Fairfax: The Rise and Fall
By Colleen Ryan | Melbourne University Press | $32.99
Killing Fairfax: Packer, Murdoch and the Ultimate Revenge
By Pamela Williams | HarperCollins | $39.99
RECENTLY the world of newspapers has come to feel not merely unstable, but topsy-turvy. The fact that Amazon’s founder, Jeff Bezos, has bought the Washington Post has upended any faint hopes nostalgics still harboured about the ability of old media to withstand the new. “A digital pioneer is coming to the rescue of an analog institution,” a former CBS correspondent gushed in Forbes magazine. That’s one way of looking at it. The other is that the businessman who has made himself the suffering book industry’s favourite voodoo doll now fashions himself as the proprietor of a masthead that not too long ago represented the epitome of newspaper culture.
The Watergate scandal (1972–74) made the “Wash Post” and its heroic proprietor Katharine Graham exemplars of a core American ideal, capitalist enterprise in the service of democracy. The paper’s profitability and its journalism’s prestige were inextricably linked: revenue grew almost twentyfold during Graham’s stewardship. No wonder the Post became a touchstone for Australians working in the quality broadsheets in the Fairfax stable. In 1973, Graham Perkin, editor of the Melbourne Age, boasted of meeting Graham in Australia: “We had dinner with her again last night in Melbourne, and I have had lunch with her today. She may feel she has seen a little too much of me.” It meant a great deal to his colleagues that when Perkin died suddenly a few years later, the proprietor of the Post and the senior executive who had managed the paper’s Watergate coverage sent their personal condolences.
Now Graham herself is more than a decade dead, and the twentieth century she and Perkin represented is well and truly gone. It has been swept away by the fatal consequences of 11 September 2001; by the paroxysms of unpredictable, uncontrollable markets; and by intense, interrelated waves of technological and social change. We are deep into the era styled by Tim O’Reilly as Web 2.0, in which the internet has become a transparent platform that can deliver almost anything via a secure online financial transaction, and most of us have become little media producers, finally discovering the camera on our phones and more or less enthusiastically launching ourselves into social media space.
Bezos’s online bookstore, Amazon, was a creature of this era, in the space of twenty years turning itself from a much-mocked start-up to a business generating US$61 billion in revenue annually as the world’s largest online retailer. A significant slice of its profit has been made at the expense of traditional publishers and bricks-and-mortar bookshops around the world, thanks to Amazon’s aggressive price-cutting tactics, its development of an e-reader people actually enjoyed using, and, more recently, its successful move into e-publishing.
Bezos is a change agent. Though respectful of the Washington Post’s legacy (he is friends with the Graham family), he has been candid about the need to rethink the paper’s approach, given its sagging revenues in recent years: “The Internet is transforming almost every element of the news business: shortening news cycles, eroding long-reliable revenue sources, and enabling new kinds of competition, some of which bear little or no news-gathering costs. There is no map, and charting a path ahead will not be easy. We will need to invent, which means we will need to experiment. Our touchstone will be readers…” Forbes magazine speculated that this announcement could mean more e-content; editorial and salesforce salaries linked to page views and readership; and electronic coupons and “buy-it-now” capabilities, a direct connection between editorial and advertising content that would be anathema to traditional journalism’s values.
In short, the epoch-making qualities of Web 2.0 are hard to overstate. The speed and depth of the changes it has wrought – and particularly the public’s lightning embrace of mobile broadband once the third-generation network was introduced to the smartphone – were difficult to fully envisage. In this country alone, almost nine million citizens have acquired smartphones since they came onto the market five years ago; more than seven million use them to access updates that were once the province of newspapers, TV and radio: breaking news, weather forecasts, sport and finance.
IT IS therefore disconcerting, even disappointing, to open up two award-winning journalists’ accounts of the decline of Fairfax only to discover that they are business procedurals narrowly focused on the loss of the company’s “rivers of gold” – the classified advertising in its main titles, the Sydney Morning Herald and the Age. Neither book does more than gesture towards the fundamental technological and social changes that underpin the collapse of Fairfax’s business model; an approach that demonstrates the sort of tunnel vision of which the authors accuse their subjects. Ordinary newspaper readers are rarely mentioned in either account, unless they transformed themselves into “players.” Nor do rank-and-file journalists get much of a look-in, even though thousands of them were at the coalface during the ascendancy of online news, and are still struggling with the consequences of the most radical change to their work practices since the 1920s.
Colleen Ryan’s Fairfax: The Rise and Fall and Pamela Williams’s Killing Fairfax: Packer, Murdoch and the Ultimate Revenge each set out to describe how Fairfax’s leaders fiddle-faddled while new media competitors stole the company’s most lucrative revenue streams from under its nose. As one of the smartest and first new players, Daniel Petre, told Ryan recently, “Eight billion dollars of market cap is now tied up in REA [realestate.com.au], Carsales and Seek. That has basically come out of Fairfax. And Fairfax is worth $1.3 billion. That is the scale of the tragedy.”
Ryan recounts the tragedy from the inside out, moving from a stock historical account of the Fairfax dynasty’s rise and fall to the boardroom battles of Fairfax in its post-dynastic phase since 1990. Whether a substantial regurgitation of the unhappy tale of an unwise princeling named young Warwick was required at this late date is doubtful, but nevertheless the author provides it.
Similarly, she guides us through yet another account of how a coterie of brilliant journalists at the Sydney Morning Herald, the Financial Review and the National Times managed to alienate powerful politicians and media rivals such as Kerry Packer. None of this will particularly surprise the loyal baby-boomers who have supported the Fairfax papers through thick and thin and who, presumably, are one of the key audiences for this book. Indeed, it may wear rather thin with many of them whose postcode starts with a 3; the Age functions in this narrative mainly as a counterpoint to the SMH, a laggard or, alternatively, a spur to action.
Pamela Williams tells the Fairfax story from the outside in, and from a more recent point of view, through the self-serving perspectives of James Packer, Lachlan Murdoch and a bunch of young, internet-savvy businessmen who had the vision to set up their own internet classifieds businesses early, and kept the faith despite the bursting of the tech stocks bubble in the early 2000s.
Two themes loom large in both books. First, there is the “lost decade” of Fred Hilmer, who was chief executive from 1998 to 2005, the formative years of Web 2.0. Hilmer should have done much more to translate the print classifieds business online, Ryan’s and Williams’s accounts agree, but he was stymied by infighting among his executives and a lack of insight into the news business. He established Fairfax’s digital arm, F2, but failed to – as they say – monetise it, pitching it towards directories. Fairfax did not apprehend how powerful internet search would become, rendering directories less desirable media properties (in that, the company was far from alone).
Crucially, Hilmer also lacked the instinctive grasp of personal contact that has defined generations of successful editors and media executives. (Graham Perkin was a past master of it.) If he wanted skin in the game, Hilmer should have gone himself to woo the young internet mavericks. Instead, he often sent a lieutenant. The team from Seek, who actually got a meeting with him, found Hilmer and his executives to be “very complacent.”
Second, there were the disastrous consequences of John B. Fairfax’s decision in 2006 to return to the fold by merging his own successful company, Rural Press, back into Fairfax. This union ended unhappily four years later, at huge cost to John B.: his family company’s stake, worth $1.16 billion in 2007, was driven down in value to $193 million. The last tycoon from the Fairfax stable emerges from both accounts as a clever but backwards-looking media mogul, driven to extract maximum value from slowly dying print assets.
Both Ryan and Williams have written the story of a company that lost its way partly because, in the vacuum left after the Fairfaxes departed, no single chairman, chief executive or board member had the vision, authority and longevity to meet the challenges of the new century. The stock market impatient and unforgiving, and too many board members had direct or indirect connections with other media interests that complicated their ability to show real leadership at Fairfax.
By contrast, James Packer emerges from Williams’s account as a businessman who knew instinctively that he had to invest in new media, even if he made some breathtaking mistakes along the way. Left a portfolio of assets worth up to $6.5 billion by his father, Kerry, he managed to blow a quarter of its value on bad casino investments in the course of the global financial crisis: “Of the roughly $2.3 billion in Australian dollars that he invested outside Australia,” Williams writes, “James Packer had lost $1.67 billion in less time than it took a new driver to get off P plates.” (Like the P-plater, the young Packer eventually graduated.)
Williams tells a doozy of a story about Packer and Gina Rinehart, who had once been shareholders at the same time in the Ten Network, meeting in early 2012 soon after she had bought a stake in Fairfax:
Over dinner, Rinehart put her cards on the table. She wanted Packer to join her as a shareholder and partner at Fairfax, where she owned almost 15 per cent of the company, and to help drive a huge cost-cutting operation aimed at reducing the staff of 11,000 employees by almost half, to rationalise costs and lift the share price. Rinehart had been watching operations at other media companies, and she believed that Fairfax was way overstaffed and living beyond its means. But Packer was not interested… He was annoyed at the implication that he could be easily dragooned into helping to run Fairfax, a company he loathed and which was rife with problems; he left the dinner abruptly, making it clear to Rinehart that the answer was no.
Both authors raise the question still hanging over Fairfax, thanks to Rinehart’s continuing involvement. The mining tycoon remains the largest single shareholder in Fairfax, and though she has yet to prevail in her campaign to win a seat on the board, her friend Jack Cowin sits on it as an independent director. In the short term, the question is this: if a conservative government is returned at the 7 September federal election, will Rinehart sell up, or does she remain intent on going through Fairfax like a dose of salts?
Whatever she does, expect none of the finely expressed aspirations that Bezos articulated in a personal tribute to the Graham family’s legacy at the Post:
Journalism plays a critical role in a free society, and The Washington Post – as the hometown paper of the capital city of the United States – is especially important. I would highlight two kinds of courage the Grahams have shown as owners that I hope to channel. The first is the courage to say wait, be sure, slow down, get another source. Real people and their reputations, livelihoods and families are at stake. The second is the courage to say follow the story, no matter the cost. While I hope no one ever threatens to put one of my body parts through a wringer, if they do, thanks to Mrs Graham’s example, I’ll be ready.
That is not the way Gina Rinehart thinks or talks. In contrast to the traditional model of enlightened proprietor symbolised by Graham and revered by the Fairfax press, Rinehart represents capitalist enterprise in the service of capitalism. •