Thursday, 24 September 2009

Coverage of Fairfax board developments has been pretty poor. So far, it has been a stale tale of conflict that hangs on the face-off between John B Fairfax – who shares the same name as the 150-year-old company – and the ancien regime of Ron Walker, the Chairman of Fairfax Media.

The irony is that even though Mr Fairfax has the same name as the company, it is him who wants renewal. So far we’ve seen no longer-format piece explaining why all of this is important. It’s something we need.

In a document dated 18 September on the ASX website it is clearly conveyed that “years of under-performance” is to blame for Walker’s demise, as announced today in The Sydney Morning Herald. In the story, the basic grievance is again (but in the final sentence of the story) stated:

Mr Fairfax has called for ''renewal'' on the board, citing a lack of strategic direction and poor share price performance.

Mr Fairfax is a director of Marinya Media, which owns the largest single stake in Fairfax media: 9.7 per cent. The statement also says:

While we clearly appreciate that Fairfax media has been operating within an industry in the midst of structural change, it is our view that the company’s strategic outlook and leadership calls for new direction.

In a related story, this time published in The Australian, we find (again, near the end of the story):

The company's shareholders, including the Fairfaxes, have been pushing for board renewal, particularly the inclusion of directors with digital media experience.

Digital media experience.

So there you have it. The company has been haemorrhaging money and employees for at least the past three years. Media’s share of a dwindling advertising spend has shrunk dramatically. They can no longer rely on ads to support their model. Then a little while ago their arch-rival Rupert Murdoch, who owns competing newspapers in Australia, announced he would set up a pay wall that would prevent readers getting access to stories unless they paid first.

Things are getting hot in the media industry. Fairfax editors tell me all the time that they have no freelance budget. If they can’t afford a few hundred dollars for stories that might mean the difference between having a readership or having none, they’re in serious trouble.

People are spending more time online and more time reading news, but they’re not spending money – apart from the cost of their broadband connection – to do it.

But people are also spending more time creating content, and it’s not just blogs. Blogs are the least important part of the equation. The bigger impact has been from social networking sites like Facebook and Twitter.

Here, people can follow friends and see friends react to stuff these people are posting themselves. A retweet gives you a short high. It’s a lot more than you can say about the average news story.


Bill Bennett said...

You're right about the events at Fairfax not being fully explained anywhere in the media.

Until November last year I was a Fairfax employee who worked for the company one way or another for ten years.

My take on Fairfax's problems is the death journalism and the widely reported death of traditional media at the hand of the Internet is only a sideshow. The real problem is the business is being run as a multi-national corporation (which on one level makes sense) but publishing works best when it operates on a smaller scale. Fairfax is stuffed to the gills with highly paid senior executives and layer upon layer of management. Decision making is never made at the point of delivery and is rarely made by the people who understand what is going on.

Matt da Silva said...

Hi Bill - If this is true then the cashflow problem at Fairfax is even more serious and the risk is that they'll just go under completely.

Which would be a shame, as the broadsheets fulfil a vital role in society. In Queensland, where there's no broadsheet, things are even worse than in NSW in terms of govt accountability and public debate.

I also think that Fairfax could do a lot better if they wrote more longer-format, explanatory pieces giving background to their straight news stories. I'm sure they have a lot of expertise in this regard that is not being exploited properly.