Eight years ago, then-Fairfax chairman Dean Wills invited me to his sprawling Sydney home to ask me to think about the future of his company’s broadsheet newspapers. Spend a month or two, he proposed, write a report and present it to the board.
These were the first words I wrote in that 33-page report:
“Almost every time a company fails or stumbles, industry experts saw the fall coming before the board. The board is often the last to know that its company has serious problems.”
The Fairfax board of 2004 took that prediction (from Back to The Drawing Board by Colin Carter and Jay Lorsch) to heart. After listening to my prognosis that the company faced a potential collapse of its traditional business model — I sketched out what I described as a “catastrophe scenario” under which The Sydney Morning Herald and The Age would lose much of their classified advertising in coming years — the Fairfax board studiously ignored my plea to implement overlapping strategies as “insurance” against that possibility.
One director, in particular, became quite agitated about what I was saying. “I don’t ever want anyone coming into this boardroom again,” he told his colleagues as he held up a copy of one of Fairfax’s hefty Saturday papers, “and telling us that people will buy houses or cars, or look for jobs, without this”. He then dropped the lump of newsprint onto the boardroom table with a thud.
That board member was Roger Corbett, now the chairman of Fairfax. He spent 40 years as a retailer, never worked in media or journalism, holds a handful of shares in Fairfax, and was paid $412,000 last year by the company. On the day he was appointed Fairfax chairman in 2009, Corbett presented a glowing picture of the way his company was handling its task. “The decisions taken in the last few years by management and the board have, I believe, put Fairfax in a position which is envied by media companies around the world,” he said.
I describe Fairfax as “his” company because, in the absence of a proprietor or dominant shareholder, the chairman of Fairfax is, in effect, its Rupert Murdoch. Without any substantial shareholders who understand the company’s industry, the Fairfax chairman has the sweeping powers of a Lord Beaverbrook or William Randolph Hearst.
But unlike a Beaverbrook, Hearst or Murdoch, Roger Corbett is a functionary. He has no skin in the game, no background in the industry, and no financial or apparent legal accountability for his incompetence.
When Corbett leaves the board – which will almost certainly be sooner than he had anticipated – how much culpability will he hold for ruining two of the most valuable institutions in Australian democracy? What restitution is available to shareholders who were buying Fairfax stock at $1.73 on the day Corbett became chairman?
And even more poignantly, what restitution is available to the consumers of quality journalism when they realise that the person chiefly responsible for its demise deliberately ignored years of advice from many experts who understood the industry he knew nothing about?
Three years ago, just as Roger Corbett was proudly taking the helm of an organisation “envied by media companies around the world”, a new book was published. Written by Jim Collins, well known for his deep studies of how companies work, How The Mighty Fall describes the five stages of the decline of once-successful companies:
Stage 1: Hubris born of success
Stage 2: Undisciplined pursuit of more
Stage 3: Denial of risk and peril
Stage 4: Grasping for salvation
Stage 5: Capitulation to irrelevance or death.
Under its current chairman, Fairfax Media took less than three years to move briskly from Stage 3 to Stage 4. And if there’s one certainty about the future of the company, it is that the current chairman and board won’t be hanging around to preside over Stage 5.