More Regulation Won't Fix The Media


Over the past three weeks, the News of the World phone-hacking scandal in Britain has been the catalyst for calls for an inquiry into the Australian media industry. Many have argued for regulation of journalistic ethics or for tighter control of newspaper ownership, including Wendy Bacon here in New Matilda.

This should be cause for concern. While the value to a democratic society of honest and diverse news media is beyond doubt, tighter regulation is likely to be of little benefit and indeed could do much harm to the health of the already ailing print media. Rupert Murdoch’s News Limited controls around 70 per cent of the Australian newspaper market, with just two other players holding a substantial market share. The standard argument goes something like this: a robust democracy requires diversity of ownership to minimise the risk of biased news reporting — and if this diversity cannot be achieved through a free market it should be imposed through legislation.

Unfortunately, the shrinking newspaper market in Australia is unlikely to be robust enough to withstand external manipulation. With newspaper circulation in steady decline, it is improbable either that another corporation would take on any papers divested from News Ltd or that News Ltd would be able to buy out any failing titles from the other players. The newspaper business has very high costs of entry and of production. It is economies of scale that allow the large circulation papers to cover these costs — barely. But as advertising revenue continues to move to online outlets, it is a business that makes less and less sense. With new players unlikely to enter the market, regulation of ownership would only redistribute holdings arbitrarily among the existing players and hence have very little impact on media diversity.

Digital platforms reduce the cost barriers to the media market — even though the problem of income generation has still not been solved satisfactorily. Fairfax has committed to a digital future, entering the Brisbane market with the Brisbane Times in 2007, and the national market with the relaunched National Times in 2009. Magazines are an expanding market, and weekend papers are faring better than dailies.

In other words, it is a time of change in the media — and also one of great promise. Those calling for media control should look forward to the digital future not to the moribund state of newspapers. The last thing we need right now is government overview of online media, the effect of which would be to reduce, rather than increase, market dynamism and diversity by imposing regulatory barriers to entry or worse, control of content production.

With the ease of access and low cost of production that the internet provides, media diversity should soon be a problem of the past. Some, like Tim Dwyer and Fiona Martin at the University of Sydney, may argue that these factors make for too-easy syndication and recycling of news from a common source, but this is a problem — if it is one — created by media consolidation, not the online platform. There is no reason why it should be exacerbated by the move to digital. Indeed, it is likely to be meliorated as more new media outlets are launched.

The argument in favour of newspaper regulation also assumes a connection between ownership and editorial direction which is by no means obvious.

On last week’s Media Watch, for example, host Jonathan Holmes showed that the Daily Telegraph’s famously negative editorial stance on the carbon tax was not reflected in other News Limited outlets. Murdoch has also argued for action on climate change, and introduced a carbon-neutral policy at News Corp. In Britain, Murdoch’s holdings range from the now-defunct News of the World and The Sun to The Times and the Sunday Times, papers with vastly different reader demographics and editorial styles.

News Corporation, like companies in other industries, is more likely to be driven by commerce than politics. A newspaper company in search of a larger market share will diversify its offerings in order to satisfy the divergent interests of a large readership. Diversity draws more readers and more advertising. The growth of Murdoch’s News Corporation is unmatched in large part thanks to his unwavering push to engage as large an audience as possible. Indeed, the larger the corporation the more probable it is that the owner will not exert editorial control over individual outlets. A one-paper media business is far more likely to be a vehicle of the owner’s agenda.

It is true that business and politics are not islands unto themselves: Murdoch’s attempts to influence politicians have been well documented during the current furore in Britain, but clientelism and rent-seeking find a firmer friend in political pragmatism than they do in ideology. If we are to be worried about editorial control, it should not be with political ideology in mind but the more insidious problem of a too-cosy relationship between government and media resulting in an unwillingness to hold government to account.

While it may take "a certain level of chutzpah to simultaneously run an utterly biased campaign against the Government whilst sticking your hand out for a juicy government contract", as Stephen Mayne recently wrote of News Limited’s bid for the Australia Network contract, the possibility of a government contract being offered as a reward for favourable media coverage is far more worrying.

The News of the World scandal has exposed some nefarious journalistic practices, but they are also criminal practices and will be dealt with by the law in Britain — and indeed in Australia if it emerges that journalists have practised illegal surveillance in this country. Ethics are a matter of culture, and the best hope for journalistic ethics is not government regulation but ethical journalists and a public culture that does not buy into the sensationalism of tabloid media.


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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.