Yesterday’s news that Fairfax Media will cull a further 125 journalists from its national newsrooms – prompting a seven dray strike by staff – is symptomatic of a problem the newspaper publisher has had since 2011.
Go back six years, and Fairfax – though its mastheads The Sydney Morning Herald, The Age, AFR, Brisbane Times and WAToday – boasted over 1000 journalists between them. Once yesterday’s cull is implemented the number will be a paltry 375.
The problem for staff and readers is that management and a very vocal bunch of shareholders are demanding the cuts happen and continue to show very little interest in the articles produced by the company’s writers.
Fairfax CEO, Greg Hywood, is bonused big dollars to ensure the publisher is run lean and mean, regardless of what’s written in its newspapers. On top of his $1.6 million salary, it has been reported that Hywood can earn as much as $3.6 million a year with bonuses, while he currently holds shares in the business estimated to be worth $12.8 million.
The view at Fairfax appears to be along the lines of why run a $400 million a year business with a $30 million profit when you can run a much leaner $200 million a year business with a $25 million profit. And, so long as the share price goes up, there are no worries regardless of how many staff end up on the scrapheap.
Fairfax’s arch-rival News Corp has relished its competitors’ calamities and in a column today, media commentator Mark Day described Hywood as “a man with a funereal air rapidly burying the media company that used to sit astride its rivers of gold”.
“The strike will damage Fairfax, coming in the week of the Turnbull government’s crucial second budget. What is the value of a media company unable to credibly report and analyse a national budget?” Day mused, before adding: “Different publishers have different ways of approaching it, mostly much more humanely than Hywood’s Fairfax, where brutality rules.”
Despite staff calls for renewed investment in journalism and for Fairfax bosses to take some of the company’s pain too, many believe there won’t be a move away from kicking the actual product anytime soon. Cost cutting and protecting the lucrative real estate portal Doman being the order of the day.
“That is an interest that the fund managers, the people who actually own Fairfax, aren’t particularly interested in,” said Michael West, the former Fairfax business editor who made redundant last year. “What they’re interested in is performing for their constituents, getting a financial return.
“You’ve got the journalists and you’ve got management and their situations are entirely at loggerheads, because management want the share price to go up so their share options rise and they become more wealthy.
“The managers of the journalists are all on KPIs, key performance indicators, to reduce the cost base which is another way of saying ‘sack your own staff’.”
Steve Allen, media analyst at Fusion Strategy, agreed that those running the business cared little for the actual journalism but rather the size of their shareholder dividend.
“Shareholders really don’t care about the construction, or the validity, or the exclusivity of journalism, they only care about what’s in it for them,” Allen said, his comments reported on ABC.net.au.
“The reason for splitting Domain out from the rest of the company is that it’s the thing that investors want to jump into.