News

The closure of the Australian Associated Press news service threatens to devastate regional and smaller media players. So was the decision taken solely in response to falling revenue streams, or was there also an attempt to stifle competition at play? By Paddy Manning.

AAP closure leaves industry reeling

Australian Associated Press chairman Campbell Reid after the closure announcement at AAP’s head office in Sydney on March 3.
Credit: AAP Image / Dylan Coker

The final deadline is the end of June. In all, it will be 600 people out of work, 180 of them well-trained and highly skilled journalists. But the impact of Australian Associated Press’s closure – especially on regional publications that depend on the service for syndicated photographs and stories – is difficult to overstate. Some observers say it will be worse than anything journalism in this country has faced so far.

A final decision was rubber-stamped at a meeting of the AAP board in Sydney on Wednesday morning. It is not too late to save the business, but it is unlikely. AAP chairman Campbell Reid said: “If someone wanted to make an offer, there is nothing stopping them.”

The financial position of AAP is said to be dire and although various rescue options are being thrashed out, it would probably take a philanthropic white knight or public bailout to keep the operation afloat.

Paul Murphy, chief executive of the journalists’ union, the Media, Entertainment and Arts Alliance, says the closure was “an absolute bolt from the blue”. The union is now arguing to save as many jobs as possible, ensure all employees have an equal and fair opportunity to apply for any new positions that come up and ensure redundancy entitlements are paid.

The size of this is enormous. Murphy says it’s “the most catastrophic event for the media industry, in structural terms, that we’ve seen through this whole dark period of redundancies and closures. AAP is just so fundamental to the ecology of our news environment and public information.”

He also says it’s hard to see a resolution that preserves the news wire. “Short of the government coming and finally having the guts to say, ‘We’re going to put a levy on digital platforms that is going into a public interest journalism fund, controlled by a co-operative of all the media operators in Australia’… Absent that happening, I can’t see how AAP can be saved in its current form.”

AAP was set up 85 years ago by Sir Keith Murdoch – father of News Corp executive chairman Rupert Murdoch – to “protect and promote without partisanship the acquiring and dissemination in Australia or elsewhere of news or information of public commercial or general usefulness or interest”. It is controlled by News Corp and Nine Entertainment, which both own just under 45 per cent. Minority shareholders include Seven West Media and regional publisher Australian Community Media, co-owned by former Fairfax executive Antony Catalano.

AAP provides syndicated or wire services to a wide range of broadcast, print and digital media subscribers – including Schwartz Media, publisher of The Saturday Paper – as well as lucrative corporate clients such as Telstra and Commonwealth Bank. Those paying customers have dwindled, however, and management had to cut costs to keep the company solvent. AAP reported almost $1 million profit in 2019, but had lost more than $10 million the previous year. AAP boss Bruce Davidson told ABC’s Radio National this week: “Revenue has been falling, subscribers have been falling, and we’re now at the stage where we simply couldn’t continue to cut our way to viability because then you wouldn’t have a service.”

AAP’s imminent closure has sent shock waves through the industry. At the announcement, Campbell Reid, who is also a senior Murdoch executive, reportedly told AAP staff that News and Nine felt the wire services were propping up competitors who were non-shareholder subscribers, including Guardian Australia, The New Daily, Daily Mail and others. Guardian Australia editor Lenore Taylor wrote that “to an extent, they probably were” but warned of the impact AAP’s closure would have on media diversity, especially for newer, smaller players.

Reid hit back, accusing Guardian Australia of “gobsmacking hypocrisy” for cutting its annual subscription from $120,000 to $75,000. Taylor responded: “We were offered a reduction BY AAP when we renegotiated … because we were using fewer services because we expanded our own reporting teams.” Crikey founder and shareholder activist Stephen Mayne lodged a complaint with competition regulator the Australian Competition and Consumer Commission (ACCC), although there is little precedent for intervention over the closure of a private business and expectations of an investigation are low.

In a statement to Media Watch, Reid denied “categorically and absolutely” that it was trying to stifle competition. Taylor told The Saturday Paper that Guardian Australia was given “no warning that AAP might be closed, nor asked whether we might have paid more to keep it going”.

That’s what puzzles Bruce Guthrie, the former Age and Herald Sun editor and co-founder of The New Daily, which has also relied on AAP. He says that if AAP had come to him and proposed a doubling of their yearly $120,000 fee, with less content, they probably would have accepted given the value of the service. If AAP wanted to regain profitability, he asks, why would they not have axed half their newsroom, as painful as that might be. By his reckoning, assuming each journalist was on an average salary of $100,000, after 90 redundancies AAP could have been $9 million in the black. “They had plenty of room to move,” Guthrie says. “Why didn’t AAP explore that? The answer has got to be that they didn’t want to prop up new entrants. As bitter a pill as that is to swallow, I kind of get it ... maybe it is time we stood on our own two feet.”

The New Daily is now having conversations about how they might combine resources – perhaps with external media organisations – to take up some of the slack that will be left by the closure of AAP. A pooled photographic service to cover courts and royal commissions, or sport, could emerge, or even a news service. It will certainly offer less, at more cost, than AAP. The Saturday Paper has been told that the subscription revenue from non-shareholder subscribers was so low that rates would have to increase by five or six times to restore profitability.

The journalists’ union does not believe the closure of AAP was a straightout cost-cutting exercise. “We’ve had concerns about whether enough was done to save the business,” Paul Murphy says. “I think it’s very appropriate that the ACCC is having a look at the competition stuff.”

Paradoxically, despite the animus directed at News Corp, most industry sources believe that the decision on AAP has been driven by Nine Entertainment, which is less reliant on wire copy and images and has embarked on a $100 million cost-cutting exercise. Nine chief executive Hugh Marks indicated at an earnings briefing a fortnight ago that AAP was a “big cost” – and the former Fairfax newspapers use far less wire copy than Murdoch sites such as news.com.au.

Given the long history of rivalry between Fairfax and News, Stephen Mayne says their decision together to kill off AAP is the “ultimate sellout”. His calls for Nine to give AAP a last-minute stay of execution fell on deaf ears this week.

Much of the focus is on the possibility of some kind of public takeover – the French government owns wire service AFP, for example – and Mayne says there could be no objection on political grounds. He says AAP’s coverage is “the straightest of the straight”. From a budget perspective, the sums involved are minuscule – particularly when the government is trying to stimulate the economy. “If AAP goes broke, it is a conscious decision of the government to allow it to go broke.”

Author and former university journalism professor Margaret Simons says it would be a logical step for the ABC or SBS to take over AAP, and she does not believe there would be much overlap with the existing wire services. “The ABC has nothing like the sort of coverage that AAP has, particularly if you look at the regions,” Simons says. “If you talk to an ABC regional reporter in Warrnambool, the first thing they do in the morning is pick up the local Standard. I don’t think the ABC is in any kind of competition with AAP. Any effect would be at the margins.” Given the federal government’s intransigence over ABC funding, she admits the prospects are not encouraging.

Lenore Taylor says that while there are many conversations happening about how former AAP subscribers might fill the gaps after AAP’s closure, “at the moment I am unaware of any concrete plans or proposals”.

The union and media companies are agreed that the real problem is Google and Facebook. “Digital giants consuming more and more of the advertising market,” says the MEAA’s Paul Murphy, “that is fundamentally the underlying problem that requires government action to address.”

Communications Minister Paul Fletcher did not respond to a request for comment, but in a press release the shadow Communications minister, Michelle Rowland, slammed the government for failing to respond to last year’s final report of the ACCC’s Digital Platforms inquiry. “AAP cited the impact of the digital platforms as the reason it is no longer viable to continue,” she said, describing the closure as “a devastating blow to our democracy”.

Rural and regional newspapers are the most reliant on AAP’s breaking news and photography wire services, Murphy says. “I just don’t know how those regional titles are going to go without AAP copy, and smaller digital titles as well.”

This article was first published in the print edition of The Saturday Paper on Mar 14, 2020 as "Wire less".

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Paddy Manning is contributing editor (politics) at The Monthly.