When newspaper managements ‘back’ themselves

tim burrowes landscapeThis has been a bad week for the newspaper industry, says Mumbrella’s Tim Burrowes   

As far as Australian newspapers go, this has been a most disillusioning week. I love ’em – but jeez, they make it hard.   

Take last Friday. That was when it emerged that a designer on News Corp’s The Daily Telegraph had casually appropriated the image of a victim of a terrorist atrocity in order to poke fun at rival Fairfax columnist Mike Carlton.

Disney: attacked

Disney: attacked

Then there was the weekend, when News Corp’s The Australian decided it didn’t like the way self regulatory body The Australian Press Council (declaration of interest: we’re a member) was handling a complaint, so ignored the procedures it had signed up to, breached confidentiality and declared it had no confidence in chairman Julian Disney. (That’s the point of having an independent press watchdog, by the way: sometimes their decisions go against you.)

I know it can be easy to knock News Corp, or its individual papers. And like all big organisations, they’re capable of good and bad. I’ve loved The Tele’s campaigning stance on major issues like the western Sydney development (and I choose to buy it just about every day), and the half century presence of The Oz has added to serious national debate.

But I know not everybody sees it that way.

Every morning I pick up the papers from my local supermarket to read over coffee at my local hipster bakery before going to work. It’s a favourite part of the day.

The attitude of the staff at that supermarket selling me those papers is informative about what the public (or at least those in my latte-sipping corner of the world) think. Twice now, when one of the staff has been training a colleague serving me, he’s reminded them to congratulate customers who only buy Fairfax papers and berate those who buy News Corp titles. He’s kind of joking – but he’s not.

hack attackNow I must admit, at the moment it’s a bit too easy to know where he’s coming from. I spent the rest of the weekend reading the brilliant Nick Davies book Hack Attack about the phone hacking conspiracy at News Corp’s News of the World in the UK.

It’s so compelling, I found myself staying up til four in the morning to finish it.

Despite the fact that this was a single culture in a single newsroom, it’s hard for the reader to like the company at the end of that book. Given the many good people News Corp employs, I’m sure I’ll get over that feeling, but wow, that book makes the News of the World staff seem evil.

And Fairfax depresses me for other reasons.

stop-the-pressesI’ve just finished Ben Hills’ book on Fairfax, Stop The Presses. I had thought that I didn’t have it in me to read yet another book about the decline of a once great publisher. But Hills found new ways of telling an old but sad tale.

And indeed the best of Fairfax was on display at The Kennedy Awards last Friday night. This celebration of NSW journalism was rightly dominated by Adele Ferguson of The Sydney Morning Herald and The Age with her brilliant investigation into the shitbags in Commonwealth Bank’s financial planning team.

When it comes to the ethos of independent journalism, put me on Team Fairfax.

Yet Hills captured the contradiction in his book – often brilliant journalists let down by bad and self-interested management over the years. As they said about the British infantry in World War One, lions led by donkeys.

Which brings me to Monday morning.

Now, I live in the centre of Sydney. I’m as urban as it’s possible to be.

Yet at this major supermarket in the centre of Sydney, there were no Fairfax newspapers. They simply hadn’t been delivered.

The newsagent in the same shopping centre complex informed me they’d inexplicably received just one copy of Fairfax’s Australian Financial Review that day, and it had already been sold. Some days they just don’t arrive at all, he said. (To be honest, he didn’t seem that bothered – the queue for lotto tickets was pretty healthy at the time.)

So here we have Australia’s last best hope of keeping News Corp honest unable to do the one thing it’s been in the business of for the last 173 years – reliably delivering its newspapers to places that sell it in the centre of Australia’s biggest city.

On a Monday, the day the AFR and The Australian publish their media sections, this was frustrating.

It was also a depressing reminder of what life might be like when there’s only one major newspaper publisher left.

Then I came to work, where EMMA – Enhanced Media Metrics Australia – had released its numbers. It marked the one year anniversary since this metric – commissioned and paid for by Australia’s print publishers – launched.

And without a hint of a smile, the data was claiming that while print circulation might be down, readership was soaring.

Then on Tuesday came the turn of the measurement company which EMMA appears to have been set up to knock off – Roy Morgan Research. It tried to launch an eye-bleeding new metric claiming to link audience spend with individual magazine titles. It felt about as scientific as creationism.

But the biscuit was thoroughly taken on Thursday.

That was when Fairfax Media revealed its annual financial figures, which on the face of it showed some stabilisation.

The four top executives had been given big rises in their packages – about $2.4m. Bigger, according to the journalists’ union, than the total amount offered to the 600 journos in the company’s metropolitan newsrooms.

My colleague Nic Christensen asked Fairfax for a comment. Fairfax’s spin consultant Sue Cato, who advised “no comment”.

General counsel Gail Hambly (enjoying a total rise of $300,000, taking her up to a package of $1.063m) had her own views:

“Of course the aggressive response is that the increases are all incentive based- ie the management was prepared to back itself to achieve set targets- something the journalists are refusing to do. There were NO base pay increases.”

We know this because Cato accidentally forwarded the email chain to The Australian.

gail hambly email

It’s worth at this point examining what Hambly – along with CEO Greg Hywood; Allen Williams, MD of the Australian publishing media division and chief financial officer David Housego – are actually backing themselves on.

The information is in the annual report.

Turns out that all four of them have the same KPIs. And one of those KPIs is reducing cost. Which in large part has been achieved by firing journalists and photographers, and making printers redundant by shutting the presses at Tullamarine and Chullora. (Or “cost reduction targets” as the report more benignly puts it.)

Fairfax executive incentive plan | Source: ASX

Fairfax executive incentive plan | Source: ASX

In Hambly’s case this directly makes up 10 per cent of her incentive. So, I guess she’s $37,500 better off thanks in part to all that crying in the lift Ben Hills wrote about. I’m sure those people working for her will be delighted she backed herself.

Luckily only five per cent of her incentive was made up of increasing the company’s revenue. I see it actually fell below $2bn for the first time in many years. Lucky for her she didn’t back herself more there. And luckily, all four still got some bonuses against revenue despite it going down.

Incidentally, those cost savings were worth $144,000 to Hywood, $99,000 to Housego and $46,500 to Williams. That’s without counting the additional dollars they got against their profit targets.

fairfax incentives

Fairfax executive incentive plan targets | Source: ASX

The observant reader of the report might also notice that the company has also just had its second worst profits result in the last five years. I’m not convinced that the turnaround is as complete as it tries to suggest.

Funnily enough all the buzzwords about content marketing and building the events business in the previous report were barely covered this time around.

Source: ASX

Source: ASX

Those staff mulling over how to react to their zero per cent pay rise offer may also like to reflect that the total pay for the top four rose by 58 per cent last year – from $4.1m to $6.5m.

Source: ASX

Fairfax management remuneration | Source: ASX

Not by the way that I would claim myself able to do any better job. Hywood is playing the hand he has been dealt, with the board he has got, as well as anybody could reasonably be expected to. But the us-and-them nature of the “backing ourselves” comment points to a big divide between management and workers. Particularly when incentives are so skewed towards firing people.

Which brings me to today. And the quarterly newspaper sales figures, released this morning.

And to be honest, these make me feel sad rather than angry.

Print sales are still going down across the board, and digital numbers are going up nowhere near fast enough to make up the shortfall.

We get a bit more of of a picture from the fact that Fairfax revealed its paywall revenues yesterday – $24m.

Given that The Age and The Sydney Morning Herald are claiming digital subs of 255,000 across the two titles (and they won’t say any more what afr.com.au gets) this suggests each subscription is worth less than $2 per week. That’s not even a single edition of the paper.

And the growth curves are far too flat to suggest this will improve fast enough to offset the print declines.



Which is less than encouraging.

In truth, I bought the papers as usual today, and I’ll go on buying them tomorrow. There’s still a lot to love about them – and the people who produce them.

But when you find out what their bosses really think – and that “backing yourself” is hitting your bonus targets – it’s really hard to like the people they work for.

  • Tim Burrowes is content director of Mumbrella

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