Saturday, June 23, 2012


The media is changing.

This column examines the negative effect of managers that don't understand the business can have on a company . . .


Every good story has a villain. The tale of the wrecking of Fairfax has, at its genesis, an evil genius so brilliant that even today, years after he first engaged in his wrecking role, most people have little idea of the central role he played in the subsequent, engulfing disaster that’s finally stopping the printing-press’.

Ladies and gentlemen, may I present the current Vice-Chancellor of NSW University, former expert management consultant and previously (and perhaps most importantly in terms of his importance on the Australian scene), from 1998 to 2005, the Chief Executive Officer of John Fairfax Holdings: Professor Fred Hilmer.

If ever a business case study was required demonstrating myopia, hubris and the failings of theory in equal measure, then surely his tenure at the peak of the news company would hold prominent position. Hilmer revealed a uniquely dystopian conjunction. His personal contribution was a messianic belief in the barren logic of an infertile, technocratic approach. It wasn’t just that he didn’t understand the business. Instead, he persisted in an attempt to measure art by using a ruler.

“The culture (at Fairfax) was the toughest nut to crack,” Hilmer later insisted. For once he was right. Frustrated by the inability of editors to actually reduce ‘news’ to a formula (like making soup, perhaps) the erstwhile Professor stood blinking and bewildered in incomprehension at the chaos surrounding the process of manufacturing news. But his critical blunder was lacking the insight to understand that everything was about to change: the Internet had arrived.

By ’98 there was no lack of understanding of the dimensions this challenge represented to print journalism. It was blindingly obvious – even to the most ardent Luddite – that cheaper electronic alternatives would soon overwhelm the classified advertisement business; the “rivers of gold” that paid for the newspaper. Who was going to bother paying for an old-fashioned print ad when they could bypass the old, slow-moving distribution channels and directly target interested consumers on the net? But, under Hilmer, Fairfax adopted another strategy. The company took on the Internet directly, by out-printing it.

That’s why the Saturday papers grew so large. It explains why so much of the paper became waste, making the transition from newsagency to rubbish bin with barely a glance from readers. Not surprisingly, many had little interest in the copious quantities of classified ads bulking out the compendious editions. But once Hilmer had embarked on this ridiculous strategy, he was apparently unable to cease. Page after page was added; section after section; until wrestling with the paper required a black-belt in Tae Kwon Do.

Hilmer didn’t understand the most vital principle of journalism. The news isn’t about inclusion: it’s all about selection. Reporting is all about stripping away the cacophony of noise surrounding an event to reveal the pure sound of a clear note. This carries the individual story and allows it to uncover what’s important. Editing is the same. It was the stories Fairfax rejected that made Fairfax the best. Journalism is not about producing more and more; it’s about providing an audience with what they want, and need, to know. The most important stories, recounted in the most interesting way. It’s something Hilmer never understood.

Others were at fault too, of course, including the journalists and editors who failed to convince him that there is more to the media than profit centres, productivity measurements and the simplistic calculus of the profit and loss. Nevertheless, and although it’s taken more than a decade of further compounding mistakes and contributory negligence, the flaws from his period in control have now widened into crevasses.

He couldn’t discover an answer because he didn’t love the news. Journalism is at the centre of our cultural life. It’s all about telling stories about who we are – not about making money. He attempted to apply a mechanistic discipline to a living organism. He failed, but left a crippling burden.

Hilmer departed Fairfax in ignominy. At his next job his pay-packet halved to (just) $750,000, but nonetheless he still left with a payout of $4.5 million. The journalists were thrilled to see him go. They feasted on sashimi from a ‘farewell party’ that was hurriedly cancelled when staff threatened to crash it and let Hilmer know exactly what they really thought of his management insights. But it was all too late. The die was cast.

Could it have been different? Well, not everyone shared his lack of enthusiasm for change. Mark Scott also worked for Fairfax, at the same time. He moved on to become the ABC’s Managing Director a year after Hilmer departed. Now the Corporation still has many problems but at least Scott has attempted to grapple with challenges in the new media environment, embracing opportunities as diverse as Twitter and iview. Of course it’s not possible to compress anything worthwhile saying into a tweet (apart from, perhaps, the strongest and most enduring sentiment of all; “I love you”) nonetheless, there’s courage in making the attempt. And it’s critical for our society that we find a way to make sure this mutual conversation continues.

Common endeavours depend upon a shared dialogue. This is provided through the media. Without it we are reduced to anomie. Individuals become alienated and atomised, reduced to our functions: working and consuming. The ‘content’ of journalism represents much more than just simple ‘product’. It speaks to us, telling us who we are and what we want to be. It is the binding that ties us together in a community.

Today Fairfax publishes this newspaper and the company is not dead – despite the burden of the legacy I’ve been bemoaning at length. Management is charting a path forward for the Canberra Times, Age and Sydney Morning Herald. News Limited has also announced it is slashing costs and is engaged in restructuring. The industry is on the ropes. A new media landscape will emerge and some things will improve. But make no mistake; the media outlets we end up with will define our future.

A healthy, vibrant society cannot be created instantaneously, 140 characters at a time. There is a role for the immediate, but it’s a vapidly superficial one. It can’t compete with deeper analysis or provide a detailed picture of events, exploring motivations and consequences. This is what the printed word does so well. There’s time for reflection and thought. We will always manage to find a way of relating who did what to whom, when, where and how. But assisting readers to discover ‘why’ something has occurred is the most precious insight of all. Unless people can be led to an understanding of the elemental forces provoking an event, they will be right to feel short-changed.

1 comment:

  1. The story goes that Hilmer ran Fairfax through a speadsheet derived perhaps from his experiences at AGSM. He also sent an email to all staff inviting comments to him about the situation at Fairfax but one fellow who responded to him and was promptly reprimanded by other managers for doing so...