A failure of stewardship: a feckless, flailing Fairfax confounds with the latest round of savage cutbacks

True to its tin-eared modus operandi Fairfax management thought it fitting to choose World Press Freedom Day to announce the loss of 125 editorial positions from its already depleted metropolitan mastheads. After years of savage cutbacks, that’s a breathtaking 25% of its current newsroom numbers.

Announcing the cuts on World Press Freedom Day may not be as in-your-face as Fairfax CEO Greg Hywood splashing $140,000 on a new Maserati Ghibli in 2014 during tense wages negotiations and ongoing cost-cutting, but there is no question that relations between staff and Fairfax management are at an all-time low.

The decision by journalists from The Age, the Sydney Morning Herald, Brisbane Times and WA Today to go on strike for seven days reflects not just their anger but their lack of confidence in Fairfax’s feckless management and a genuine concern about the future of journalism in Australia.

As the journalists’ union, the MEAA, stated on behalf of its striking members: “These cuts are bad for journalism, bad for democracy and press freedom, and bad for the future of not only the Fairfax business, but for the entire industry in Australia.”

The strike period covers federal budget night, May 9, a plum event for any political, economics and finance reporter, which goes some way to revealing the extent of bitterness felt by Fairfax staff.

Fairfax journalists are red-hot angry, and they have a right to be. For the past five years of fevered “restructuring” and rolling redundancies they have worked under enormous stress, uncertainty and the vagaries of Fairfax management ineptitude. They feel strongly enough about not just their own job security but also the very future of journalism in this country to forego a week’s wages and expose themselves to penalties under illegal-strike laws. (And this goes to the heart of the point made by newly elected ACTU Secretary Sally McManus when she made what should have been the unremarkable observation recently that, “It shouldn’t be so hard for workers in our country to be able to take industrial action when they need to.”)

Hywood has made comments that suggest Fairfax will take a sanguine approach to the strike, insisting: “I absolutely respect the passion of our people. I wrote for the Financial Review for 17 years, I’ve edited the publi­cations, I’m a journalist.”

Good cop, bad cop

But another Fairfax executive who also might profess to still be a journalist, Editorial Director Sean Aylmer (whose distinguished career includes being editor-in-chief of the Sydney Morning Herald and editor-in-chief of BRW), sent a very different signal on the subject of strike action.

A memo to staff in which Aylmer stressed that “we want to make the company’s position very clear” warned that the consequences of “unlawful industrial action” and “unauthorised absence” may include “disciplinary action” and “termination of employment”. Oh, Sean.

Hywood has assured staff that the latest cuts, aimed at saving $30 million annually, will be the last.

“After this year, we will be spending $100 million a year on journalism; that’s a lot of money,” Hywood told The Australian.

A lot of something, that’s for sure. It’s this kind of flim-flammery – saving $30 million to spend $100 million – that infuriates journalists at the manifestly flailing Fairfax. Rolling cutbacks since 2012 have seen some 600 editorial jobs slashed from newsrooms. The lack of a credible, cohesive or consistent strategy leaves little room for confidence in either the management or governance of Fairfax. A merry-go-round of strategies, reviews and restructures have ostensibly sought to prepare Fairfax for the age of digital media, but all that has been achieved is that a once-great media house has been depleted to a point where the viability of its flagship mastheads are now in serious doubt.

Since the late 1990s, Fairfax has been run as a management consultant’s plaything. A succession of thick and jargon-laden consultants’ reports always seem to come to the same conclusion: more cuts. While the reports piled up, nobody thought to understand how the internet would change the media industry. Early opportunities for Fairfax to buy into internet plays such as carsales.com, SEEK and realestate.com.au went begging. While Fairfax assumed that the legendary rivers of gold had dried up, in fact they were flowing into new online media channels. James Packer and the Murdochs were more attuned to this critical change in course.

A failure of stewardship

Fairfax was caught flat-footed by the rapid rise of the internet and ever since its only resort has been to cut costs. Fairfax has some of Australia’s best and brightest business and finance journalists; they will know better than most that a company that relies on cost-cutting for profitability eventually has nothing left to cut.

Fairfax management and the Fairfax board have failed miserably as stewards of one of Australia’s – one of the world’s – great publishing houses. Instead of looking to the long-term health of the company Fairfax’s management and board remain fixed on creating short-term wealth for shareholders.

“[W]hat we are doing is that we are making sure that our publications are profitable and by profitable that means sustainable. They are profitable now and they have to continue to be profitable,” Hywood told The Australian.

“You have to look into the future … If they are not profitable, they become vulnerable, seriously vulnerable.”

As if Fairfax today is not “seriously vulnerable”. It is certainly diminished.

The constant assault on the very assets that deliver value – Fairfax’s people – belies any suggestion that Fairfax is building a company for the future. The erosion of newsroom resources – reporters, photographers, sub-editors – across the Fairfax stable has left the company a shell of its former self.

Fairfax staff know better than most that there is a need for fundamental shifts in business models to transform traditional media companies into 21st century businesses. What they lament is not just that they are so little regarded, but that Fairfax has no clear direction for the future. Over the past five years of restructuring the company has been less than candid about its true intentions – if indeed it has any.

While Hywood insists that he has a plan, Fairfax’s vacillation over the future of the print editions of its flagship city mastheads, The Age and the Sydney Morning Herald, reveals a company in strategic disarray. Earlier this year, after years of uncertainty about the future of print, uncertainty created by Hywood himself, the Fairfax CEO announced that “[t]he model we have developed involves continuing to print our publications daily for some years yet”.

It is hard not to be cynical about this decision. A reasonable conclusion would be that retaining the print editions of The Age and the Sydney Morning Herald provides Fairfax with valuable assets that can be sold. Has this been its intention all along? Does Fairfax’s future rest with its real estate site Domain and online fripperies such as the dating site RSVP? (The noise you hear in the distance may well be generations of Fairfaxes rolling in their graves.)

The fact that Fairfax now finds itself the subject of a takeover bid by private-equity investor TPG is hardly flattering. It’s the equities market equivalent of vultures circling for the kill. Neither staff nor readers would have cause to welcome a private-equity overlord. But a sale of some kind is probably in the wind.

Former Fairfax titan Robert Gottliebsen does not like what he sees. Gottliebsen was the founder of the iconic and now-defunct BRW at Fairfax, as well as a stable of magazines that included Personal Investment and Shares, also gone. Gottliebsen was also responsible for acquiring what was then Australia’s oldest business magazine, Rydges, and relaunching it as BRW’s sister magazine under the editorship of this writer. Rydges was later merged into BRW, cementing the latter’s market leadership.

Gottliebsen speculates that The Age and the Sydney Morning Herald might be sold to Melbourne and Sydney families with deep pockets.

But with no end in sight to the cost-cutting, Gottliebsen has this warning:

“[T]hat scenario may be impossible to even consider if the quality of journalism declines too far and the papers become a source of ridicule.”

 Leo D’Angelo Fisher was at Fairfax in 1986-89 and 2006-2013. He is a former editor of Rydges magazine when it was part of the BRW Group and associate editor of BRW. He has also been a columnist for the Australian Financial Review. He took a voluntary redundancy package at the end of 2013.

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3 thoughts on “A failure of stewardship: a feckless, flailing Fairfax confounds with the latest round of savage cutbacks

  1. Thanks for your article which se3to position the ongoing dilemma, perfectly.
    However, I am confused, not by you, at how Fairfax managers can “save $30m, by sacking 100+staff, whilst promising to “invest $100m for “journalists “.
    Why don’t they leave the current staff there, and “invest $70m on additional journalists?”

  2. Pingback: Australian journalists striking for a full week after 125 jobs axed

  3. Pingback: 2: Who is campaigning for the goddamn jobs? -

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