Tonagh leads consortium to buy AAP

Former News Corp CEO Peter Tonagh is leading a consortium seeking to protect journalists’ jobs and media diversity.

Peter Tonagh says his consortium aims to make the AAP newswire profitable. Picture: John Feder

Former News Corp and Foxtel CEO Peter Tonagh has revealed he is heading up a consortium to buy the AAP newswire and is hoping to pressure its management to strike a deal before the 85-year-old business closes next month.

As the Tonagh-led consortium became the latest to reveal itself as a suitor for the AAP business, ACCC chairman Rod Sims warned that shareholders News Corp Australia and Nine Entertainment could not be forced into a deal that did “not make commercial sense”. Mr Tonagh told The Australian on Sunday he had been motivated by a desire “to protect journalists’ jobs and media diversity, and provide the right level of support to regional and rural areas”.

Mr Tonagh, who now helps ­advise and fund start-up media ventures, accepted that in the short term it would be challenging to make AAP turn a profit.

“If it’s a purely philanthropic venture it is going to die,” he said. “If it is a purely commercial endeavour it won’t work either. But if it is philanthropic and there’s a transition period in the end you should be able to get a return.

“There’s no doubt the media needs to change, but we think it can support itself after a transition period.”

The consortium includes Fred Woollard, managing director of Samuel Terry Asset Management, and Kylie Charlton, managing ­director of Australian Impact Investments, but Mr Tonagh would not reveal other parties.

Mr Woollard tweeted on Sunday: “I am pleased to be part of the consortium bidding for AAP. This investment is in my personal ­capacity, not through the Samuel Terry Fund.”

AAP announced in March that the company would shut, leaving several hundred journalists and editors without jobs.

The decision was a result of News Corp (publisher of The Australian) and Nine deciding to pull out of the venture, which was costing the companies tens of millions of dollars a year. AAP is chaired by News Corp senior executive Campbell Reid.

An AAP board spokesman told The Australian: “We are considering the offer, which we are treating as confidential. Our concern remains the AAP employees.”

Nine and News Corp have made clear they will not be customers or shareholders of a new AAP, with News Corp recently unveiling its own internal newswire service for mastheads and plans to on-sell content to third parties.

Mr Tonagh described the decision by News Corp and Nine to sever ties as the “biggest challenge” for a new AAP. “If they are not going to pay for content from it, what does this mean for the others?” he said.

Mr Sims on Sunday told The Australian he thought “it would be a good thing for competition” if AAP were to remain open, but News Corp and Nine could not be forced into a deal that did not make commercial sense.

“It’s not required that News and Nine do anything against their financial interests,” he said. “If they did get an offer in their ­financial interests and did not take it, that could be a competition issue — but I don’t see that happening.”

While AAP is set to close next month, it recently said the deadline could be extended as talks continue, and The Australian understands there will not be rush to close the company while talks are ongoing.

With Mr Tonagh’s involvement revealed on ABC Insiders on Sunday, the consortium is seeking to increase the pressure for the business not to close by the June deadline. Mr Tonagh said the bid would be for the newswire and fact-checking business. “There are parts of the business that won’t fit with the consortium.”

Parts of the AAP business could still be sold to other bidders.