Australia’s media landscape has been through the ringer over the past few weeks, the ground is changing at a pace not seen since the eighties. The latest shake-up comes from the ever stoic News Limited – the Australian arm of News Corporation – the company has announced a massive restructuring of the way it delivers news.
The announcement on last week, which included job cuts and a reduction in east coast operations from 19 divisions to five, came days after Fairfax Media outlined plans to axe 1,900 staff, move jobs offshore, close two major printing presses and downsize its flagship newspapers to tabloids, as well as it’s ongoing boardroom battles with billionaire Gina Rinehart.
Despite the cuts, News Limited CEO Kim Williams has told staff that the organisation remains committed to print ::::
Key announcements out of News Limited:
- Unknown number of redundancies
- One city, one newsroom strategy
- 19 divisions to be reduced to five
- Company remains committed to print
- Methode publishing system brought in for print and online
- Takeover offer for Consolidated Media Holdings
- Purchase of Business Spectator and Eureka Report
Mr Williams told ABC.net.au that he cannot say how many jobs will go at this stage.
“As we go through our transformation program, as I spelt out in my detailed presentation to our staff today, we will progressively be very transparent with our workforce about the numbers and the impact,” Mr Williams said. ”But where ever possible we are going to manage our transformation through natural attrition.”
On modernisation, no-one has been as willing to take risks as News Limited, the announcement that the group will pick-up Methode Publishing is another example of the head long charge into digital media that News is undertaking.
The Australian reported that the decision to pursue the social media project, which will pipe Twitter and Facebook streams to computer screens as journalists write stories, will form part of the company’s $60 million editorial computer system upgrade. News has decided all mastheads will adopt the Methode publishing system, which will publish copy in print and also online.
The system will allow journalists to track the social media development of a story in real time from within the editorial system. A News Limited spokesman declined to comment on the specifics of the Methode roll out.
Media has been told a number of companies, including Adobe, have been developing digital publishing systems that would keep journalists abreast of commentary via social media. It is probable that the social media integration would not make the first stage of the Methode roll out, but sources said News Limited planned to make access to social media feeds automatic in the long term.
This isn’t by far the end of the shake-up road for News Limited, it’s parent company News Corporation is en-route to making some pretty major changes to it’s hefty galaxy. Business Spectator – another News target – is reporting that News Corporation is considering splitting into two companies, according to a report from The Wall Street Journal. If it went ahead, the split would most likely separate the company’s publishing assets from its entertainment businesses.
News Corp chairman and chief executive Rupert Murdoch has previously opposed splitting up the business. According to The Wall Street Journal, a source familiar with the situation said Mr Murdoch has recently given the idea more consideration.
If such a split went ahead, it’s expected that the Murdoch family would retain control in the businesses.
News Limited has also made a $2 billion takeover bid for James Packer’s Consolidated Media, in an attempt to increase its pay TV stake. Consolidated Media owns 25 per cent of Foxtel and 50 per cent of Fox Sports Australia, a producer of subscription sports TV channels.
Mr Packer has welcomed News Limited’s offer of $3.50 a share. The Australian Competition and Consumer Commission says it has begun a review of the move, which would see News gain complete ownership of Fox Sports Australia and 50 per cent of Foxtel.
Consolidated Media Takeover
James Packer has welcomed News Limited’s bid for his pay-television empire just hours before Rupert Murdoch’s publishing giant revealed details of a major shake-up of its operations. News Limited has made a $1.97 billion offer at $3.50 a share to take over Mr Packer’s Consolidated Media Holdings in a bid to strengthen its dominance in the pay TV industry.
Consolidated Media owns 25 per cent of Foxtel and 50 per cent of Fox Sports Australia, a producer of subscription sports TV channels.
The competition watchdog says it has begun a review of the move, which would see News gain complete ownership of Fox Sports Australia and 50 per cent of Foxtel.
It is subject to a number of conditions, including clearance from News Corporation, the Foreign Investment Review Board (FIRB) and the Australian Competition and Consumer Commission (ACCC).
It would give Mr Packer $1 billion to pour into his battle to gain control of Echo Entertainment, which owns Sydney’s The Star casino, and leave his nearly 7 per cent stake in Ten Network as his sole media investment.
News lodged the takeover bid before it revealed details of a major restructure, including job losses, moving to a “one city, one newsroom” model and the $30 million acquisition of the Business Spectator and Eureka Report websites founded by former Fairfax editor and ABC identity Alan Kohler.
Mr Packer, through his Consolidated Press Holdings (CPH), is the majority shareholder of Consolidated Media with a 50.1 per cent stake.
“CPH welcomes News’ proposal and looks forward to CMH and News working together to address the detailed terms and conditions,” he said in a statement.
“Subject to this, CPH, considering the offer price of $3.50 per share to be fair, will support the proposal in the absence of a superior cash offer.”
Kerry Stokes’s Seven Group is the next largest owner of Consolidated Media, with 24 per cent.
City Index chief market analyst Peter Esho told The World Today the deal made sense for Mr Packer given his battle to gain control of Echo Entertainment.
In March, Mr Packer took a 10 per cent stake in Echo through his Crown casino business.
“Many have said the premium isn’t large enough but I think the earnings expectations out there in the market are perhaps too generous, and the price is reflective of what’s a reasonable price to pay for this asset,” Mr Esho said.
“So it’s a nice exit and it comes at a time where Packer can use that to reinvest in a higher-return business.”
UPDATED: 29 June 2012 – Media mogul Rupert Murdoch has confirmed that News Corporation will proceed with a plan to split the company in two. The split will separate newspapers like the Wall Street Journal, the Times, the Sun and the Australian from the fast-growing entertainment unit that includes Fox News.
The 81 year old Mr Murdoch will be chairman of both companies and will be chief executive of the entertainment business. The move to split into separate publishing and entertainment arms was approved by the News Corp board in New York.
Mr Murdoch insists the move to split the $60 billion conglomerate is not a reaction to the continuing fallout from the phone-hacking scandal in Britain.
“No, got nothing to do with it at all, at all,” he said. ”This is not in reaction to it. This is looking forward to what’s best for our companies and what’s best for our shareholders. Gradually I realised the logic of it and how all the companies would be better managed and we’d be a lot better in every way.”
Asked what the future held for his sons Lachlan and James, he said: “”Well they have to earn it, and they have to want it.”
“Lachlan is very happy running his own business in Australia and loves living there, so we’ll see,” Mr Murdoch said.
Mr Murdoch also dismissed speculation the publishing company would be based in Australia.
Chase Carey will stay as chief operating officer of the entertainment group but Mr Murdoch says the company is in no hurry to name a CEO for the publishing unit.
The split could take a year to complete.
Major shareholders have apparently been pressuring Mr Murdoch to hive the publishing business away from the more profitable Fox empire.
The publishing arm has little growth and accounts for as little as 10 per cent of the company’s overall cash flow.
Mr Murdoch says the company has “a large and unparalleled portfolio of diversified assets” and that this structure has “become increasingly complex.”
“We determined that creating this new structure would simplify operations and greater align strategic priorities, enabling each company to better deliver on our commitments to consumers across the globe,” Mr Murdoch said. ”I am 100 per cent committed to the future of both the publishing and media and entertainment businesses and, if the board ultimately approves a separation, I would serve as chairman of both companies.”
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