Billions lost, boards to blame: Colleen Ryan on the rise and fall of Fairfax

Media giant Fairfax has been plagued by board troubles and company indecision, according to a new book. AAP/Julian Smith

In the same week that Colleen Ryan’s tell-all book Fairfax: The Rise and Fall hits bookstores, Fairfax’s two biggest metropolitan newspapers will place their content behind a metered digital paywall.

If you want to know the long story behind why the Sydney Morning Herald and The Age will soon cost you anywhere between A$15 and A$44 a month to read online when last week it was free, Ryan’s book is a perfect place to start.

She investigates the history of Fairfax and arrives at why Fairfax’s chief executive Greg Hywood found himself in a dire position in June 2012. Hywood, to the surprise of many including staff, announced a company writedown of over $2 billion, 1900 jobs losses, the closure of Sydney and Melbourne’s printing presses, the end of the broadsheet tradition for the weekday SMH and The Age, and the placing of their journalism behind metered paywalls.

Ryan, a former Sydney Morning Herald journalist and Australian Financial Review editor knows about investigative reporting. In collaboration, Ryan won a 1993 Walkley for reporting the millions that went missing at prestigious Sydney law firm Allen Allen & Hemsley. In 2004 she picked up two Walkleys, including the Gold Walkley after investigating the labyrinth of Swiss bank accounts belonging to flamboyant stockbroker Rene Rivkin.

But, Ryan does more than trace the history of Australia’s oldest media company, bought by John Fairfax Sr and his business partner Charles Kemp in 1841. She investigates how Australia’s oldest newspaper company has lost billions in value.

There are consistent themes throughout the book. The blame largely rests at the top with successive boards whose members enjoyed wielding power - often against each other - but failed to identify threats and timely opportunities for the company. This is most evident leading in to the digital era when newspapers had an opportunity to colonise the online classified market before newcomers like CarSales, Seek and RealEstate gobbled it up.

Combined, these websites’ worth is $8 billion whilst Fairfax — once worth over $7 billion — now sits at about $1.3 billion. Too often, Ryan notes, the board was bedevilled by infighting, lacked sufficient knowledge about the basics of the newspaper business, and failed to act at the right time.

Fairfax is a chronology of Australia’s ailing print newspaper industry. It is also a catalogue of great journalism about scandal and corruption in Australia, such as The Age tapes, the Costigan Royal Commission, the Khemlani loans affair, the story of Rex Jackson, the “truth” about former NSW premier Sir Robert Askin, and why Kerry Packer was codenamed The Goanna.

Most entertainingly, it is a riveting tale of the who’s who of corporate Australia. The big names feature: Kerry Packer, Rupert Murdoch, Kerry Stokes, Ziggy Switkowski, Ron Walker, John Singleton, Sir Rod Carnegie and his son Mark, David Gonski, Brian Powers, Bob Mansfield and of course the two Fairfax families of Sir Warwick and Sir Vincent who collectively retained a seat on the company board for 150 years. That line was finally severed when Sir Vincent’s son, John B. Fairfax, sold the majority share he had acquired as part of the Fairfax merger with Rural Press, in November 2011.

Ryan’s retelling of the Fairfax dynasty shows how Australian business, politics and the media intersect, often ruthlessly and treating the media company as their plaything. It is largely a story about powerful and ambitious men — with the exceptions of Warwick Fairfax’s third wife Lady Mary, and the new entrant in the Australian media mogul scene, Gina Rinehart.

Colleen Ryan’s The Rise and Fall of Fairfax provides a faithful account of the media giant’s troubles. Melbourne University Publishing

In the earlier decades, many of the industry’s big names found themselves in prison for corruption of one sort or another such as Laurie Connell, Conrad Black and Alan Bond. Others simply lost much of their fortunes through bad decisions not helped by the 1987 stockmarket collapse like Robert Holmes a Court and the ill-fated Warwick Fairfax Jnr, who presided over the failed Fairfax takeover.

In great detail, Ryan explains the boardroom deals, why various editors came and went, the personality clashes and the role of institutional investors. She offers tabloid-styled thumbnails of the players: Rinehart is “a rather large woman”; Sir Warwick Fairfax is “a nerd”; and former Australian Financial Review editor Maxwell Newton is “a big larrikin personality and an even bigger brain”.

More broadly, Ryan maps the Australian media landscape, not just newspapers, but television and radio from its days of giddy profits in the early 1980s when advertising was considered “rivers of gold” to now. She traces the spiralling decline caused by the structural changes to print that has seen the barriers to entry significantly lowered and advertising decoupled from journalism.

The book’s structure is chronological and largely Sydney-centric. It begins with the aristocratic Fairfax family and their ownership of the daily metropolitan masthead The Sydney Morning Herald, and later, their acquisitions of The Age, The National Times and the AFR.

Some details are repetitious, and there is a minor factual error about Fairfax’s Melbourne operations regarding the launch and quick demise of Fairfax’s freebie newspaper Melbourne Express. It was a morning not an afternoon paper, which partly explains why it failed. Unlike the News Limited version, the mX, the Fairfax freebie did not capture the commuters (and importantly the advertisers) looking for a light read travelling home from work.

But the book’s weaknesses are few. It tracks Australia’s media laws and holds former prime minister Paul Keating to account for his cross-media ownership reforms which further concentrated media ownership in Australia.

The final chapter captures Fairfax’s present financial woes. It examines the world’s richest woman’s gameplay with Fairfax shares. Gina Rinehart, the largest individual shareholder of the company, has sought up to three seats on the board while publicly refusing to commit to a core principal of editorial independence. Her friend and fellow billionaire Jack Cowin was appointed to the Fairfax board shortly after her initial demands.

The final chapter is in many ways similar to the opening chapters that show what editorial independence was like under Warwick Fairfax Sr. Then, in the 1950s, many newspapers were still part of the feudal territory of the wealthy and editorial independence was, at times, regarded with disdain.

In 2013, Rinehart is suing two journalists - one from Fairfax, business reporter Adele Ferguson - to access their private correspondence from her son John Hancock. With Rinehart’s shareholding at about 15%, Ryan offers no definitive conclusion other than: “Rinehart’s role at Fairfax in 2013 remains a puzzle”.