In late July the Mercury enlisted Spiderman and a bevy of his superhero friends in a bid to try and arrest the circulation nosedive of Tasmania’s largest newspaper.
It was an old-style marketing gimmick, aimed at persuading adults to buy a circulation-boosting 14 editions of the Mercury so they could purchase copies of the Marvel superhero comic series for $2.50 each.
Just in case readers missed the front page ads or the two-page promotional spreads inside, the Mercury – which touts itself ‘The voice of Tasmania’ – devoted scarce news space to further hype the promotion.
“Comics ‘a marvel’ for building poets” proclaimed a page two ‘article’ by a Brisbane-based News Corporation Australia journalist which was based on an interview with a Canberra teacher on the benefits of using comics in teaching primary school kids.
However, Spiderman and his superhero friends may have met their match.
Despite a bevy of similar promotional gimmicks over the last year – everything from coupons for discounted Dr Suess books to a free fuel giveaway draw – the paid newspaper circulation of the Mercury keeps on falling.
Data from the Audited Media Association of Australia reveals the paid circulation of the newspaper version of the Mercury and its Sunday sibling the Sunday Tasmanian has plummeted by over one-third over the last decade and keeps on falling.
The bulk of the Mercury and Sunday Tasmanian’s circulation decline – which amounts to over 19,000 less weekly sales – has occurred since 2010, even though Australian Bureau of Statistics data reveals the population of the Mercury’s southern Tasmania stronghold has grown by over 6300 over the same period.
News Corporation Australia, the parent company of Davies Brothers which publishes the Mercury, does not publicly report data on the financial performance of its Tasmanian operations.
However, some fine-resolution data was revealed when a copy of News Corporation Australia’s 276-page internal Weekly Operating Statement to the end of June 2013 was leaked to Crikey in August 2014. (Crikey published the document online but, faced with the threat of legal action by News Corporation Australia, agreed to destroy all digital and print copies in its possession. News Corporation also threatened to sue media organisations which published the leaked document.)
The document revealed profits from the company’s three Tasmanian mastheads – the Mercury, the Sunday Tasmanian and Tasmanian Country – fell by 40% in one year. While the final $9.4 million profit to the end of June 2013 financial year appeared healthy, the downwards spiral signalled big trouble lay ahead.
Since then the combined average weekly circulation of the Mercury and the Sunday Tasmanian has fallen by almost 17,000 copies a week, a drop of almost 20% in just over three years.
Rapidly falling circulation and advertising has set off a devastating financial chain reaction.
Falling newsstand and home delivery sales over the decade – which accounted for about one-quarter of the Mercury’s income – has stripped millions off the bottom-line. The decline in circulation in turn has undermined both the volume of newspaper advertising and the premium which can be charged for it, ripping millions more off the bottom-line.
With high fixed costs of production – journalists, marketing and administration staff, newsprint, as well as printing and distribution – managers have resorted to the usual cost-cutting formula: less pages, higher cover price, more content syndicated from mainland News Corporation Australia stablemates and fewer journalists and photographers. Sub-editing, once considered a critical in-house function, was outsourced to a company which performed the task with lower-waged workers in New Zealand.
Back in the last week of June 2006 a week’s worth of the Mercury and a Sunday Tasmaniancame to 432 pages; by September 2016 a week’s worth had dropped by 20 pages with another dozen pages comprising ‘house ads’ promoting digital subscriptions to the Mercury, branded competitions or its disparate online advertising vehicles. All up it adds up to over 1500 less pages a year compared to a decade ago, with most of the pages winnowed from the Monday to Thursday editions.
Page tallies, however, are only a broad indicator of content. Photos are bigger and bolder than a decade ago while design changes have reduced the density of the text and cut the word tally. All up, there are fewer stories and those there are shorter and shallower.
Relentless cost-cutting though could only go so far in plugging the holes in the Mercury’s ailing balance sheet.
In an attempt to prop up its falling revenue base the newsstand price of the weekday Mercury – which now sells for $1.40 – has increased four times in a little over the last three years, to double the cover price. (The price increases were an extra 20 cents in July 2013, another 30 cents in November 2014, 10 cents in each of February 2015 and July 2016.)
Incremental price rises are at best a temporary salve on what is likely to be a mortal wound inflicted by falling circulation and advertising on the continued production of the hard copy version of the Mercury.
The Mercury’s digital despair
If the Mercury is to have a future at all it will hinge on its ability to rapidly bridge from its heavy reliance on newspaper advertising and retail sales to building a growing digital subscriber base.
Without a rapid increase in digital subscriptions the Mercury would be doomed to racking up financial losses News Corporation Australia is unlikely to tolerate for long.
As of June 30 this year, according to the Audited Media Association of Australia, the Mercury had a measly 252 digital subscribers. (At that time Fairfax Media’s Launceston-based Examiner had more digital subscribers.)
With a dismal digital subscription base and falling hard copy sales, the Mercury decided it needed to launch an advertising blitz in its own pages. During recent months Mercury readers have been subjected to a barrage of ads spanning from double-page spreads to smaller ads hyping discounted digital subscriptions to the Mercury and the Sunday Tasmanian.
For full digital access to the print versions of the Mercury and the Sunday Tasmanian, plus home delivery of the two weekend editions, the cost is $28 every four weeks, a $14 discount off the newsstand price of the hard copy version. For those that want it, home delivery of the Saturday and Sunday editions are thrown in for good measure. For $52 every four weeks digital subscribers can also get home delivery of all weekday editions of the Mercury.
As a teaser the Mercury is offering potential digital subscribers a 50 per cent discount for the first 12 weeks.
Despite the massive advertising blitz and the big up-front discount the appetite was limited, with just 1200 additional digital subscriptions in the three months to the end of September.
The increased number of digital subscribers beyond the continued decline in print sales would barely raise enough cash to cover the costs of a journalist or two and their overheads. Even more sobering is that the rise of digital subscriptions was only slightly greater than the fall in the more valuable print circulation. (When the latest sobering circulation data was released by the Audited Media Association of Australia last Friday it went unreported in the Mercury.)
Asked whether the result was satisfactory or disappointing the editor of the Mercury, Matt Deighton, told Tasmanian Times “I think it was okay … I don’t think anyone is cheering about the results at this point but it does give us a reasonable foundation to grow when we start getting serious about it over the next 12 months.”
As to whether the Mercury has a digital subscriptions target to ensure sustainability, Deighton was guarded. “At this point we haven’t really discussed that publicly - that’s commercially confidential,” he said. Asked if it had a digital subscriptions target for the end of the year Deighton insisted it didn’t: “Not at this point, no.”
In late October News Corporation Australia officially announced that the websites of its regional mastheads – including the Mercury – are about to shift to a “freemium” model of limited free articles with the rest behind a paywall, as has been done with The Australian.
The strategy of forcing online readers to pay for articles currently made available for free is a signal that the Mercury’s days as a hard copy newspaper may be numbered. While the announcement is significant, this also went unreported in the Mercury.
On Saturday the Mercury foreshadowed it would be announcing the introduction of its paywall this week. While insisting the Mercury would remain financially “very strong” if it chose to primarily focus on print circulation, a shift in its business strategy is considered essential.
“The problem is that if we don’t go down the paywall route we are really just managing slow decline,” Deighton said. By adding a paywall to its website and pushing digital subscriptions, he said, the Mercury hopes to be “in a position where we can grow again.”
The shift to digital subscriptions and hard paywalls has spill-over consequences for the content of the Mercury.
Increasingly the most prominent stories tend to be those that – with an eye to prompting social media shareability and spur of the moment newsstand sales – evoke the strongest emotions: uplifting tales of battles against life-threatening illness and acts of heroism on one hand or confronting stories of crime and crims, tragedies and car crashes. Accountability journalism – especially of the State Government – has been softened and largely pushed down the page order.
News Corporation executives, confronted with declining advertising, falling newspaper sales and the slow uptake of digital subscriptions, are already running out of patience.
With digital subscribers currently representing less than five per cent of the Mercury’s total subscriber base, the axe is poised for yet another round of cost-cutting.
In early November New Corporation’s global chief financial officer Bedi Singh confessed to financial analysts it had taken a further battering from falling advertising revenue. Advertising revenue in the September quarter for its Australian subsidiary, News Corporation Australia, was down 11 per cent, he said.
Singh told analysts a further $40 million would have to be cut from the company’s Australian mastheads by the end of June next year. Singh flagged redundancies and not replacing departing staff wherever possible “while we continue to push digital initiatives more broadly.”
While Singh’s comments were reported in The Australian they went unreported in the Mercury.
Where exactly the cuts will fall, Singh didn’t say, other than that he would be having a meeting with editors.
The magnitude of the cuts at the Mercury remains unclear but Deighton confirmed there will be some impact. “Given they just announced it [the cuts], at this point we don’t know … I don’t think any masthead is necessarily going to escape unscathed and we are all doing work in the background to see how we can operate as efficiently as possible,” he said.
Is this the endgame for the Mercury as a newspaper?
In announcing the latest price hike in July this year, a small page 2 ‘article’ in the Mercury defended the 10 cents per copy price hike on the grounds that “despite the price increase, the newspaper continues to represent great value for money.”
However, the hard subscription data for the newspaper reveals an increasing number of Tasmanians think otherwise.
How long the newspaper version of the Mercury will continue to be produced is an open question. Already the Monday to Thursday editions have been pared back to just 40 pages, with advertising, sport pages, opinion pages and in-house supplements accounting for the bulk of that.
Before too long older readers, long used to reading editions of the Mercury with a higher proportion of hard news stories, may soon confront a decision on whether to take out a digital subscription or stop reading the publication altogether.
Earlier this year the CEO of Fairfax, Greg Hywood, told investors the Sydney Morning Herald and The Age were shifting to a target of raising 65 per cent of their advertising revenue from just their Saturday and Sunday editions. “It should surprise no one, and certainly not us, that the seven-day-a-week publishing model will eventually give way to weekend-only or more targeted printing for most publishers,” he said.
If scrapping weekday editions of major mastheads such as the Sydney Morning Herald and The Age is on the cards, will the Mercury go down the same path?
Deighton argues News Corporation is pursuing s different strategy to Fairfax, one which seeks to increase investment in print titles such as in regional Queensland. “I think if there are midweek [newspaper] closures I think they will be happening interstate well before they happen in Tasmania,” Deighton said.
While evidence indicates the heavy promotions such as those featuring Spiderman may have – at best – slowed the falling circulation of the Mercury, it is equally clear it is beyond their superpowers alone to save the publication from yet more financial cuts.
*Bob Burton is a Hobart-based Contributing Editor of Tasmanian Times. His earlier articles on Tasmanian Times are here.
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• John Hawkins in Comments: … The independent Wilkie and those Greens in parliament are streets ahead of the Lib/Lab dross that represent us. Where is the Mercury or the Examiner as the disaster of a bankrupt Forestry Tasmania deepens and its debts are funded by Tasmanian taxpayers? Where is the Mercury and Examiner regarding the Tasmanian Planning Commission and the badly considered changes to our planning laws to benefit developers that put 500 thinking Tasmanians into the Town Hall - not a squeak …
• Bob Daniels in Comments: Unfortunately The Mercury is directed by News, Sydney. Increased subscription and advertising costs don’t encourage Tasmanians to support their local paper. A sure fire way to lose subscribers. It would have been better to lower subscriptions and keep advertising rates competitive therefore maintaining circulation levels and attracting bigger advertisers with an assured readership. After all, the staff as been cut to the bone to offset the profit loss. A crying shame for a once great local newspaper.
• Mick Kenny in Comments: This is a fantastic and detailed summary of the Mercury’s recent decline. Rupert might hope to shape the future of media to his own commercial ends but I doubt even he can turn back the tide of change … He struggles to tweet without sounding like a prophet short of a flock … On the up side, there are many alternative news sources, the Guardian not least, with its increasing local and national content.
• Mark Worley in Comments: The Mercury deserves a chance. It’s by no means perfect, it never has been. But Hobart needs it. Tasmania needs it. As much as I love the ABC, the state needs another voice. If anyone thinks Rupert or any senior News Corp execs give a damn about their smallest asset, they are mistaken. If anything, the push towards an online paywall appears to be ensuring the death of the paper - a case of Sydney HQ ordering Hobart’s editors and staff to play Russian roulette with a fully loaded gun. The online price point is simply too high to attract enough subscribers. I am sure the execs know that. But damn it, what is the alternative here? …
EARLIER on Tasmanian Times ...
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• Ian M in Comments: … After an inquiry the ABC, I believe, reported it was found that the media had “contributed” to the tragic outcomes. While I do like some local content, the local rag has to do better than he said/she said, ads and syndicated content. And because of multiple failings, they deserve exactly fuck all until they can demonstrate they’ve resolved these issues.
• Matthew Sykes in Comments: … All this commissioned by a disgruntled former editor at the Merc. How’s that for balance?