Could regional newspapers be healthier without Fairfax?

The best thing for Nine could do for Fairfax’s regional papers, once the media companies merge, would be to sell off or close the newspapers, regional publishers say.

Since Fairfax took over the group of newspapers previously owned by Rural Press in 2006, revenues and circulation have been dropping at increasing pace, as the media company has cut costs in journalists, production and even individual editors for each of its 160 publications. And as the quality has subsequently dropped, some advertisers are turning to independent alternatives.

Country Press Association SA President Ian Osterman, who is also editor of the independent Courier in Mount Barker, told Crikey that South Australian Fairfax newspapers which had previously been regular award-winners had dropped substantially in quality over previous years.

“Some of the papers have one editor between three, they’ve cut staff, sub-editors, and the quality is poor, attention to detail is lost. The communities are being poorly served,” he said.

But, he said, newspapers were still important in regional communities, and the independent newspapers were doing well in SA, even moving in on what was previously very strong Fairfax territory.

“There’s money to be had in these communities and there’s no doubt advertising in newspapers works. The independents aren’t as big or as profitable businesses but we’re still very relevant,” he said.

Osterman said the regional papers had not suffered circulation declines as heavy as the metro newspapers because they were so important to smaller, more isolated communities.

“Every story you read in almost every independent regional newspaper is a world exclusive,” he said. “My community is a city of 30,000 people and it’s much tighter and there’s a much stronger bond than there is between city people. We’re bound together by our location. And we all know the footy team and who the mayor is and who the footy coach is and we’re all in this together. That bond is not as strong in the city. The paper binds it all together, it’s hugely important.”

And, he said, independent papers were already stepping into the gaps left by Fairfax’s cuts. “The independents have continued to invest, rather than cut, in their communities,” he said. “The owner lives in the town and cares about the product and is not just a bean counter in Sydney who will not replace a person or get rid of someone.”

In Clare, the Northern Argus stopped running the local footy scores. Ready to take up the slack was the independent Plains Producer, based in Balaklava, about 40 minutes away. And by doing some of the things dropped by the Argus, the Producer has dramatically increased its circulation and revenues, Osterman said.

It’s not just South Australia where standards have dropped at the Fairfax papers. In Orange, NSW, Bob Holland publishes a community newsletter magazine, Orange City Life, which competes for advertising but not readers (it doesn’t do news) with Fairfax’s Central Western Daily. The Daily’s Monday to Friday circulation is a bit over 2000, and its Saturday circulation is about 3800. Orange City Life is a free weekly pick-up magazine, and its circulation is 13,500.

Holland said that if the Daily was sold or closed, he would start offering local news and possibly an online news service.

“The newspaper here is hanging on by a thread,” he said. “There’s still a love of a hard copy newspaper, but the one we have isn’t really serving the community anymore.”

Holland said that if Fairfax closed or sold the paper, something else would replace it. “We’re feeling the effects of the drought — the car dealers are cutting back, real estate agents aren’t getting listings. But we’re still doing alright. The main thing is if I wasn’t here and they’d pulled out, someone would start some sort of publication. And they’d make a reasonable living.”

Revenue in 2017-18 for Fairfax’s Australian Community Media group, which houses its regional and free newspapers, was a still-substantial $400 million, down from $428 million the year before and $485 million in 2015-16. Earnings have fallen from $90 million (on an earnings before interest, tax, depreciation and amortisation basis) in 2015-16 to $57.2 million in the year to June 30 2018. Indicating the growing profit pressures, the 17% fall in revenues from 2015-16 to the year to June saw a 33% slide in earnings as profit margins were crunched — and there is still the impact of the drought to come this financial year.

Fairfax’s priorities, as told to analysts, are to spend as little as possible and wring every dollar of cash flow out of the papers. It’s rolling out paywalls for the regional papers — likely to turn them into clones of The Age and Sydney Morning Herald websites. The financial impact of the drought could make that a cost people can do without, especially with the ABC offering free news websites and data on markets.

When Fairfax is absorbed by Nine Entertainment, these local papers in regional and urban areas of Australia will be even further from the upper levels of management — and the old adage, “out of sight, out of mind” will will be the managerial credo.