The Kim Williams legacy: a lesson in who runs News

Kim WilliamsFriday’s departure of News Corp Australia’s Kim Williams came about because of his failure to master the internal politics of the company and by the collapse of sales revenues, writes Nic Christensen.

Among the legacies of the Williams years at News Corp may well be the passage of two phrases, “grin fucking” and “tummy compass”, into the Australian media lexicon.

Over the weekend, News’s arch rival Fairfax Media has had tremendous fun trawling over the details of the departure of the iconoclastic News CEO and indeed there are many stories about what happened and why Williams was left with no choice but to pull up stumps.

Mumbrella has spoken to many people inside the company over the last 48 hours, but perhaps one of the most succinct analyses came from a News Corp insider, who summed up Williams’s predicament this way: “You can piss off the editors or you can lose money, but you certainly can’t do both and think Rupert (Murdoch) will let you get away it.”

In the end Kim Williams clearly didn’t.

Inside News Corp’s Holt Street HQ in Sydney, the consensus is that Williams walked the plank for two key reasons: a tin ear for the ever present internal politics at News, particularly with the various fiefdoms that the newspaper editors have, and a major collapse in sales revenues.

Over the weekend there was much media coverage of the falling out between Williams and Rupert Murdoch’s son Lachlan who is now chairman and part owner of Ten over the NRL rights. While ‘the Lachlan factor’ can also be seen as a another contributing factor it does not appear to be a key reason for the departure.

Rather various News Corp Australia sources tell Mumbrella print advertising revenues are down as much as 40 per cent, compared with just half that — or 20 per cent — for the overall print market.

If the falls are indeed that dramatic it will raise serious questions about the impact of the 2012 restructure of the sales teams and the merger of its newspaper and digital products.

News is not alone in making such changes, rival Fairfax Media has also introduced similar measures. However, the consensus at News seems to be that in streamlining processes and chasing cost savings, the company has seriously damaged a declining revenue base with lower advertising revenue yields through greater bundling of its advertising options.

There are also limited available avenues for unwinding the changes.

“It’s not good,” says one News sales executive. “They didn’t realise what this would do to the all important revenue base and I can’t see how they could possibly unwind it.”

“That would be an admission of defeat — which, we all know, they’re not going to do.”

The full extent of any circulation revenue collapse will be clearer on Friday when the Australian Bureau of Circulation numbers come out but it is worth noting that well-respected veteran media columnist Mark Day in the company’s own organ, The Australian today writes that News’s “advertising revenue figures (are) falling off a cliff” and that “the issue is that revenue is falling faster than costs.”

Julian ClAake

Julian Clarke

Jerry Harris

Jerry Harris

Fiorella Di Santo

Fiorella Di Santo

The next question is also the future of key Williams appointees, such as commercial and operations group director Jerry Harris, group marketing director Corin Dimopoulos and group sales director Fiorella Di Santo.

If the revenue has fallen by as much as is being speculated about internally, you can be sure new CEO Julian Clarke, who starts today and who is largely viewed as a placeholder for the short to medium term, will make stemming the revenue fall his first and foremost priority (presumably, right after he expels from the building the last of any of Williams’s Boston Consultancy Group consultants, who were largely loathed within the company).

As with all leadership changes, there will be those on the fifth floor of News’s headquarters at Holt Street who will have to reassess their roles in the post-Williams regime and who would have read the writing on the wall last Friday, particularly when The Australian wrote that: “more (senior leadership) changes are expected to follow”.

Internal News rumour says that Harris, with his background in print, and Williams, who had a more digital focus, were often at loggerheads over strategy. The result being that the internal ructions were not limited to management conflicts with editorial.

“Kim really pushed the boundaries with Jerry, plus the war with the editorial staff and we’re still bleeding cash,” said one senior executive. “It just couldn’t go on.”

Last month Williams and the company celebrated internally hitting the milestone of 100,000 paid digital subscribers, with company wide emails and posters in the lifts championing the success of the new paywall strategy, Newsplus. However, many inside the company noted how the milestone was not as spectacular a start as the company might have hoped, given that 45,000 of them were pre-existing digital subscribers to The Australian.

But the loss of revenue alone is not the sole reason for Williams’s demise. Rather it was the failure to recognise the internal political power of the newspaper editors that ultimately made Williams’s position untenable.

Stories abide of the frustration of the newspaper editors with the cost cutting program instituted by Williams, which has now seen News sack more journalists than Fairfax.

It was widely known internally that the editors, many of whom have decade long relationships with Rupert Murdoch and the Murdoch family, were going around Williams and undermining the CEO.

The Sydney Morning Herald’s Tim Elliott told the story on Saturday of how Williams began his stint as CEO lecturing the newspaper editors on how they had for too long relied on “feeling” and not on hard data.

He reportedly told the editors there would be no more relying on gut instinct, somewhat bizarrely declaring an end to what Williams reportedly labelled: “the Royal Order of the Tummy Compass”.

The News CEO also explicitly warned them not to “grin fuck” him. The phrase, not generally used in Australia, is described by Williams in the SMH as: “Grin f—king is when I say to do something, you sit there and nod your head and grin, then walk away and fuck me over.”

Williams shouldn’t have worried too much about grin fucking. News’s editors are not known for their subtly and sometimes their opposition and active undermining of Williams’s cost cutting attempts weren’t even hidden.

There are reportedly instances of Williams emailing editors with instructions on where and how to cut costs only to have them reply to his missives by cc’ing in News chairman Rupert Murdoch in New York.

The result: the chairman of the multi-billion dollar global media conglomerate was forced to act as ultimate judge and arbiter between his editors and his CEO on where and how deep to cut at newspapers half a world away.

For those who know the company, it is unsurprising Murdoch eventually sided with the editors, who run his beloved Australian newspapers.

In Williams’s place, Rupert Murdoch has brought out of retirement one of his most trusted lieutenants Julian Clarke to calm the horses. The move is largely viewed as a temporary placeholder strategy and speculation will soon turn to who will lead the company in the long term.

And while speculation of course turns to Lachlan Murdoch, the question remains, as ever, would he really want it? But by appointing a 69-year-old, it certainly looks like Murdoch has somebody else in mind, who is not immediately available or will be groomed for the role.

News Corp’s national broadsheet, The Australian hints at such a manoeuvre today reporting that one of Clarke’s first moves will be a “major hire in coming weeks to strengthen the operational side of the company.”

Clarke will also have alongside him legendary tabloid editor Col Allan who according to News CEO Robert Thomson’s email announcing his return to Australia will be here “temporarily” to provide “extra editorial leadership for our papers” for a period of two or three months.

News insiders are increasingly tipping that visit by the editor of New York Post may not be as short term as was originally indicated.

In the words of one company veteran: “Col loves politics and he is clearly here for our federal election but given there is also right now an all important New York mayoral election going on back in the States so, it certainly looks like Oz is going to be his focus the foreseeable future.”

Allan’s remit is also interesting with The Australian reporting one of his first priorities was the Sunday newspapers. Many inside the company suggest the Sunday newspapers, which are still the highest selling newspapers of the week, have struggled under the move to a seven-day newsroom roster.

neil breen

Neil Breen

The merger of daily and Sunday reporting staffs was one of Williams’s most controversial reforms and was strongly fought by a number of editors, among them was rumoured to be the Sunday Telegraph’s Neil Breen.

Across various News newsrooms the story of how Breen told Williams he would not give up his staff on the highly successful and profitable newspaper, has been widely told.

Williams reportedly replied telling him: “either you are on the fucking (seven day roster) bus or you fucking get off.” *

Shortly after this Breen, who was well respected and strongly backed internally, departed the company. He is now the executive producer of the Today Show.

It will be fascinating to see what changes happen to News’s editorial leadership in the coming months, particularly if Allan stays in Australia.

Campbell Reid

Campbell Reid

Should Col Allan remain, this will also invariably add to continuing rumours about the future of Campbell Reid, a former editor of The Australian and The Daily Telegraph, who is otherwise responsible for editorial content as the company’s group editorial director.

Internally Clarke is not expected to be the person charged with completing the reform agenda begun by Williams.

Perennial speculation about the return of Lachlan Murdoch to the helm of News Corp Australia will also not go away. However, Lachlan’s personal stakes in DMG Radio and the troubled Channel Ten make a return to day-to-day operations at News unlikely, both because cross media ownership rules prevent it and also any return by Rupert Murdoch’s son are generally tipped to be at the global level of News.

Richard Freudenstein

Richard Freudenstein

Some insiders say Foxtel CEO Richard Freudenstein is the most likely internal candidate, however his business skills will also be needed at the pay TV operator which faces increasing competition in the online world.

One of the big things in Freudenstein’s favour is that as a former CEO of The Australian, he has good relationships with important editors, such as Chris Mitchell and Paul Whittaker. Another factor likely to play in his favour is that he also led the introduction of the national broadsheet’s “freemium” paywall, which with its growing subscriber base is viewed internally as a success.

Freudenstein announces the paywall at Mumbrella360:

Freudenstein is also more of a diplomat than Williams and would likely be able to better manage some of the key relationships integral to success in the role of News CEO. But it is also worth recognising that he too is not a newspaperman.

The company may also look externally and while that happens Clarke as the former head of the Herald Weekly Times, described by one insider as: “the newspaperman’s newspaperman”, is capable of handling the reins.

“It’ll be okay”, said one News insider, “Right now we just need to right the ship and Julian is the guy to do that. In the end, he is one of us.”

To outsiders, the tribal culture that is News is a difficult thing to quantify, let alone explain.  It is not something that is mirrored at rival Fairfax or any other Australian media company.

It is one of its defining cultural characteristics that the publisher has an ‘us against the world’ mentality and in the eyes of many inside the company Williams, despite his decade long tenure at Foxtel, was never seen as part of the News family.

When he took the reigns of the company in 2011 the fact that Williams didn’t have ‘ink in his veins’ was largely sold as a plus. He would be a man to revolutionise and digitise the old newspaper publisher.

In the end Williams was given a reform mandate but, in just 20 months, he didn’t have time to complete the program.

What he did achieve was to shake up the company, restructuring both sales and editorial, and attempting to force the publisher into the 21st Century, almost by force of personality alone.

Did he go too far, too quickly? Perhaps.

News Limited logoWhoever succeeds him, as a permanent and long term CEO, must learn the lessons of the Williams era and also understand one fundamental truth about the company, which most insiders still call News Limited, despite a recent rebranding.

In the words of one senior executive: “A lot of what Kim did was good, necessary even, but he thought he was in charge of the place.”

“And that was his real mistake.”

*UPDATE: Since publishing this story on Monday, former Sunday Telegraph editor Neil Breen has commented in the thread below saying:

I’m bemused by the anecdote about Kim telling me to ‘get off the f…ing bus’. It never happened…

I had robust disagreements with others about many things, including aspects of the merger, but this one has me baffled…

… as many things are being said about what’s going on at News. Some are true, some aren’t.

His full comments can be read below in comment number 19.

Nic Christensen is deputy editor of Mumbrella and Encore Magazine. He has previously worked as a media writer for The Australian and as a reporter for The Daily Telegraph. 

Comments


  1. BCG: Are you kidding me?
    12 Aug 13
    9:47 am

  2. Is it my imagination or is appointing BCG the kiss of death?

  3. Nic Halley
    12 Aug 13
    11:14 am

  4. best summary Ive seen to date, great piece Nic

  5. Nath
    12 Aug 13
    11:15 am

  6. Great article.

    I for one hope that the newspaper bleeds revenue until they can act a bit more “fair and balanced” in their reporting. Deliberately polarising the nation in order to sell more papers is a short sighted and harmful stance. And one Australia doesn’t need or deserve.

  7. Dibby Dob
    12 Aug 13
    11:19 am

  8. Great piece Nic.
    Lets see how long Fairfax keeps their management consultants – they are sending Greg H’s team crazy with their bungled roll outs.

  9. TheFacts
    12 Aug 13
    11:30 am

  10. I read an article recently that talked about Obama referring to Fox News as a “destructive force” in US life. I would personally apply a similar argument to the Daily Telegraph. It’s one thing to feature anti-government comment in the opinion section, but to selectively present news throughout the paper that strongly suits the editorial line is another thing entirely. It’s misleading. It’s a tactic that seems to have been borrowed from both Fox News and News’ British tabloids. I assume it is mostly for commercial/circulation (with a touch of ideology thrown in) reasons rather than the various conspiracy theories. Not sure if it is working for them though. I miss the days when the Tele was more about celebrity stories, bikini girls, humour and various other bits of mass market fluff. Under Paul Whittaker it is all about rabid and one-sided political campaigning.

  11. TimN
    12 Aug 13
    12:00 pm

  12. Channel 9 should make a mini-series out of the Holt St shenanigans over the years. Maybe next version of ‘Underbelly’, sub-titled ‘Grin F**cking’.
    Like most papers News Ltd’s papers are still losing readers and this may been the last nail in Williams’ coffin; refer latest ABC data from May – http://www.crikey.com.au/2013/.....ls-falter/.

  13. Laters
    12 Aug 13
    12:14 pm

  14. Unfortunately for hywood, the management consultants at fairfax are a lot better at fixing the company than him, and the board are well aware of that. Watch this space….

  15. richard
    12 Aug 13
    12:58 pm

  16. The Sydney Morning Herald’s Tim Elliott told the story on Saturday of how Williams began his stint as CEO lecturing the newspaper editors on how they had for too long relied on “feeling” and not on hard data.
    He reportedly told the editors there would be no more relying on gut instinct, somewhat bizarrely declaring an end to what Williams reportedly labelled: “the Royal Order of the Tummy Compass”.

    Basically, they rely on Truthiness, a term created by Stephen Colbert. And as The Colbert Report is a parody of The O’Reilly Factor, which is on Fox News, which is owned by NewsCorp, who also owns News Australia, why is any of this surprising?

  17. Dibby Dob
    12 Aug 13
    2:14 pm

  18. Laters – you’re a joke. The Fairfax board are a disgrace – and every single person in Fairfax knows it. How about that shareprice Fairfax boardmembers?
    Not one of those individuals is brave enough to stand up to Corbett and his antiquated positions. Greg Hywood has done more for this company in 3 years than many other media CEOs have managed.

  19. Dylan Nickelson
    12 Aug 13
    2:26 pm

  20. If News Corp and Fairfax both claim declines in print advertising revenue greater than the industry average, where’s print ad revenue going?

  21. nell schofield
    12 Aug 13
    2:46 pm

  22. best piece written on WIlliams’ departure, great job, Nic

  23. Scoop
    12 Aug 13
    3:20 pm

  24. I challenge that his characteristic round framed glasses were the real cause of his undoing. No rough and tumble Aussie hack likes round glasses on blokes.

  25. Laters
    12 Aug 13
    3:34 pm

  26. @ dibbyknob

    Sounds like you’re one of Hywood’s mis-informed cronies. And the tanking share price has nothing to do with the Ceo? Better hope I’m wrong but unfortunately for you and him the wheels are in motion.

  27. Andrew Bolt & Gina Rineharts Lovechild
    12 Aug 13
    3:58 pm

  28. Laters,

    You are a prize pillock. Having worked at FXJ and others over the years I have seen hundreds of these consultants come and go. PWC, McKinsey, Bain. It’s all the same.

    One question. How many of these “consultants” see through their recommendations? And how often do they take responsibility for that?

    Consultants DO have the advantage of being able to see through the internal BS. But at the end of the day they are all care and no repsonsibility.

    After all, if these consultants were any good they would have fixed fairfax after being camped there (in various iterations) for the last 20 years?

    Or is 20 years not long enough?

  29. Martin Walsh
    12 Aug 13
    4:00 pm

  30. Dear ‘Nath’,

    On what date did this mysterious requirement for newspapers to be ‘fair and balanced’ begin?

    Newspapers through their history have always endorsed or opposed political candidates in every western democracy. It is an important part of the democratic apparatus.

    I seriously suggest you go back to school and learn about the important role newspaper endorsements and opposition to political candidates and or parties has provided.

    It’ll take you 5 minutes on the Internet to track down endorsements or otherwise of scores of high profile newspapers. Here’s the record for just one newspaper, The New York Times – http://www.nytimes.com/interac.....eline.html

    It’s funny how we never heard any of this hysterical and stupid ‘bias’ whining from the Labor apologists when Murdoch endorsed Rudd last time around.

    Nothing worse in this world than hypocrites.

    For the record, I don’t like either Rudd or Abbott but this is not a personality or popularity contest, it’s an election for the Government of our country and the sooner people stop listening to political (not media) dogma, the better we’ll all be.

  31. Tired of spin
    12 Aug 13
    4:52 pm

  32. Both News and Fairfax have obvious financial problems and obvious inability to do anything about them. News has an ageing “proprietor” and Fairfax has an ageing grocer in charge. It seems evident that the CEO roles in both are now merely a window into the lack of direction and sense of purpose in both. What is blatantly obvious is the standard of product. They both are miserable and standards are falling in a market where the real is issue is rising competition.
    If nothing changes, these two will be the ageing drunks on the street corner, belting each other ineffectually as the community looks in bemused indifference.

  33. Who Knows
    12 Aug 13
    5:50 pm

  34. I have to wonder if anyone has spoken to the people at Foxtel who worked under Williams versus the executive post his departure. Be interesting to understand the view of Williams and that company’s change post Williams, from “within the walls”.

  35. Richard
    12 Aug 13
    6:14 pm

  36. Like McKinsey and then BCG at NAB.

    Been in there forever, and all that has happened is the bank has sunk to the bottom of the pack

  37. Neil Breen
    12 Aug 13
    7:08 pm

  38. Hi Nic – I, like many others who have provided feedback, enjoyed your well-written piece. But I have to say I’m bemused by the anecdote about Kim telling me to ‘get off the f…ing bus’. It never happened. Kim and I never had a terse word to one another. I never had a disagreement with him about anything, including merging the newsrooms.
    I had robust disagreements with others about many things, including aspects of the merger, but this one has me baffled. It is also a story no-one has repeated to me or ever asked me about. I do believe what you say in your piece about it being told, as many things are being said about what’s going on at News. Some are true, some aren’t.
    Regards,
    Neil Breen

  39. Nic Christensen
    12 Aug 13
    7:51 pm

  40. (Time updated so comment appears in sequence)
    Hi Neil,

    I’ll email you as well, but in a public forum, I wanted to apologise for not getting your response to the “get off the bus” story.

    As I said in the piece, that story did go widely around News and came from multiple staff across various parts of the company. On that basis I took them to be true.

    However, on reflection, I should have I checked it with you. This was a oversight on my part and I’ve posted an update in the story to reflect and draw readers attention to your comments.

    I appreciate you clarifying.

    Cheers

    Nic – Mumbrella

  41. Abalone sandwich
    12 Aug 13
    9:12 pm

  42. Whilst there are elements of your story that are likely true, you are ill-informed as you again repeat the messages of various unnamed senior advertising executives of the collapse in ad revenues – given that News (and Fairfax) are the market, who is holding the sector up? Sadly perpetuating this myth serves the agendas of narrow minded and beady eyed little men who are working to protect their fiefdoms (editorial) or yearn for their return (the various unnamed advertising sources). PS Incidentally, collapse is not true – decline is.

  43. john hollands
    13 Aug 13
    1:04 am

  44. I LOVE it!
    Folks at newspapers can’t figure why they are declining.
    There have been many great eras – the era of steam, the era of the railroads, the era of trans-oceanic liners.
    Whatever happened to those expensive investment newsletters that were delivered by Telex, huh?
    Gone.
    All gone.
    And so, news and information is collected digitally, manipulated digitally, massaged and enhanced AND THEN PRINTED IN INK ONTO PAPER AND LOADED ONTO TRUCKS AND DRIVEN TO ALL CORNERS OF THE STATE – TO BE THROWN OFF ONTO THE FOOTPATH, WHERE VENDORS COLLECT THEM AND PEOPLE HAVE TO TRAVEL TO THE SHOP TO BUY THEM.
    Where does this distribution model seem odd?

    Newspapers are where television would be if there was only VHS at the shop and no broadcast over-the-air.
    Like a man jumping off a hundred storey building; as he passes floor 95 he can truthfully say “I’m not dead”.
    As he passes the thirtieth floor he can truthfully say “I’m not dead”…
    But, you know what?
    He’s dead.
    Just not yet.
    But inevitable.
    Newspapers, who buys ‘em? I don’t, my kids don’t, their friends don’t.
    THAT’S why they are declining.

  45. Are we for real?
    13 Aug 13
    9:47 am

  46. I cannot understand some of the credulous praise on this thread particularly from someone like Neil Breen who should know better. It’s a round-up of articles in News and Fairfax papers days after the fact. I think some of the journalists behind the mammoth endeavours in the weekend papers might have a copyright issue.

  47. mumbrella
    13 Aug 13
    10:02 am

  48. Hi Are We For Real,

    Allow me to come to Nic’s defence. You’re wrong.

    This is a piece Nic began to work his sources on, on Friday, as soon as it happened. He filed a first draft to me on Saturday and continued to work on it across the weekend. We held off on posting until Monday when News had been given the opportunity to comment on the claim that News Corp has seen a 40 per cent drop in revenue. That has been thus far unreported.

    Our view is that where other interesting pieces are carried, we acknowledge and link to them for the readers’ benefit (I know the linking to the outside world is not something always done by traditional titles – I see you’re posting from a News Corp IP address)

    We were very clear that two of the most colourful lines “grin fucking” and “tummy compass” came from the Tim Elliott’s SMH story. As previously has been reported elsewhere, Tim Elliott had already been working on a profile of Kim Williams for Good Weekend. Clearly this material paid off in a big way.

    But the analysis and insight is entirely Nic’s own. He was sharing it in media interviews from Friday afternoon onwards, long before those other articles appeared.

    Cheers,

    Tim – Mumbrella

  49. dave
    20 Aug 13
    10:00 pm

  50. I have bought daily newspapers for 40 years.Suddenly I decided to help my bottom line and save $600 per year,thanks to the opinionated journalism appearing in the
    West Australian and Sunday Times in Perth.When you piss off 40% of your readers and therefore your revenue,as you sow,so shall you reap.
    Dave.