A chill wind is blowing through the media and it could be a warning sign for everyone

by Admin
June 28, 2024

The chill winds blowing through the world of commercial media are gathering pace.

Nine Entertainment has announced it would lay off up to 200 employees with almost half coming from its publishing businesses, 38 from television news and current affairs and the remainder from digital and head office.

The announcement follows a spate of restructures and redundancies at both News Ltd and Seven West Media in recent weeks amid signs the economy is cooling as advertisers slash their marketing budgets.

The downturn has coincided with a controversial decision by Meta, owner of Facebook and Instagram, that it would no longer provide funding to traditional media outlets under deals struck in the wake of Australia’s landmark legislation in 2021 that required technology companies to pay for news content.

Nine Entertainment chief executive Mike Sneesby told staff the company was “not immune to the economic headwinds impacting many businesses globally” and would “continue to responsibly manage costs through the cycle.”

“In light of recent market events we are reviewing key parts of our business to identify further potential savings,” he said.

Nine will cut dozens of jobs from its publishing and TV news businesses.(ABC News)

A stitch in time

The company has been rocked by a series of recent scandals including the sudden resignation of former chairman Peter Costello after an alleged altercation with a reporter at Canberra airport, a claim the former federal treasurer denied.

That followed the departure of its news boss in March after reports of allegedly inappropriate behaviour.

But the problems facing traditional commercial media outlets is industry wide.

Rupert Murdoch’s News Corporation this month embarked upon its biggest restructuring in a decade in a bid to streamline management and operations and reduce costs in the face of declining revenues.

The $65 million cost cutting strategy resulted in the removal of a swag of senior News executives and a split into three publishing divisions.

Kerry Stokes, who controls Seven West Media, unveiled a similar strategy earlier this week, announcing the departure of 150 staff members as it reconfigured operations into three divisions with the aim of saving $100 million.

Seven West Media’s recent redundancies affected staff at the Seven Network.(AAP: Joel Carrett)

Traditionally, advertising has been one of the first casualties in corporate budgets when the economy begins to slow.

While the Reserve Bank of Australia has raised interest rates 13 times since May 2023, employment has remained buoyant, surprising most experts who expected unemployment to rise sharply. Instead, it has remained at close to its lowest levels in half a century at around 4 per cent.

But the most recent figures show Australia’s economy is barely managing to keep its head above water, growing by just 0.1 per cent in the March quarter.

But there are concerns corporate earnings may have plateaued, leading to cost-cutting drives that could see a rise in jobless numbers later this year.

The recent lay-offs across the media landscape could make an already difficult situation for the RBA even harder as it comes under pressure to rein in persistent inflation with yet another hike.