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 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. 


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