Mcguire's Brave Move On News
Sydney Morning Herald
Saturday June 10, 2006
THE most interesting story about the media this year is not so much the digital revolution and the internet but the way Naomi Robson has mopped the floor with Tracy Grimshaw.
Since 2002 between 200,000 and 300,000 people stopped watching National Nine News and A Current Affair and switched to Seven News and Today Tonight instead - most of them in the past two years and most of them in Melbourne. As a result Seven News now clearly leads Nine News, with an average of 1.46 million viewers each night, year to date, versus 1.31 million on Nine. This is an increase of 24 per cent for Seven over the past four years and a decline of 17 per cent for Nine. This year, according to Seven, there has been a 160,000-viewer switch in favour of Seven. Meanwhile Today Tonight's audience has increased 17 per cent over four years while that of A Current Affair has declined 24 per cent. It's much the same story at breakfast: Seven's Sunrise has added 177,100 viewers since 2003 while Nine's Today has lost about 65,000. This switch in fortunes has provided a platform for Seven's ascension to No.1 generally and for CEO David Leckie's turnaround of the business, after a shaky start. It has resulted in Seven's share price more than doubling since early 2003, while Ten Network's price has gone up 45 per cent and the All Ordinaries by 65 per cent. Publishing & Broadcasting's stock price has also more then doubled, but only because of its successful diversification strategy away from TV and into the internet and gambling. So with the benefit of hindsight, PBL's sacking of Leckie as CEO and then its loss of Peter Meakin as head of news and current affairs, both of whom ended up at Seven, seems to have been one of the great stupidities of modern corporate life. And how those two then beat Nine in the crucial 6-7pm time slot should make one of the core study subjects in the university media studies courses. Unfortunately your correspondent wasn't watching either channel during this time slot over the past few years, being too busy burbling on the channel with no ads, so I can't bring personal observation to bear on the issue. But others who have been watching explain that there was a change for the better in the people reading the news on Seven, which is apparently quite important, and that Seven has been getting a better lead-in from something called Deal Or No Deal, which I presume is a program about investment banking. Fundamentally it seems Seven's news and current affairs hour has remained unambiguously and unapologetically tabloid. Meanwhile, the powerful presence of Laurie Oakes, among other factors, means that Nine can sometimes be a confusing mixture of very good journalism and tabloid schlock. As Peter Meakin puts it, A Current Affair doesn't know whether it wants to be the 7.30 Report or Today Tonight, and this identity crisis seems to have worked in Seven's favour. Also, tabloid journalism is inherently local, which has been another key part of Meakin's and Leckie's strategy. The competition, meanwhile is National Nine News. This week, Nine's new CEO, Mr Edward McGuire, cut the network's news and current affair staff by a quarter without dropping any of the programs they produce. This, to put it mildly, is an interesting and courageous idea, and will presumably mean lots of long interviews, which are cheap to produce. Politicians and CEOs looking to get their message across to Nine's dwindling audience should form an orderly queue. *** I didn't sell any BHP Billiton shares in early May when they were above $30, even though it was obvious that a correction was coming. I guess that makes me either a long-term investor or an idiot. Let's go with the former. The commodity super cycle remains intact, in my view. The weakness in sharemarkets and the increase in volatility we're seeing now is a response to a natural and predictable cyclical increase in inflation accompanied by rising interest rates around the world and some softening of economic growth. Is it part of a cycle, or something more permanent? In other words, will the world's central banks regain control of inflation without causing recession, or will they stuff things up again? This is the essential question that investors must answer while deciding whether to use this correction as a buying opportunity. Here's the bear case, eloquently put this week by Morgan Stanley's Andy Xie: "As decade-long Anglo-Saxon consumption peters out, a secular bear market is possible. Asia is not ready to take over from the US as the global growth engine. China changing its development model to boost household consumption could be sufficient to support a bull market in Asia. But the reforms necessary to change the model may take five years or longer." Here's the more optimistic case, put by Shane Oliver of AMP: "Our view remains that this is a correction within a bull market and not the start of a bear market. Thanks to strong competition and productivity growth, global inflation will remain benign, hence interest rate rises are unlikely to be excessive and as a result global growth may slow but it won't collapse and this should underpin profit growth. "On top of this sharemarkets, apart from Japan, were never overvalued and they certainly aren't now. In other words, I am feeling shaken but not stirred." I'm more with Oliver than Xie, but I'm also worried about household debt levels in the US, and the effect on consumption there. Alan Kohler publishes Eureka Report, a newsletter financially backed by Carnegie, Wylie & Co, and presents finance on the ABC.
© 2006 Sydney Morning Herald