[LINK] Whatever happened to Fairfax?

[David Boxall]

Interesting, how getting it wrong on the impact of the 'net contributed 
to weakening the company.

 From 
<https://theconversation.edu.au/fairfax-or-gina-fax-lets-have-the-debate-before-its-over-7721>

The next two weeks will be defining moments for Australia. It’s when 
Fairfax is likely to morph into Gina-fax.

On Tuesday Gina Rinehart, the world’s richest woman, is expected to 
confirm that she has acquired up to 19.9% of Fairfax. The current Board, 
led by ex-Woolworths and now Walmart director Roger Corbett, is expected 
to raise the white flag in their efforts to ward off Rinehart’s bid for 
control. Rinehart is believed to want two or three seats on the board, 
and control of the Fairfax’s editorial positioning. And what she wants 
she can afford to buy.

Running in parallel, Fairfax will announce this week one of the most 
radical restructuring of its metropolitan mastheads, The Age and Sydney 
Morning Herald. From July 1 the two papers will be nationalized, that 
is, converted into one newsroom across both titles. There will be some 
local differences to allow the content to be rebranded for the Melbourne 
and Sydney audiences, but two voices in our shallow pool of diversity 
will become one.

And Fairfax will reduce its editorial workforce on the two papers by 
around 25% from roughly 800 to 600.

In tandem, Kim Williams, the chief executive of News Ltd, is expected to 
announce the most radical restructuring of the entire News Ltd workforce 
with a reduction of up to 1,500 staff.

This perfect storm has been brewing for some time. The decline and 
implosion of the media was seen as a European or American disease that 
Australia would avoid, much like the GFC. The seeds of Fairfax’s 
destruction were born in the mid 1990s when it failed to fully engage, 
understand and act on the disruptive threats of the internet.

The story of Fairfax’s decline is one of managerial failure. The company 
has been run by senior executives and boards with no direct experience 
running a media company. Instead, leaders at Fairfax have been property 
developers, management consultants, accountants, and rugby players. 
Those people did not have the experience or understanding of a 
people-media business to steer the ship into safe waters. Instead they 
allowed Fairfax to remain at sea while competitors savaged the business. 
One by one Fairfax was stripped of its classified advertising “rivers of 
gold”. The jobs went to Seek.com.au, Cars to Carsales.co.au, homes to 
Realestate.com.au.

And shorn of those easy revenues the only way Fairfax CEOs could “stay 
in the game” was to cut costs faster than revenues fell (all the while 
pocketing eye-watering salaries and bonuses).

Instead of having the foresight to embrace and invest in the digital age 
by bringing together mastheads to work collegiately, Fairfax leadership 
instead chose to separate the online team from the print team and run 
them as two distinct businesses, with “Fairfax Digital” competing for 
advertising revenues with the so-called “Fairfax Publishing”.

In 2007, I was asked to lead a team of three senior executives to visit 
the most progressive newspaper/media companies in the US and UK and 
report back to the then CEO, David Kirk. We went to the Wall Street 
Journal, New York Times, USA Today, Washington Post, The London 
Telegraph, The Financial Times and The Guardian.

We reported back to Kirk that every one of these had brought together 
“print” and “digital” into one resource. That is one editorial team, one 
advertising team and one back office. Kirk flatly opposed doing the same 
on the grounds the two businesses were both very profitable. And he 
wanted to keep it that way.

Five years later, with the company’s market value slashed from $7bn to 
just over $1bn, this integration will finally be imposed next month.

And for the first time in living memory the change will be led by a 
former journalist and senior editor, the CEO, Greg Hywood, along with 
the advice of consultants Bain & Co (Mitt Romney’s crew).

But it’s too late to save the Fairfax we know. The share price has 
collapsed from $5 to 60c or less because no one in the market believes 
there is a coherent strategy for the company. And that has left the 
company weak and defenceless to predators such as Rinehart.

Staff, meanwhile, have been living in denial. Though finally last week 
the penny dropped among the editorial staff that Gina’s tilt at Fairfax 
will happen. That has led to great despondency, and many rightly 
concerned about their future. And of course, once in, she is in control, 
and they will be told if they don’t like it, they can ship out.

What does this all mean? Rinehart is not an investor in Fairfax to earn 
a return like the rest of the company’s long-suffering institutional 
investors. She is making her play to change the climate of opinion in 
Australia.

Back in 2010 she and her fellow mining barons spent $22m to get rid of 
Kevin Rudd’s proposed mining tax.

And so successful was the campaign that they got rid of Rudd and saved 
themselves an estimated $20bn in taxes.

Rinehart’s appointment of Australia’s leading climate change sceptic, 
Ian Plimer, as an advisor to her mining companies is simply a taste of 
what’s to come. As one senior Fairfax editor remarked, expect this kind 
of front page once Rinehart gets control. “Exclusive: Climate Change is 
a Hoax”.

Rinehart aims to change the terms of debate in Australia for good. Her 
fellow Channel 10 director, “Hungry Jack” Cowin, the burger man, will 
likely join Rinehart on the board of Fairfax. Cowin has already made 
clear that the Fairfax Board has every right to set the editorial tone 
of the papers. And that Andrew Bolt, who already has the Bolt Report 
show on Channel 10, would be welcome at a Rinehart dominated Fairfax to 
“balance the message that’s being communicated to the community”.

With such a program, Rinehart and Co may well tell staff and readers 
that if they don’t like it they can go elsewhere. The problem in 
Australia is where to? The media is in crisis elsewhere in the West, but 
usually there is a choice, somewhere else to go to get a job or to get 
your news and commentary. Right now if you live in Hobart, Adelaide, 
Perth, Darwin or Brisbane you have no choice, just the one paper. In 
Melbourne and Sydney, there was choice.

Readers who, like Rinehart, prefer the editorial tone and message of The 
Australian, with its line on mining tax little different to that run by 
BHP, will be spoilt for choice. And scepticism towards climate change 
will now be shared by all three quality mastheads. Those with different 
views will have limited options.

Is this the modern, open, progressive, democratic, tolerant, 
knowledge-based, clever country we aspire to be? Or are we seeing the 
same rise of the oligarch as in Russia where the resource-rich 
billionaires also dominate the media? Or Italy, where Silvio Berlusconi 
owned the majority of the TV stations and newspapers and imposed his 
right-wing agenda, and ultimately won control of the country as Prime 
Minister?

This is an important moment for all those who cherish democratic and 
pluralistic debate and a freedom to information that is factual and 
reliable to inform decision-making.

Given that both the Fairfax and News Ltd papers are “interested parties” 
in the outcome, you will be hard pressed to get a full and dispassionate 
account of the next few weeks' momentous events.

...

-- 
David Boxall                         | "Cheer up" they said.
                                     | "Things could be worse."
http://david.boxall.id.au            | So I cheered up and,
                                     | Sure enough, things got worse.
                                     |              --Murphy's musing