FYI | Jun 06 2007
It would appear that Fairfax’s (FXJ) position as Australia’s pre-eminent publisher of financial news and analyses is about to be challenged. FNArena has learnt that News Corp’s (NWS) local publisher, News Ltd, plans to restructure flagship newspaper The Australian in order to facilitate a stronger focus on financial reporting.
With News Corp watchers seemingly more confident of the company’s chances in acquiring Dow Jones & Co, one would have to fear the consequences of such success for Fairfax in Australia, especially given the dismal track record of the latter recently.
Rupert Murdoch’s ambitions to step into the financial news arena have been a public secret for years. However, his company News Corp was never going to pursue Rupert’s ambition the pioneering way, instead News Corp officials have been scanning the market for suitable assets to buy.
In Australia, FNArena knows of discussions between News Ltd representatives and one small print publisher and, separately, discussions with two online content providers. Meetings have taken place over the past four years. Alas, none of the discussions ever moved past preliminary stages of exploratory talks.
All of the embryonic plans discussed revolved around a central role for newspaper The Australian, both print and online, which provides us with some insight into how News Ltd is planning to attack what is still very much Fairfax’s double fenced home turf.
While News was unable to locate and acquire the sought after assets, Fairfax, being the owner of Australia’s sole daily financial newspaper the Australian Financial Review, was able to make the transition from print to online from a relatively luxurious (as in: unchallenged) position.
Domestic plans for the Financial Times never got anywhere, so competition in the financial information sector has been largely confined to some market share nibbling from Publishing & Broadcasting’s (PBL) ACP Magazines, and efforts from online portals Yahoo! and Ninemsn (Packer’s PBL again). Apart from them, the majority of competitors in the field exist in the form of, well, companies such as FNArena. Hardly something a media institution of the size of Fairfax, even prior to the merger with Rural Press, would be worried about.
However, it’s not like the company has been doing a particularly inspiring job while developing its online financial business model. Traffic to its flagship url address afr.com.au (or afr.com nowadays) has slipped significantly over the past 18 months. In so far that international web traffic monitoring service Alexa no longer includes the website in its global top 100,000.
According to industry insiders, the decline of afr.com(.au) as a traffic magnet across Australia’s online investment minded community is a direct result of management’s failed strategy for investment portal afronline (nowadays fully integrated into afr.com). After spending more than $10m in developing the service, and marketing it with full page ads in the newspaper, and across the Fairfax Digital channels, the service has painfully failed to live up to its potential.
The previous sentence should be regarded as a firm understatement. It is rumoured the total amount of paying subscribers to what Fairfax ads describe as a “revolutionary service” is some 800 subscriptions (at a maximum of $25 per month), and the number is said to be declining. This despite an alliance with CommSec, the largest online financial broking service in Australia, and even more intense marketing efforts recently.
Let’s skip the details about why the service hasn’t worked thus far. The fact that a Fairfax marketing delegation was visiting partners and prospects earlier this year only to bombard them with questions such as “what would you do?” [to improve our service] and “is there nothing you can do to help us?” -I have this information from a first hand source- let’s be honest about this: it is not really a token of confidence from the people in the field who should be selling the service.
Now enter Rupert Murdoch’s The Australian. The newspaper has been poaching some highly profiled, and some less highly profiled, journalists from the AFR over the past months – and in quite noticeable numbers.
The plan is to create an alternative platform for financial advertisers, and their job advertisements in particular, through subdividing The Australian in a few easy take out sections. The business section will be placed at the back of the newspaper, in reverse. This will give readers of the newspaper direct access to the main financial news by simply flipping the newspaper. Brilliant idea?
Wait to see Fairfax’s ad revenues come under pressure as The Australian tries to secure itself a permanent piece of the financial advertisement pie. How long before afr.com will be challenged?
Simply let your imagination do the work for when Rupert manages to convince the Bancroft family The Wall Street Journal and Dow Jones news service are in better hands at News Corp.
Following the success story of the MySpace purchase, there should be little doubt News Corp management already has some grand strategies mapped out for when Dow Jones & Co will ultimately become a News Corp asset.
Fairfax better starts cleaning up its act, and fast.
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On a different matter: I have been warning about creeping up bond yields for several weeks now. It would seem the market has finally paid attention following a much stronger than expected Q1 GDP release in Australia on Wednesday morning.
Interest expectations in the local market received a big boost from the surprise release. Some economists have not only started talking about further tightening by the RBA possibly as early as July or August, but some of them are mentioning as many as potentially three more hikes between now and mid-2008.
It would seem the equities bull market has found its natural brakes in June this year.
Till next week!
Your I will be watching the battle between News and Fairfax from the sidelines editor,
Rudi Filapek-Vandyck
(As always firmly supported by the Fab Three: Chris, Greg and Terry)