Telstra’s retreat

So Telstra has realised at long last it is not a media company. While some news columnists have called its retreat from media a “disaster” I can hear customers all over the country breathing a sigh of relief. Is it possible that Telstra has realised it is a telecommunications company at last?

It appears so. The announcement by chief executive David Thodey this morning that it has reorganised the management team into four main groups: customer sales and support, product and marketing innovation, operations and corporate support.

Not sexy is it? Nothing in that to excite everyone with a dazzling new direction, around words like “new” and “digital” and “media”.

It is also a big shift in direction from Trujillo’s strategy announced in 2008 to establish Telstra Media as a separate unit to “recognise the growing importance of content to Telstra’s future and our belief that content lies at the heart of Telstra’s future as a media-comms company.” Telstra insiders were told to view the new operation as a Fairfax Digital or News type operation and the hunt was on for acquisitions, particularly in print media.

But Justin Milne, who was the golden boy heading up Telstra Media, has now resigned.

J B Rousselot, who has been with Telstra for six years, will become executive director of voice, broadband and media. A review of operations with the goal of reducing costs and improving competitiveness has begun.

“The way we work – everything from our corporate decision making processes to the way we serve our customers at the frontline – needs to be simplified.”, Thodey says.

There is a lesson in this for all companies that are attracted to the media space.

As the barriers to entry have plummeted, everyone suddenly wants to produce their own content. Yet Telstra has enough trouble running its one core business, without trying to expand into the media space.

Yes, on butcher’s paper, it makes sense to own the content that runs on the broadband. But those of us in the media business know how hard and expensive it is to produce or buy great content and create and maintain vibrant communities.