No doubt you’ve heard the news. Two of Australia’s oldest media companies are merging. Nine and Fairfax have decided for the sake of their futures to combine, or as some have said Nine will be swallowing Fairfax.
There are implications for the media in Australia and the announcement provoked many reactions in the last week. From Nine the reaction was wholly positive, with Nine’s business reporter Ross Greenwood touting the merger “It means you’ve got some of the hottest digital properties in the country all together on the one platform.”
From Fairfax, the reaction depended on who you listened to. Management followed the positive development line. While from some reporters at Fairfax’s best-known publications, The Age and Sydney Morning Herald, who’ve seen themselves as producing more respectable work than the news division over at Nine, there was some sense of dread.
What does it mean for you as an investor?
News quality has been on a downward slide for some time now, and for various reasons. Media companies didn’t adapt quickly enough to the arrival of the internet and saw much of their revenue washed away. Less money means less quality and chasing eyeballs by any means possible.
We’ve long been critical of the general media’s ability to report on investment issues because of their short-term focus and sensationalized reporting. And it’s continually slipping.
Writing stories from the opinions of people who say the market’s going to crash every month and “what does it mean for your super?” is easy. It will always get more attention than just reminding the audience that no one has a crystal ball and if they just save and stick to a reliable process for a few decades they’ll have a decent retirement.
In that world, one person’s opinion is news. Data, facts and proven outcomes aren’t.
However, things aren’t that much better in the specialized financial media. For the most part, the Australian Financial Review occupies itself with business deals, yesterday’s market movements, where fund managers think the market will go and a little bit of PR and backslapping thrown in to keep Australia’s business egos happy.
The investment sections in The Age and Sydney Morning Herald have withered away over the past few years, supplanted by a greater focus on real estate through Fairfax’s increasing use of its Domain real estate portal (now 60% owned) to push property. Some of what’s left is sponsored content, mostly online, where brokers like IG Markets now provide round ups of the latest short term financial news, i.e. keep your eye on the short term so you can trade more with IG.
With Nine calling the shots it’s fair to expect more of this. Any space available will be leveraged for its commercial potential and the stories will be the sexiest they can be. Which won’t make for a quality stream of investment information.
Sure, there’s been some great investigations done at Fairfax, but we need to remember when the great journalism is done, it’s often crime scene journalism. In other words, something shonky has already gone on, investors have been sucked in and people have lost life savings.
Then there’s their culpability. Rewind and you may well find many of these disasters promoted at one time in the media as the next hot investment option. Nant Whiskey was one that received a great run in the media. The Australian Financial Review’s BRW magazine even promoted Nant could get financing from a bank at 7% but decided to go to the public at 9.5% because it was better for the business. Yeah right.
Essentially, there’s always been a gap where the most obvious investments: stocks, bonds, listed real estate and cash, along with reliable processes are ignored. Instead the media has often turned its attention to highlight something new, that may or may not work.
This won’t change, and the investment section will likely be further farmed out to commercial interests selling something. The antidote is to keep all of this in mind. If you have an adviser and a question, put them together.
We’re sure the media will offer an entertaining answer, it just won’t be the correct one.
This represents general information only. Before making any financial or investment decisions, we recommend you consult a financial planner to take into account your personal investment objectives, financial situation and individual needs.
