Big-foot billionaires crash the media scene in Israel, Australia

You’ve heard of Sheldon Adelson, the Las Vegas billionaire who bankrolled Newt Gingrich’s campaign and continues to pour millions into Republican Super PACs? Suppose he also owned and generously funded a free-distribution newspaper pushing his political agenda and driving competitors into deep financial distress.

Couldn’t happen here? Probably not. But Adelson’s five-year-old Israel HaYom (Israel Today) has become the country’s best read daily. The venerable Maariv, in business since shortly after Israel’s independence, is being sold at a liquidation price with deep cuts certain to follow.

An excellent Associated Press account earlier this week and one from the Christian Science Monitor highlight the political dimensions of the newspaper war. Rhetoric burns hot in Israel, and liberal media sees a vendetta from Prime Minister Benjamin Netanyahu aimed at quieting their influence.

Netanyahu has said that economic and technological forces are to blame for the press shakeout, and that there is no case for a government intervention to prop up failing enterprises like Maariv.

A visiting Australian journalist alerted me to some parallels playing out there. Fairfax Media, the second largest media conglomerate to Rupert Murdoch’s News Limited, belatedly recognized steep declines in its business this summer and has ordered massive layoffs of journalists and a paywall for its digital editions.

Concurrently, mining magnate Gina Rinehart, often described as the richest woman in the world, has taken a 20 percent stake in Fairfax and agitated for management and editorial changes. And the political leaders have been flirting with new regulations that would license newspapers and individual journalists. Also, paywalls could leave the free website of the government-sponsored Australian Broadcast Corporation the default provider of national news for many.

All this puts me in mind of a flurry of federal government interest, beginning three years ago, in the decline of the newspaper industry: Congressional hearings, and separate studies by the Federal Trade Commission and Federal Communications Commission. The consensus conclusion was that a shrinking  news effort from newspapers was leaving American communities with weakened coverage that might easily result in a less informed citizenry.

But there was no political push for government action, as the newspaper industry itself was waving off federal help on First Amendment grounds.

I don’t want to retry that case but would add two updates:

  • As chronicled here and elsewhere, the financial pinch on the industry and new rounds of layoffs and buyouts continue unabated. New media and not-for-profit start-ups are filling some, but not all, of the gaps in reporting that more vigorous newspaper organizations used to undertake.
  • With newspaper companies spurned by Wall Street and other conventional investors, they are up for grabs, and rich individuals have become a growing new class of owners. Warren Buffett has been clear that the dozens of papers his Berkshire Hathaway has acquired this year are a business play not a vehicle for his political views.

On the other hand, real estate heavyweight Doug Manchester has remade the UT San Diego (formerly the San Diego Union-Tribune) with an open partisan, pro-business editorial emphasis in his first year as owner. And Manchester’s chief deputy  said just this week that he would welcome the opportunity to acquire the Los Angeles Times and other Tribune Co. papers if he has the opportunity.

Israel and Australia would rank high on anyone’s list of vibrant democracies. But they are also small — Israel with a population of 8 million, about the size of Virginia, and Australia with 20 million, the size of New York. So its bigness and the diversity of media competition probably protects the United States from newspaper distress becoming an affair of state.

But it is worth watching how these press crises play out in Israel and Australia. Democracy needs journalism (a current refrain at Poynter). And weakened news businesses, along with the independent journalism they have been providing, are now easy targets for billionaires with agendas.

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