrell Associates.

Its application, of course, will annihilate the medium- and long-term prospects of any newspaper to which it is applied. Plenty of revenue will be pumped out, but the newspaper will lose the capacity to produce any news except that which others can supply quite as well and usually for less cost. There will be no question of its reporters having any relationship to political or corporate power except taking dictation.

But this isn’t yet an inevitable doom. No other major media group has gone with explicit determination down the Murdoch track, and none fully shares its unique history.

Several, surely, will disappear as the electronic revolution gathers pace, but for some at least this will offer an opportunity to develop new business models. These will need to treat news-gathering as a volatile activity, with high risks that skilful managements can control something that capitalist markets, for all their sins, have been capable of believing, in other contexts.

Murdoch and his heirs can then be left to monopolise the sedate trade of apologising for entrenched and incompetent power.

Launched in 2004, New Matilda is one of Australia's oldest online independent publications. It's focus is on investigative journalism and analysis, with occasional smart arsery thrown in for reasons of sanity. New Matilda is owned and edited by Walkley Award and Human Rights Award winning journalist Chris Graham.