(Image: AAP/Joel Carrett)

As if the federal government didn’t have enough on its hands dealing with the economic fallout from the pandemic, it must deal with the future of the Australian media as well.

Traditionally “the future of the Australian media” in federal politics meant who would be allowed to own what, and what favours the government would hand to the Murdochs, the Packers, the Stokes, and what the quid pro quo would be for those who missed out. Now it means whether it has a future at all.

For every other industry being mauled by the shuttering of the economy, the question for the government is how to keep it on life support until things improve. Even aviation, which faces years of hardship, will eventually recover, if not necessarily to quite the health it enjoyed until February.

But for the media, the crisis has merely accelerated the decline in revenue it has been enduring for nearly 20 years, to the point where, crippled with large debt burdens and little prospect of a recovery even to the historically poor revenues of late 2019, the sector is closing up for good.

The more marginal regional media sector, which has witnessed more than 20 years of consolidation, shrinkage and cuts, is closest to extinction. The markets it serves are smaller and more fragmented and for the last two years have been hit by drought, before the bushfires and then coronavirus wrecked the tourism sector so crucial to many regional areas.

In 2017, the government, at the behest of Nick Xenophon, established a $48 million Regional and Small Publishers Innovation Fund to help regional publishers with non-editorial costs and to drive innovation (small outlets such as Private Media, which owns Crikey, were also eligible and obtained funding through the grants process run by media regulator ACMA).

Many regional publishers, however, struggled to meet conditions for the funding; earlier this week, the government brought forward $5 million in funding and expanded the eligibility criteria with “a greater emphasis on sustainability”.

Regional broadcasters were not eligible for the funding, but it was assumed that the three regional TV networks would be absorbed by the metropolitan networks — Seven already has extensive regional reach anyway — but that outcome is yet to materialise. Regional TV broadcasters (Prime, Southern Cross and WIN) have been cutting high-cost local news services for several years, while regional radio networks have been reducing services to regional communities for two decades in favour of broadcasts networked from a (sometimes metropolitan) hub.

In the wake of the closure of AAP, a key content provider for regional newspapers, the government is now considering another, bigger package of assistance for regional media, led by Michael McCormack, within whose portfolio Communications now (inexplicably) sits. McCormack’s package could be twice as big as the 2017 one.

Government intervention in regional media has a long history under successive governments. It has tried to regulate local news content for broadcasters in regional markets and funded the ABC to provide regional news and current affairs content, before embracing direct funding of regional media outlets.

The regional nature of such intervention has always allowed a fudge around exactly what the government was doing — supporting journalism or supporting regional and rural communities. And the prosaic reality was that such interventions were often driven by National MPs concerned that they wouldn’t get the media coverage they believe they deserved if the local radio station and TV broadcaster sacked their journalists.

This fudge persisted into the 2017 fund, which was expressly not intended to support journalism, beyond cadetships. But it did, for the first time, expand government intervention to newspapers.

That was a significant shift because newspapers are not regulated by the federal government, beyond the use of the corporations power of the constitution to include them in media ownership laws, and economy-wide competition laws. There’s no licensing, industry code of conduct or government complaints mechanism, as there is for broadcasters.

While another regional media package could again obscure this crabwise path to government intervention in journalism, it will become impossible to avoid for the metropolitan and national companies behind regional media in the queue for help. In fact, some companies straddle both national and regional markets — Seven has an extensive regional television licence reach, and News Corp’s has major papers in Geelong, Rockhampton and Mackay, Cairns and Townsville, Darwin, northern NSW and the Sunshine Coast, plus the Gold Coast and Hobart. Many of the 60 papers whose publication is being suspended from today by News Corp lie on the outer edges of major cities.

Historically, the way of “helping” major media companies in Australia has been to change ownership rules to let them acquire each each other or bring new capital into the industry from offshore sources. That option increasingly looks exhausted.

Nine’s acquisition of Fairfax hasn’t done anything to stop the decline of its newspapers, it merely created an entertainment company with a real estate site and some expensive cost centres for journalism.

News Corp — which yesterday sacked or stood down hundreds of people at Foxtel — might buy Seven, but for what end other than increasing its political power (which it has traditionally focused on at the expense of its investors)? Seven has huge debt and faces a grim revenue future; the only thing attractive about it is that it is now cheap as chips.

The result would be a media sector with even less diversity and competition, but no more commercially viable than before.

Nor do foreign media companies look likely sources of investment, given the state of the media across western countries, while the days of private equity investors, like the ones who did their dough on Nine when CVC bought it, look long gone. Indeed, the primary action incumbents want taken on foreign companies is to force Google and Facebook to hand back some of the ad revenue they’ve — in the view of traditional media companies — stolen.

There is thus no hiding from the conundrum of whether the government should be supporting public interest journalism at a metropolitan and national as well as regional level, reflecting the widely acknowledged importance to civil society and a successful democracy of such journalism.

Of course, the government already does that via the ABC and SBS, both of which are far more trusted as news sources than either commercial newspapers or broadcasters. But with the encouragement of News Corp, the Coalition has actually been defunding the ABC, in a mostly successful attempt to cower the broadcaster’s journalists into submission.

That’s created the irony that, at the moment when commercial media is less able to provide public interest journalism than at any time in the last hundred years, the Coalition has been actively working to reduce the ABC’s capacity to provide it as well. But that hasn’t been enough for the Murdochs, who would prefer the ABC to be removed as a competitor altogether.

There’s also a basic moral hazard issue for the government to consider. Would any assistance in effect be bailing out companies that have consistently shown inept management, an enthusiasm for bad deals and poor governance, not just in the last few torrid years, but over a period of decades?

But as media companies hover between life and death, such reservations might have to be put aside in an effort to save a crucial ingredient of democracy.