An open letter to the industry from a casualty of the Australian media bloodbath

“Unfortunately for the bulk of the media industry, short-sighted business decisions are now being made by executives who don’t know media, don’t know their audience and don’t know the value of their brands.”

What a lazy and sweeping comment. I’ve worked in media for 25 years and the people who work, run, and own media companies certainly know what they’re doing. I suggest the author does quite grasp the complexity of the issues and challenges they face.

The problem with modern media (radio is perhaps the exception) is that they have failed to adapt sufficiently to the new world. A good analogy is 19th century coach builders. The advent of the internal combustion engine largely saw off the horse, so coach builders got into the business of building bodies for motor vehicles (Holden, for example), Print media have made a half-hearted attempt to embrace the new way of doing things by putting some material on-line, but they’ve been unable to sufficiently monitise it. They have certainly been unable to convince enough people to pay for on-line material. I don’t know the answer, but greater minds than mine are paid a lot of money to come up with the answers. They’ve failed. Here’s a suggestion: hand over your companies to 20 somethings and tell them to do their worst. It certainly couldn’t result in anything worse that we have now.

Well written and argued, and there can be no doubt that some of this is true.

But aren’t we experiencing the same as the rest of the world? Do they have the same problem?

(I don’t see Disney as being a fair comparative.)

Anonymous, I like the fire, but feels like the proposed solutions are pretty weak. That said, if you can see the path forward, now’s the time to strike. I hope you can succeed where others have failed.

The situation is unprecedented for most people’s entire lives.

Everyone is a backseat driver on this one, no one has the right answers.

COVID 19 actually served Disney+ well. Audiences spend more time at home, and they made an excellent decision by moving forward the digital release of Frozen 2 and Star Wars: ROS.

As a former employee of a large Australian media company, I 100% agree with the sentiment of this author. Obviously there are nuances to every company’s situation, but speaking from experience, I saw years of gross mismanagement of budgets and resources. Wasting more and more money on projects that we all knew would never go anywhere. Pushing already stretched staff into working on a million different projects in order to make a quick buck or to support old business models, rather than defining a clear business strategy and investing in platforms for the future.

Dear Anonymous author – it is a very sad picture which you have painted. However, here are a couple of tips for you:
1/ Get an ABN set up through the Tax Office.
2/ Do some consulting for other agencies or find some clients of your own which require your specific skill-set.
3/ Be your own boss and make the change you want – don’t wait for others.
Lastly and most importantly, get off your arse and do something positive INSTEAD of blaming others. Whilst your observations of the media industry have some merit, the overall tone of your article is one of self-pity and utter hopelessness. If you disagree with any of the above points, then our industry is probably better off without your anonymous ranting.

A problem is that the difference between journalist and influencer is almost nothing in many cases. Why spend a fortune on PR/advertising and hope a journo prints your press release when there’s a horde of influencers, with massive audiences, willing to push whatever you want, for much less outlay. Of course, offering valuable journalism would be a real point of difference – but how many journalists truly offer that, if we’re honest?

Still, you’re right about dinosaur publishers not understanding the industry anymore. That said, it’s completely in a state of flux and even the ‘innovative’ new way (relying on events) has taken a hammering lately.

Ultimately, though, the fact that publishers are not prepared to hang around and lose short-term profits, at the expense of their loyal workforce, is the way of the world right now. And it’s a situation that’s evolved with complicity from the media. Perhaps ‘journalists’ should think twice about publishing relentless neo-con propaganda that puts profits above people? That way, when profits get put above themselves, they’re less likely to cry foul.

A good summary of where we are at today. Australian FTA Networks have and are still running around like were in the 80’s and 90’s. Too many people and too many inflated salaries. Just look at Sales Departments with all their layers. In house creatives and production units designed to rob the hand that feeds them. Integrated strategy Directors, Directors of Revenue on 7 figures with National sales Directors on half a ton reporting also.
Then theirs programming and production heads all on huge dollars.
It’s nuts but onward they go. Drive into the car park at 7 or 9 and check out the bling!
Industry is having a huge rationalisation but the media owners still don’t no enough about their own companies to make the big calls.

I worked in a Media company for 18 years and loved the “electricity” I felt working in such a wonderful industry. Always being one in trying to create change and think outside the box. Loving change and growth but of course that was me! But in any industry, as life, everything changes and that’s where companies need to think ahead. Growth requires thinking and doing things a new way, a better way, a different way. It requires the right kind of people who can run companies and have staff who think about growth and change and most importantly, in making change. If you play it safe you will remain where you are. And if you are not prepared to invest in new ideas or take the chance there will always be someone else who will. I still love the Media Industry and still see it as “life”and am still interested in getting back in it. Believing, that as long as there is “life in us” anything is possible in re-igniting the life back in it.

The unfortunate truth in most cost-cutting is that businesses need to make money – they are not charities. I understand (first-hand) the crushing disappointment of being made redundant, but it is rarely personal, and it is usually done to ensure businesses remain viable and profitable.
I have read several articles about the ‘short-sightedness’ of redundancies due to Covid – I daresay made by people without visibility of P&Ls – most media companies live and die by their monthly billings – and when advertisers stop, they have little wriggle room.

Mumbrella, why would you allow the writer for this piece to be anonymous?

The problem is revenue, not content. You can’t survive for long without adequate revenue and profits.

Few publishers earn enough from digital ad sales to cover their staff wages, let alone their entire set of overheads. It is true for dinosaurs and innovators alike.

While some publishers supplement advertising sales through subscription based revenue streams, few earn enough from digital subscriptions to even bother. Event related revenue streams used to keep some publishers afloat, but now look dire.

Finding a “sugar daddy” (a rich philanthropist willing to throw money at an unprofitable business) has been a successful strategy for a number of publications – big and small. It could turn out to be the only realistic option for news focused content producers.

Interesting that the author cites The Lucky Country without (seemingly) understanding the terms origins as it fits the authors narrative perfectly.

From Donald Horne’s book of the same name:
“Australia is a lucky country run mainly by second rate people who share its luck. It lives on other people’s ideas, and, although its ordinary people are adaptable, most of its leaders (in all fields) so lack curiosity about the events that surround them that they are often taken by surprise…”

First off, sorry to hear you lost your job through this. It really is unprecedented times. I hope you and your family are safe and well.

A few points up for debate though.

Disney is not a great example. Disney+ has one of the strongest brand portfolios in the world (Disney, Pixar, marvel, star wars and Nat Geo), is global (unlike all Aus OTT), and is driven largely by kids (as most parents of young children can attest). They also had one of the best CEOs (across any industry) in a generation in Bob Iger.

Taking nothing away from their amazing achievements; this is an extreme outlier. They have also spent ~3b USD to launch this product and have a very profitable business that does not rely on OTT as the saviour (theme park business is the cash cow although COVID will put it to the test!). The Disney business model is built on its unique ecosystem across movie theatres, theme parks, cruises, merch and content etc. Content pulls them into the ecosystem, and they monetise more broadly; content is not the end game.

Similarly, Amazon uses prime video to sell more sneakers (famous Bezos quote). Apple is doing the same thing with Apple TV+. Optus and Telstra also use content to acquire/retain customers in their mob/broadband packages. 

It has been clear for a while now that most content pure plays (ex Netflix; again global scale) are going to struggle. The cost to create, acquire and distribute quality content is increasing (at least video content; inflated by the stupid money thrown at it by Netflix, Amazon, apple etc and rising sports rights costs) while the amount ppl pay has decreased and audiences have fragmented (plus everyone wants Netflix level product/UX). The ‘9.99’ monthly fee with no switching cost model is great for consumers, not so much for businesses (not to mention the high CAC and churn!). Likewise on the ad side, audience growth alone does not get you far when Google and FB monopolise digi ad spend.

We are going to see much needed mass consolidation in traditional media over the coming years. Global tech cos will continue to eat our lunch (pay negligible tax, and not support the local industry; govt needs to step in and support at some level) while we fight each other for scraps. Yes, new players will emerge, but it will take time. It is also much more difficult for new media players to break through.

The core concept of network effects did not exist prior to the internet. This strengthens their mass aggregation (ecosystem) model as they grow, creating a near insurmountable moat (and warchest of free cash) – particularly as they start to expand their ecosystem into adjacent services such as Amazon Prime (video, audio, books, groceries etc) and Facebook’s move into ecommerce. They can also quickly copy products/features to test at scale (like facebook does to Sanpchat) or buy and integrate/retire businesses like Google.

The industry does need to fundamentally change the way we operate to compete, and fast (yesterday); but this will take time, cash and patience/permission from the ‘market’ (ie. shareholders). Unfortunately, cash is required to fund this kind of change, and lots of it (ie. Disney’s 3b USD investment in disney+ product, the billions spent on buying Pixar, Lucasfilm, marvel and fox – the latter was 71b USD alone!, NBCs 1b USD re Peacock). Given most legacy media revenues are structurally challenged and digital $ heavily contested, cost has to be part (not all) of the response. Debt is the other major option which has its own challenges. 

This is all a long way of saying yes there needs to be significant change. Yes it should have been done a long time ago. Yes (most) management are aware of this (and we do need a refresh). But it is not easy. There is a reason why traditional media across the world is struggling to breakthrough. This is a really hard problem to solve and there are plenty of great minds who have toiled on this for years; but that is the beauty of this industry. We are on the forefront of tech and consumer behaviour change (at least the impacts of).

No one knows how it will turn out, but that to me is the exciting part. There will be plenty of opportunities as this plays out!

Yes are all aware of most of this.

But seemed strange to me that the author not mention News corp when they rattled off a number of media companies??? You are writing about news companies and you forgot to mention the biggest one and the one that closed all the papers last wee and killed them for good? Surely should have been called out??

Terrible times. Just heard from a friend that there are more job losses – MSN laying people off at the end of the month.

I do feel sorry for ‘Anonymous’ and what has happened with COVID-19.

In fact I feel sorry for all affected by COVID-19 and other events such as drought and bushfire.

But to come up ‘Disney-fication’ is pie-in-the-sky writ large.

Disney has resources to fall back on that are larger than money nations have. It’s the ‘too-rich-to-fail’ strategy.

But back to reality, no Australian media company has those sorts of resources. Suggesting that as the panacea is irresponsible.

Having said that, I agree that many, if not most’ Australian media businesses have displayed blissful ignorance and coupled that with pie-in-the-sky business strategies on the road to disappearing up their own fundaments.

Handing the reigns over is pretty much exactly what has just happened in New Zealand with the Management Buy-Out of Stuff (see existing CEO Sinead Boucher who has negotiated with Nine). Will it be a success? TWT (time-will-tell). But it won’t come down to just handing the reigns over to someone else who is less spreadsheet-inclined… It will come down to smart operators who can balance the scales operationally and engage with Clients on the Revenue side to compete against the Tech Platforms for Digital Ad Revenue. That is the key.

You can add Vice Australia to that list too.

What a croc. Put your name to it if you are going to make a commentary. Otherwise call the waaambulance…

I feel for you Anonymous as I’ve been dumped into the same “save some quick cash” so I can meet my performance bonus target “boat”. Unfortunately short sighted management is a cyclical beast that may end some Media companies well before their time. I totally agree with you the current lot can’t see the wood for all those trees. My company hired a banking industry IT “change manager” with zero, and I mean zero FTA TV or Radio knowledge to come in and devastate the life long industry Engineering experience held within the company. To what end? Out sourcing always costs more in the long term.
This decision means the company can’t move forward as they no longer have any real industry knowledge at their disposal and this is clearly the case as all development works have stopped. Where are the board members when these plans are hatched? Surely they aren’t just accepting the CEO & CFO’s word that it’s all due to covid19 and not just the lack of a clear business building plan for the TV & Radio divisions.? Share holders seem to be well aware of the lack of any plan to reinvigorate the free to air media and my old company is heading for single digit cent value way to rapidly because of this short sightedness. A broom is desperately needed at the top or just sell the assets to someone that can see a media future and look to rebuild what is a perfectly profitable business.

In the absence of solutions, consider the following:

1. Start with the audience. Understand them. Vanity metrics are jazz hands. Unless you have a deep understanding of the audience, every business decision made is stillborn – programming, channel, timing, medium, messaging…You can’t sell advertising unless you understand the audience.

2. Invest in content. What does the audience want? Eg. sport. Buying rights is not limited to live broadcasts. It’s a licence to create content. Think Front Bar, The Last Dance, F1 Drive To Survive, Sunderland ‘Til I Die, The Test…Content that has shelf life and ability to appeal well beyond its immediate audience. To quote another article, “Stories about sport are often more gripping than sport itself”. Good media is storytelling well done.

3. Cleanse the journeymen. Ie. those that have worked their way up everywhere and created value nowhere. Media is littered with stewards vs value creators. EPS growth built on cost cuts is a sugar hit.

4. Original content development should never be the first, second or third cost lever to pull. If you don’t create your own unique content, you’re a reseller. No-one likes paying for aggregators that stand for nothing.

5. Trial and error. Go to where your audience is. The days of expecting them to come to you are long gone. Test content. Test technologies. Test channels. Create your own. Doing nothing is not an option

6. Cut Facebook reliance for distribution. You’ve already lost if Facebook is driving 90% of your traffic. Who owns your audience? Not you.

To be honest I was happy this happened. Most of these journalists and publications were a waste of time and added zero value to society with their press release rewrites and lack of inclination or drive to pursue a story. We all keep crying woe about the media industry, but I feel no-one talks about the quality of underlying journalism and the “talent” we churn out through colleges and universities. Journalists, the majority who are unskilled and show no interest in the work, are partly to blame for not being good enough to make their publication want to be picked up.