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.


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