Creative Destruction Analyses of Fairfax Media and the Rinehart Effect in Australia

TitleCreative Destruction Analyses of Fairfax Media and the Rinehart Effect in Australia
Publication TypeConference Paper
Author(s)Anyanwu, C.
Affiliation (1st Author)School of Communication and Creative Industries, Charles Sturt University, Bathurst New South Wales Australia
Section or WGPolitical Economy Section
DateWed 26 June
Slot CodePEW4c
Slot Code (Keyword)PEW4c
Time of Session16:00-17:30
RoomQ119
Session TitleTV industry and Political Economy
Submission ID6508
Abstract

This paper will use Schumpeter’s theory of creative destruction to investigate whether Fairfax’s 2012 strategic direction is a sustainable business decision which balances its economic survival with its social responsibility obligations as a media organisation, or whether it is a political strategy orchestrated by Australia’s richest woman using the organisation’s economic vulnerability to promote her business empire by countering anti-mining regulations. In October 2012, the Nine Entertainment Network Australia was on the verge of receivership as it was unable to meet its debt obligations of about $2.3 billion (Trute, 2012). Similarly, Ten Network Holding has been going through a series of financial crises, leading to a drop of more than a quarter of its market value (Chong, 2012). The Fairfax media, one of Australia’s oldest and most diversified media empires with mastheads which control some of the most powerful newspaper and radio stations in Australian political and economic life, was not spared these financial crises. In the midst of these economic crises, Australia’s richest woman, Gina Rinehart, a mining magnet, shocked many media analysts by purchasing 10 percent stake in Ten Network (Bolt, Nov 24, 2010), and later increased her media stake by buying almost 19% of Fairfax media, making her the biggest shareholder in Fairfax. The question is what is her motivation when the media industry is not as profitable as her mining business? But when her 10 percent stake gave her a seat on the board of Ten Network and she bid to use her majority share position to gain two seats on the board of Fairfax, while refusing to sign the Journalistic Charter of Editorial Independence, her action created disquiet among Fairfax journalists (Whalley and Wright 2012) and led McKnight (2012) to state that, “...what is now occurring is that representatives of one of the most powerful sectors in Australian society, the mining industry, are seeking to dominate one of the important accountability mechanisms in a democracy”. In response to its dwindling market value and criticisms from its largest shareholder, Gina Rinehart, Fairfax Media overhauled its operations and strategic direction from hardcopy newspapers to digital production in 2012. This shift led to the shedding of over 1,900 aimed at providing a more versatile digital content. While such action aligns with what Hirst and Treadwell (2011) regard as favouring multi-skilled, social media-savvy young journalism, Knee, Greenwald, and Seave (2009) in their book The Curse of the Mogul,, What’s Wrong with the World’s Leading Media Companies, argue that the collapse of many media empires is due to poor management decision rather than digital transformation. However, Schumpeter (1942, 2003) in his theory of creative destruction argues that capitalism is a dynamic process that thrives on new consumer demands, changes in production processes and new markets which require replacement of obsolete systems with innovative strategies. According to Foster (2010) such action requires decisive political power, but the question this paper asks is who is in charge of Fairfax media and who has the political will to make such changes?

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