September 13, 2011 | Graham

How would you divest News Limited?

The government is establishing a media inquiry, but apparently it won’t look at divestment, despite the Greens demands that it do so. This is probably a good idea because I can’t see how you could actually execute a workable divestment.

News Limited owns 70% of the eastern seaboard newspapers, and it is claimed that this is an unacceptable concentration of ownership. In Brisbane, Adelaide and Hobart they own the only daily. In Sydney and Melbourne they compete with Fairfax which owns two broadsheets The Sydney Morning Herald and The Age which compete against News’ tabloids The Telegraph and The Herald Sun. On a weekday News has 66% of the circulation in Sydney and 72% in Melbourne.

Anyone arguing that News needed to be divested of some of its publications would be hard-pressed to argue that they should be forced to sell in the capitals where they face significant competition. They may have close to 70% in both those markets, but they’ve done it against competition.

It would seem to be perverse to punish them because their very substantial competitor isn’t as good at selling newspapers as they are. It’s not as though there are restrictive trade practices in place which prevent newsagents from selling both newspapers to whoever wants to buy them.

So the argument surely devolves to Brisbane, Adelaide and Hobart where there is no print competition.

But this then produces another problem. ¬†While these three newspapers represent around 30% of News’ titles and forcing News to divest them would reduce News to around 50% of the capital city market, there isn’t really a capital city market in any meaningful sense of the world. There are really six discrete markets.

If monopolies in each of these discrete markets are a problem, then what you are doing is really transferring the problem from one owner to another. The government might not like the current owner of these newspapers, but they might like a future owner even less.

It’s hard to see too many people getting excited about buying a newspaper these days, which means that likely buyers may have other reasons for buying. Suppose prominent LNP supporter Clive Palmer could be persuaded to stump up for The Courier Mail¬†– would that fulfil the Greens and government agenda, or just make things worse for them? He’s got the money to buy a newspaper, and it might suit his view of the world. It’s also fashionable for mining magnates to own media with Gina Reinhardt having a fresh stake in Ten.

There is no alternative to forcing a sale. You can’t force people to set-up a newspaper in competition which will be successful enough to substantially eat into News’ circulation. In Brisbane Fairfax thought about it and whimped out, establishing an online publication The Brisbane Times, which has barely made an impact on coverage of politics in this state.

This article skirts a whole lot of issues – such as whether it is appropriate at all to have an inquiry into ownership of newspapers. It is afterall a matter of free speech that someone should be able to publish their opinion as widely as they like and I would be surprised if a constitutional challenge to any attempt to limit this right would not succeed.

But, within the limits of my counterfactual, how exactly would you divest News Limited?

Posted by Graham at 9:21 pm | Comments (1) |
Filed under: Uncategorized

1 Comment

  1. News Ltd and Fairfax are being divested naturally by the internet anyway.Who would buy a decaying dinosaur? They are the masters of their own demise.The corporate news have allowed large corp interests like the Gobal Reserve Banks to dictate policy and agendas.

    The people are awakening.Already many are looking to the Chinese Renimbi as a replacement for the US $.The currency wars have begun but the losers in the West have but one reply,ie A New World Order by WAR.

    Comment by Ross — September 14, 2011 @ 11:44 am

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