Fairfax or Gina-fax? Let’s have the debate before it’s over

andrew jaspanFormer editor-in-chief of The Age Andrew Jaspan argues that Australia is just days away from suffering a major blow to its media plurality if mining billionnaire Gina Rinehart successfully takes control of Fairfax Media.

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.com.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.

That is what The Conversation will aim to provide. We will be leading a debate over the next few weeks, and keeping tabs on the media developments. We hope you will engage with us through your comments and suggestions for the coverage you would like to see us run. It’s important to have your say while the matter is live, rather than bleat about it afterwards.

Andrew Jaspan is editor of The Conversation and the former editor-in-chief of The Age.

Comments


  1. Robbo
    18 Jun 12
    9:06 am

  2. After reading this tripe, it’s no wonder The Age has gone downhill.

  3. Robbo
    18 Jun 12
    9:08 am

  4. PS. and good luck with The Conversation – because no-one will be listening.

  5. Devil's advocaat
    18 Jun 12
    9:13 am

  6. Well I think I might pop to a cafe with wi-fi before commenting in case she buys Mumbrella to shut it up too and comes after me.

  7. Hmmmm...
    18 Jun 12
    9:30 am

  8. “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?”

    I fear the latter, unfortunately.

  9. roger colman
    18 Jun 12
    10:10 am

  10. It is typical of the friends of Fairfax, mainly non shareholders to bleat about their Fairfax. It’s very simple, Fairfax, in a breakup is worth between around 50 cps, depending on the timing of the $500m of restructuring and redundancies as newspapers decline. One has to be conservative as the newspapers in Sydney and Melbourne provide the online pool of UB’s that enable the Fairfax digital divisions to generate their declared profits. Drive, MyCareer, Domain, Essential Baby, RSVP, Stayz, all benefit immensely from this cross audience pool. One knocks $300m-360m off the valuation of the digital assets if the SMH/The Age were no longer to exist. And which they surely will. Of USA cities over 4m persons (13) only 11 have two daily newspapers. Sydney and Melbourne are naturally single newspapers towns this decade. These two cities are Fairfax’s Stalingrad, and Rupert is on the other side of the Volga with relatively endless commitment and resources.
    Now Gina is paying 10 cps per share above the 50 cps breakup valuation to ensure that Abbott gets elected and the upper house control passes to the Coalition. This is for her a $47m extra cost premium (10 cps on 20% of capital which is $2.350b) She picks up billons in the termination of the carbon tax, MRRT on new mines (hers). And so she should.
    But Fairfax metro journalists have lost the ability to keep these two titles journals of records under the current editorial independence guidelines. Relative to News, it is obvious that theses two newspapers don’t do the hard yards anymore that the News provides readers. By adopting this Chardonnay journalism Fairfax has lost the readers who count – right wing readers -who have the money. In the last election, of the 20 wealthiest electorates, 13 voted coalition. Fairfax, as Greg Gardiner, the best Fairfax GM of the past 50 years, said, “every day the SMH, AFR and Age shovels up **** in the face of their readers”. These are the wealthiest readers who can afford pay walls, $2.00 cover prices. Fairfax bleeds readers and circulation share to News.
    For Gina, the chances of getting top quality conservative managers from the world talent pool are easy.
    The key thing it’s not your Fairfax, it’s the shareholders Fairfax. Those making the noise wouldn’t buy shares and suffer the losses that have occurred, Gina has. They want something for nothing, just like the ABC/SBS viewer who gets a $1.3b pa service for their culture and not pay directly for it. And as though the Government should own any media at all, or not at least have the ABC/SBS advertiser or PAY TV financed.

  11. Last One Left
    18 Jun 12
    10:14 am

  12. I have a pretty decent A3 printer with quite a lot of ink left. I can write real good too. Who’s with me?

  13. Brad
    18 Jun 12
    10:21 am

  14. This horribly edited article, rife with typos, is probably the reason you’re the former editor in chief.

    Sounds very ‘tin-foil-hat’.

    How many people do you think get their news from paper or institution owned websites these days? You’ve missed the boat, again.

  15. David Quamby
    18 Jun 12
    10:37 am

  16. What a depressing thought! Rinehart in control of Fairfax. If this happens, I can see myself never bothering to read (let alone buy another Australian based newspaper again – I already avoid all Murdoch press). Instead I suppose I’ll just stick to the ABC and SBS fro my local balanced online new sources and then get my world news from the Guardian and The Independent in the UK online.

    @ Hmmmm – You raise a good warning question there regarding the rise of the Australian Oligarchs. What a shame it could come to this.

  17. Waaah
    18 Jun 12
    10:53 am

  18. Hello Mumbrella-folk! Small typo in the title (OF instead of OR).

  19. Cathie McGinn
    18 Jun 12
    11:06 am

  20. Thanks Waah. Updated accordingly.

    Cheers,

    Cathie – Mumbrella

  21. Analog Penetration
    18 Jun 12
    11:40 am

  22. And what are you contributing Robbo?
    I am and will remain a reader of The Conversation – it and sites like it are satisfying a need in society that will soon become more widely felt.

  23. Robbo
    18 Jun 12
    2:30 pm

  24. I’m not reading biased propaganda, Analog Penetration, that’s for sure. Unlike you.

  25. Enviro
    18 Jun 12
    2:35 pm

  26. The opposition are blaming the carbon tax for the loss of the two printing plants and the loss of 2000 jobs.

    This would be the headline on the Herald and the Age today under a Fairfax run by mining companies.

    When will Australia move beyond being “the lucky quarry”.

  27. Jim
    18 Jun 12
    4:55 pm

  28. Australia just got dumber…and Robbo you seem to fine with that? We’re turning inot a creche of morons run by big mining companies. Our culture…what’s left of it?

  29. Warren Bley
    18 Jun 12
    5:08 pm

  30. Just reading a few of these comments should make us all despair! The ratbag right have taken over commercial AM radio, Ch 9 – post Packer’s legacy, Ch 10 since Rinehart, and now the only voice not simply regurgitating the propaganda of Tory lick-spittles: the Herald, is set to become prey to the fell stench of these Murdoch inspired miscreants.

    It happened in the UK – read “Dial M for Murdoch” – just released. It is happening here – only worse! This is breathtakingly sinister!!

  31. Mark
    18 Jun 12
    8:16 pm

  32. I don’t believe that the general public is stupid enough to take everything they read at face value. So what if gina-fax pushes “climate opinion & carbon tax agenda.” It would be blatantly obvious and consist probably .1% of everything that they publish.

    An educated reader would inspect everything with a grain of salt and if they don’t like it, retreat to their blog, comments section or troll cave. Just like this article for example, you wouldn’t be the first ex-employee sprouting of managerial failure.

    Now I’m not suggesting that you left on bad terms or carry resentment, just making a point and you’re probably right, there will be further reductions in talented staff and editorial independence at Fairfax. However, in a media format that is so rapidly in demise I don’t see this as a problem. Within 5 years, when physical newspapers are no longer financially viable they will have as much control of the media as you and I do via our keyboards.

  33. Narelle Hanratty
    19 Jun 12
    11:23 am

  34. As a reader, I want my news source to occur as having a sense of mastery: mastery of its purpose, its niche, its material, its expression. For a long time, Fairfax papers have not occurred to me in this way. Occasionally, some of the older journalists will still demonstrate this mastery, eg, John Silvester, but as a product it no longer does.

    The absence of mastery shows up in many ways, including poor editing and grammar. You can pick up The Age on any day and find typos and errors galore. This piece itself is badly edited (presumably by the people at The Conversation). The following passage is awful:

    “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.”

    Readers can smell this mastery. If you don’t show evidence of it, they will continue to turn away.

  35. Enviro
    19 Jun 12
    1:36 pm

  36. Mark,
    I take on board your comments.

    Climate debate may be a minor percentage of coverage but it is pivotal at this time.

    The Liberals are falsely blaming every economic woe on the carbon tax and many intelligent Australians agree with them.

    Just where will people be able to access unbiased news in future?
    E

  37. days of whining poseurs
    19 Jun 12
    6:34 pm

  38. This is hilarious coming from Jaspan, the guy who forced The Age journalists to promote Earth Hour, a program in which Fairfax has shares.

    Jaspan and co’s only concern is that other voices as well as theirs will be heard.

  39. days of whining poseurs
    19 Jun 12
    6:39 pm

  40. Since when was “billionaire” spelt “billionnaire”?

    Ah, Mumbrella, how quickly you take on errors of the error-ridden. ;)

  41. M
    19 Jun 12
    7:31 pm

  42. It’s pretty rich for an ex-editor who was dismissed from Fairfax to a cheer of relief across the Age editorial floor to start giving advice on how to run the rest of the business.

  43. Gavin H
    19 Jun 12
    7:38 pm

  44. Fairfax cannot compete online with the ad free, subscription free Drum, competing with News Ltd is it’s only chance. To do so it must move to the Right, there is no other option it’s Nofax or Ginafax.

    Choose wisely.

  45. Glenn Turner
    20 Jun 12
    2:20 am

  46. So what?
    If you think media Plurality is doomed in this country write about it. If what you write has the ring of truth the people will reward your efforts with popularity. It is that simple.
    The friut of debate is enlightenment and freedom of speech the DNA of democracy. Why close the lid on the treasure chest?

  47. jimbo
    20 Jun 12
    5:57 am

  48. Fairfax can live, but it needs to stop being a niche market player. Why sing to a small choir and then complain about their failure to support you in the manner in which you would like to.

    Fairfax needs to embrace diversity of opinion to make it stronger, not demand others to support its own thinly disguised political agenda.

    Their stance on the debunked Al Gore Climate Change scam is just baffling. It’s 2012 and they are stuck in the past.

  49. Savvy content creators
    20 Jun 12
    9:08 am

  50. I think this is a great thing for Australian Media if Gina buys more into Fairfax. Let her buy more of the old dinosaur. Watch the cream leave and then watch ‘the cream’ launch into the digital news space themselves, without a paywall, engaging their audiences really well.

    You watch the news space – I can see many speedboats getting launched, which are far more nimble than the oil tanker Reinhart. Yes she is worth more, however the speedboat is what everyone wants.

    We shall see?

    Content creators: Do something yourselves, you are great at writing content!!!!!!!!!!

    Tim did it with Mumbrella!!

  51. Richard Grayden
    20 Jun 12
    10:28 am

  52. What has happened to Journalism over the last couple of decades? You have rejected your brief to report the news, and instead have gone for advocacy of any tin pot, half baked idea that comes along.
    Oh, I know. It went to the Universities, since they are the paragons of “learning”. What has happened to those REPORTERS who got their apprentiships in the back of the Black Marias, and learnt to be cynical of everything that is spouted by Bozos.
    All we are seeing is the end game for this failed system of “degree” qualified children.