Killing The Messenger: News Corp’s failed pitch to save suburban weekly

SPECIAL REPORT | Cuts and closures loom for News Corp SA’s suburban weekly Messenger Newspapers, after the media company unsuccessfully lobbied several metropolitan councils for hundreds of thousands of ratepayer dollars to help prop up the ailing brand, warning continued publishing is “at risk”, InDaily can reveal.

May 03, 2019, updated May 03, 2019
Photo: Tony Lewis / InDaily

Photo: Tony Lewis / InDaily

InDaily has confirmed with several sources a senior delegation of News Corp executives, including South Australian executive general manager Ish Davies and Messenger Newspapers editor-in-chief Nadja Fleet, approached four north-eastern councils in March requesting significant investment – totalling at least $1.6 million over two years – to keep the print run of the local North Eastern Weekly afloat.

It was sold to us as ‘either you fund it or it gets shut down’

The requests were designated as commercial-in-confidence, but council documents seen by InDaily state the request would have equated to an increase for ratepayers of around 0.3 per cent per year, “with no guarantee of the North Eastern Weekly continuing after this period”.

One source with knowledge of the proposal told InDaily: “It was sold to us as ‘either you fund it or it gets shut down’, essentially.”

Ironically, the approach came amid an ongoing Advertiser/Messenger campaign – entitled ‘Your Rates At Work’ – targeting waste and a lack of transparency in council spending.

Reporters for the long-running Murdoch-owned Messenger masthead, which began in Port Adelaide in 1951, also file directly to The Advertiser and its website, AdelaideNow.

“They crack on at local government about not being transparent… [but] go behind closed doors trying to get money from local councils,” said another source.

We have approached council with the proposition that you invest $200k for a 12 month commitment to Messenger

In a further sign of malaise in the media landscape, InDaily has been told local News Corp SA editorial staff are preparing for yet another round of redundancies at the end of the financial year, with at least 10 employees understood to be facing the axe.

Confidential documents obtained by InDaily show the Tea Tree Gully council considered a document titled “Unsolicited Proposal – Advertising” at a March 26 meeting from which the public were excluded.

The council’s website states the document should remain confidential “until the relevant company ceases the activity or announces the cessation of the activity that the proposal relates to”.

Declining print advertising revenues are putting continued publishing at risk

A letter outlining News Corp’s request, attributed to but not signed by Messenger’s Commercial Publisher Rhiannon Klar and dated March 15, is included as an attachment to the document.

It reads:

“In our discussion yesterday we talked about the challenging circumstances for community newspapers generally and for our business particularly in the Northern suburbs.

We made you aware of the significant increased costs we are incurring from a distribution perspective and also declining print advertising revenues which are putting continued publishing at risk.

We do believe that there is a future for a print and digital North East proposition with growing new revenue streams from digital advertising and digital subscriptions.

However, we see a 1 – 2 year gap where the new revenue growth will be insufficient to offset rising costs and print advertising declines.

In the last 12 months, reflecting on coverage created for your area we have published 974 local stories, delivering an estimated $5 million of media value reaching an audience of 986,000 South Australians. Stories that celebrate the community, local business, local sport, development and much more. We think this content is something that your resident’s [sic] value and we hope you would be open to supporting.

With this in mind we have approached Tea Tree Gully council with the proposition that you invest $200k for a 12 month commitment to Messenger.

In return for this investment News Corp will deliver $800k of advertising value, a 4 for 1 return on investment via a mix of print and digital assets that best deliver the outcomes desired by Tea Tree Gully.

This $800k budget is available for consistent communication with your own community as well as the opportunity to engage with broader audiences, state wide or indeed nationally, depending on your objectives.

We would work closely with council on creating a bespoke marketing plan that delivers to your specific needs.”

The attachment to the confidential council document.

The letter sought a response by the end of March to confirm whether council was “favourably inclined to consider such a proposal”.

The confidential council document further details that News Corp planned “on approaching other Northern Councils (Campbelltown, Playford and Salisbury) with a similar offer”.

None of the mayors of the respective councils wanted to comment on the approach, though none denied it had occurred.

Sources have told InDaily the $200,000 annual investment was requested to remain ongoing from each council for at least two years.

It’s understood all four councils declined News Corp’s “offer”.

One source said they simply “couldn’t think of a way we could sell it to our community and make it look like there was probity involved”.

“We have to be seen to do the right thing,” they said.

“I couldn’t see how we could explain to our community that we were propping up the Messenger.

“We might as well print our own paper.”

Declining advertising revenues demonstrates a lack of value in this publication for our community

The Tea Tree Gully document, the report of an evaluation team established to assess the proposal, recommends that council “rejects the unsolicited proposal from News Corp Australia on the basis that the proven community benefit and value for money objectives required under the unsolicited proposal guidelines could not be demonstrated”.

It said the paper’s “declining advertising revenues demonstrates a lack of value in this publication for our community” and that “value for money based on this unsolicited proposal could not be validated”.

Council risks not achieving value for money, risk of reputational damage by funding a major-for-profit corporation and risk of perceived media bias and lack of credibility and transparency

TTG’s Evaluation Team further warned that “while the proposal states $800,000 worth of advertising value, we are unable to determine if this represents best value for money, without a detailed breakdown of what the proposal contains”.

It warned that council risks “not achieving value for money, [as well as] reputational damage by funding a major-for-profit corporation [and] risk of perceived media bias and lack of credibility and transparency”.

There was also a “perceived reputational risk that other media do not have the opportunity to offer alternative advertising proposals” and a “risk of lack of control over all elements of publications including circulation volumes, amount of local content, quality of editorial etc”.

The evaluators warned the proposal would contravene “a key principle of the [Council’s] Procurement Policy… to provide open and fair competition by providing suppliers appropriate access to procurement opportunities, which would not be achieved by entering into exclusive negotiations with a sole supplier”.

They were also “unable to determine if the offer represents best value to council without further alternative offers to provide relevant comparisons”.

“There are concerns about [News Corp’s] financial capabilities to maintain this publication long-term and [we] understand this proposal is linked to approaching three other councils for a similar investment,” they said.

“While News Corp Australia has identified within its proposal media value of $5 million, we have no supporting information to validate that data.”

There are concerns about News Corp’s financial capabilities to maintain this publication long-term

The document noted TTG council currently spends “approximately $65,000 annually on print advertising” across the Messenger, Advertiser, public notices and the Government Gazette.

The assessors estimated “editorial content related to the City of Tea Tree Gully generated through the North Eastern Weekly… to be worth about $40,000 for the past 12 months”, adding that “only 30 per cent of these stories were perceived as positive”.

“If we were to invest in this offer, we would have to increase our advertising budget for print media by at least 60 per cent,” they said.

Copy from the long-running Messenger masthead is also filed directly to The Advertiser and its website, AdelaideNow. Photo: Tony Lewis / InDaily

Crushingly, the high-level approach appears to have had the very opposite effect to its intent, with the council advised to not merely refuse the $200,000 annual investment, but to pull all current ongoing funding.

“If council declines this offer, the Communications Team would be directed to develop a comprehensive plan to reinvest current print advertising with North Eastern Weekly (approximately $40,000 per year)… to ensure that over-70s were provided with an alternative print-based local news source,” the panel advised.

“In addition an overall market analysis would be undertaken with a focus on identifying any gaps created by the North Eastern Messenger ceasing circulation.”

The document details a March 14 meeting “where Ish Davis [sic] (News Corp SA General Manager) presented information pertaining to the decline of revenue generated through advertising in the Northern Messengers to Mayor Kevin Knight, Ryan McMahon (Acting Chief Executive Officer) and Elissa Graves (Acting Director Organisational Services and Excellence)”.

“While the letter outlines key elements of the proposal, the following information presented in this meeting has not been included,” it continues.

“There is no guarantee, even with Council investment, that the print or digital editions of the North Eastern Weekly would continue [and] council’s investment would not influence editorial content.”

Sources have told InDaily the advertising deal was to involve an arrangement whereby councils could suggest positive stories to run in the paper.

“We’d be able to say to them, ‘We’d like a story on [something]’ and they’d write that story,” said one.

“But we’d have no editorial control.”

Another said: “My personal thinking is if you’re a council putting money into a printed document, something you’d release to the public, you’d really want to have it presenting the council in the best light, and not be in accordance with what a Messenger reporter would want to do.”

“If it’s that kind of money, we’d find that extremely difficult to justify… if we were going into something of that sort, we’d expect it to be something that would benefit our community from a cost-benefit analysis.”

InDaily attempted to contact Davies by phone, and sent several questions by SMS, including seeking confirmation on further redundancies.

Asked to clarify the future of the North Eastern Weekly, he replied via text: “We will still be publishing.”

“We have spoken to councils as we frequently do but these conversations were purely commercial and had no editorial component and no impact on our current or future reporting,” he wrote.

However, in a clear indication of how unusual News Corp’s approach was, the TTG document states that council has no “relevant data to understand technical competencies as we have not worked in this capacity with News Corp previously” and “no evidence of other commercial arrangement of this type was provided”.

What’s the relationship they’re trying to forge? Where’s the balance between journalism and promotion? And beyond that, what’s happening to print media?

While Tea Tree Gully, Campbelltown, Playford and Salisbury are all understood to have rejected the offer, InDaily has spoken to several mayors around greater Adelaide who have been approached by a News Corp SA delegation – again led by Davies and Fleet – to discuss separate partnership arrangements.

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Prospect mayor David O’Loughlin said there was “certainly an offer of a reciprocal relationship whereby the synergies between News Corp providing a local newspaper and at the same time offering the City of Prospect access to their network of publications for promotional purposes was put to us as an opportunity”.

However, he stressed that the company “at no point said ‘if you do this, we’ll do that’ – I have to make that very clear”.

However, he conceded “the circumstances are interesting” as “we don’t often get asked to meet with News Corp”.

“In fact, we’ve never been asked to meet with News Corp,” he added.

“This was a meeting they initiated, to our surprise, and we went along willingly, wanting to have a positive relationship with the only print media in the state.

“They spoke about the role of Messenger and journalism… but then provided a detailed presentation on the network of public relations and communications platforms that they own and operate – not just within our area, but across SA and the nation.”

He said they proposed a bespoke communications service “ranging across all types of communications but mainly print and online” for “if we had a particular campaign or message we wanted to promote”.

“Anything from campaigns using tools like Facebook through to articles in magazines they publish… they could help by offering a very targeted bespoke marketing and communications platform using their media channels, and targeting it by, I presume, their profiling of their readership,” O’Loughlin recalled.

He conceded he had concerns about the proposition.

“It’s worrying in a sense of: what’s the relationship they’re trying to forge? Where’s the balance between journalism and promotion? And beyond that, what’s happening to print media?”

It appears a similar meeting may have occurred with the Onkaparinga council – which ironically has been firmly in the sights of News Corp’s Your Rates At Work campaign, with a particularly relentless focus on the controversial golf club membership of CEO Mark Dowd.

Golfing scandal and Onkaparinga council CEO Mark Dowd receives pay rise

— The Advertiser (@theTiser) May 21, 2017

However, Dowd was duly invited to hear News Corp’s pitch, with mayor Erin Thompson telling InDaily in a statement: “Earlier this year I met with News Corp… who provided an opportunity for myself and CEO Mark Dowd to meet with them.”

“They were keen to learn what the council’s key priorities are over the next four years, what are the key issues we see for our constituents and, more broadly, South Australia,” she said.

“They were also keen to learn about potential opportunities for collaboration and how they could assist us.”

Mitcham mayor Heather Holmes-Ross was similarly approached by the same News Corp leadership delegation, telling InDaily “we had a conversation that there’d be a possibility for them to do a lot more online stuff for us”.

“I didn’t take it to mean advertising, I took it to mean for things that we have to get out there as part of the legislative requirements, there’d be this capability of a high reach,” she said.

“They were saying ‘we’re moving to a more online format, and we’d be able to help you – the council – in whatever capacity, getting your stories out there’.

“It seemed to me they felt their future was more online, and they were exploring the opportunities for a relationship between council and them for the extended online space, through their social media networks.”

Photo: Tony Lewis / InDaily

Likewise Marion mayor Kris Hanna: “I met with the senior News Corp people earlier this year… it was really a discussion about News Corp products and their changing direction.”

“It was sort of an acknowledgment, without saying it, that the Messenger newspapers may not be the primary means of getting the message out in the future, with the rise of digital, and there are also a lot of other News Corp products,” he said.

“We never got into any detail really, it really was just a briefing on a News Corp offering, [effectively] ‘However you want to communicate, we can help you with that’.

“It was letting councils know they’re willing to offer more than just putting an ad in the Messenger… it was just at that general level and I’ve left it to staff to deal with that.”

InDaily is not suggesting any impropriety in any of these approaches and has its own advertising arrangements with various councils.

The waning coverage is evidenced by a decline in the level of media enquiries received from the Messenger

Several mayors InDaily spoke to raised concerns about the decline in distribution of the Messenger print editions across their respective council areas.

The Tea Tree Gully document explains that “News Corp’s suburban newspaper network has undergone a number of changes” over the past three years.

“In 2016 the Messenger ceased deliveries to flats and units in favour of centralised distribution… it also rolled out a refreshed look and feel and the standalone publication Adelaide Matters was removed from circulation,” it said.

“In 2017, a number of Messenger titles were merged. This saw the Leader Messenger (which serviced the city of Tea Tree Gully) and the East Torrens Messenger being combined [as] the North Eastern Weekly, [which] now services the City of Tea Tree Gully, City of Campbelltown and part of the City of Port Adelaide Enfield.

“At the same time, print distribution was further cut in suburbs with low readership.”

InDaily reported in July 2017 on the Messenger group’s decline, with various mastheads merged and print distribution axed in areas of low engagement, with News Corp at the time arguing the changes were “designed to produce bigger newspapers with more stories”.

However, the TTG document laments that “in the past 12-18 months council has seen a perceived decline in the size of the publication and in the volume of content relating to council and its activities”.

“Over the last three years, due to restructuring and combining publications, we have seen a significant reduction of local content in the Messenger newspaper… we estimate approximately one to three stories a week are about our local community (excluding sporting coverage),” it says.

“In more recent times we have also seen the Messenger shift from community-based news to more political news in terms of council coverage,” it notes.

“The waning coverage is evidenced by a decline in the level of media enquiries received from the Messenger.

“We have also experienced a decline in the number of stories generated by the Messenger in response to Council requests for publicity regarding community events and activities.”

Since the 2017 cutbacks, many different Messenger mastheads share copy, reducing the local focus of the brands.

A TTG council Communications Preference Survey conducted last year showed “56 per cent of our community read the North Eastern Weekly on a weekly basis – a decline on previous survey data”, with “those aged over 50 more likely to read it”.

“In terms of community need, the largest gap if the North Eastern Weekly was no longer available would be people aged over 70,” it said.

“I think it’s inevitable that it’s going… the advertising is very, very sparse,” one council source told InDaily.

“I do think it’s sad.”

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