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Beecher: Corbett, the functionary, sees Fairfax die on his watch

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.

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  • 1
    John
    Posted Tuesday, 19 June 2012 at 1:21 pm | Permalink

    Corbett was a grocer. They use newspaper to wrap rubbish rather than to read rubbish.
    Stage 4 (Salvation) is an interesting topic which should be explored in the light of Corbett’s strong Christian faith.
    I told Roger some years ago that at least Mussolini could get the trains to run on time whereas Corbett couldn’t even get his presses to run on time. The SMH was too often late to arrive. Now, it looks like it may be D.O.A.

  • 2
    Benny123
    Posted Tuesday, 19 June 2012 at 1:26 pm | Permalink

    Eric, lets see the voting records for Corbett’s ascendancy.

    The fool is not to blame, those who elevate him are.

  • 3
    Mark Duffett
    Posted Tuesday, 19 June 2012 at 1:30 pm | Permalink

    If anyone ever tries to tell me again that stratospheric management payments are justified because there is a ‘shortage of executive talent’, I will refer them to this excoriation. Supposedly Corbett was one of the best going around - yet any mug could have done what he has, and probably better.

    It is time the whole cult of managerialism was done away with.

  • 4
    drovers cat
    Posted Tuesday, 19 June 2012 at 1:32 pm | Permalink

    I think Corbett has achieved what he set out to do.
    A triumph of ideology over management.

  • 5
    Posted Tuesday, 19 June 2012 at 1:36 pm | Permalink

    I thank Beecher for this informative piece. I had believed that Hilmer warranted most blame for not changing Fairfax when it was already overdue during his time as ceo, but from this and from comments by former Age editors it seems that management and senior staff had less say in Fairfax’s strategy than the board.

  • 6
    View Balanced
    Posted Tuesday, 19 June 2012 at 1:52 pm | Permalink

    What an interesting article, thank you Eric Beecher. Roger Corbett has a lot to answer for.

  • 7
    Schoo M
    Posted Tuesday, 19 June 2012 at 1:52 pm | Permalink

    I’m still not sure how cutting editorial staff will not lead to a reduction in story quality. I dropped my subscription to the Age a couple of years ago when it started to resemble New Idea. I’m happy to pay for quality journalism and analysis (Crikey, New Matilda etc) but not to read masterchef recaps and 11,000 articles gushing about cafes, footballers girlfriends and regurgitated stories from overseas. Add Gina’s alleged editorial agenda into the mix and I will simply avoid Fairfax once teh paywall coems up (as most people now do with News Lts) and stick to the ABC.

    Has anyone commented on the significant capital expenditure Farifax have undertaken in the last 10 years - the new print plant in Tullarmarine and the fancy pants building at Docklands seem rather wasteful now dont they?

  • 8
    Stephen
    Posted Tuesday, 19 June 2012 at 1:57 pm | Permalink

    The Woolies ‘T Rex’ business model is based on strong-arming everyone - suppliers, staff, customers, councils, regulators, governments, and so forth.

    Doesn’t play so well in the media, Roger. Or maybe it does, if your name is Gina?

  • 9
    IC-1101
    Posted Tuesday, 19 June 2012 at 1:59 pm | Permalink

    A fascinating and shockingly honest article. Thank you.

    This paragraph affects me the most:

    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?”

    I’ve been asking that question in my head over and over again.

  • 10
    Nightingale John
    Posted Tuesday, 19 June 2012 at 2:11 pm | Permalink

    I’m not surprised at Eric’s comments and judgements. I recall Roger as a young man, accountancy student and church youth guru. His career has been a confirmation of his obvious self-confidence and self-belief. One of his fellow Grace Bros cadets in the part time accountancy major at UNSW was Mick Grace. So much for our joking about his future with such a contemporary! One has to admire his career and life choices, despite his Christian principles doubtless being troubled by his overseeing Woolworths becoming the biggest gambling and alcohol retailer in the country, not to mention smokes.

    As an academic economist with some interest in business managements’ abilities, I’ve always been intrigued by the inability of boards to make rational decisions. Herbert Simon’s seminal work on business decisionmaking (never consider more than 3 options, always choose the first feasible option, keep the others in reserve for next time so as to avoid having to search again) does seem characteristic.

    What could businesses achieve if the best minds went into business (er…, and got their way)?

  • 11
    Michael de Angelos
    Posted Tuesday, 19 June 2012 at 2:17 pm | Permalink

    Now that is good journalism.

  • 12
    Frank Campbell
    Posted Tuesday, 19 June 2012 at 2:17 pm | Permalink

    how much culpability will he hold for ruining two of the most valuable institutions in Australian democracy?’

    Beecher doesn’t answer this question.

    Sure, Corbett is exposed as a dinosaur, but what should Fairfax have done- beyond Kohler’s observation that they should have faced the new reality and shrunk humanely, without the sudden, massive and brutal expulsion of staff?

    By all accounts, Fairfax online is a great success- in terms of readership. They’ve failed to “monetise” online, but so has everyone else. Including the little comment site, Crikey, which exists only as Eric Minimogul’s indulgence (in principle not unlike that other indulgence, Murdoch’s “Australian”).

    Castigating dullards in the MSM is fun, but no substitute for incisive analysis of where the new media might go…

  • 13
    Flat tyre
    Posted Tuesday, 19 June 2012 at 2:29 pm | Permalink

    At a recent gathering of around 20 friends the topic of newspapers came up.
    Most were over 40. Approximately 50% of them regularly buy a paper.
    Of those under 40 none buy a paper. Ever.
    Several in their 20’s stated they have never purchased a newspaper …
    Fairfax, there is your future.

  • 14
    mikeb
    Posted Tuesday, 19 June 2012 at 2:46 pm | Permalink

    Eric - I sense a tone of “I told you so”, which is probably fair enough given that rou obviously don’t think much of Corbett or his dismissal of your report.

    What worries me is that a lot of the news is stuff that you weren’t particularly looking for but stumbled upon while thumbing through the daily rag. When it all goes online we have to rely on being prompted by unknown web editors who are peddling unknown agendas that includes selling advertising. Look at the “most viewed” links on the Age or whatever and the subject matter is dismayingly tabloid.

  • 15
    Posted Tuesday, 19 June 2012 at 2:50 pm | Permalink

    @ mikeb

    I come across a lot of news fortuitously while surfing - paddling in - the web. Maybe it reflects personal habits. One could always subscribe to an aggregator such as Huffington Post.

  • 16
    Greg Romanes
    Posted Tuesday, 19 June 2012 at 3:14 pm | Permalink

    Whilst Corbett doesn’t have much skin in the game, the d!ckhead institutional investors who put him there do. Or at least the poor smucks who’s super funds they are “managing” do. Back in 2009 when Corbett was shoehorned in by the existing board, Ron Walker and institutional investors, there were 3 other candidates - Steve Harris, Mayne and Goonan - any of whom’s input would be prefferable to most of those on the existing Board.

  • 17
    Michael
    Posted Tuesday, 19 June 2012 at 3:18 pm | Permalink

    @ERIC BEECHER

    Oh dear!
    The word ‘hubris’ was made just for you, as was the word ‘dillusional’!
    I like Crikey & I pay my $OneHundred&Something bucks cause its chumpy reading socialist claptrap.
    It provides perspective.
    But to suggest that you could offer advice on anything other than how to vote SocialDemocrat is a farce.
    Eric you are just another lost socialis soul wandering in the wilderness in search of a cliff top to jump from.

  • 18
    paddy
    Posted Tuesday, 19 June 2012 at 4:07 pm | Permalink

    Excellent work Eric.
    One of the three best articles I’ve on the decline and fall of Fairfax.
    The other two were Alan Kohler’s piece in Business Spectator and Jonathan Green in The Drum.
    I guess it’s no surprise, that all three of those authors have actually been involved with *successful* online journalism.

    Pity Fairfax didn’t take advice when it might have helped.

  • 19
    David Eastwood
    Posted Tuesday, 19 June 2012 at 4:16 pm | Permalink

    There’s a real possibility that Fairfax is worth more to Gina dead than alive, and with three Board seats she’ll be well placed to kill it and take out a dissenting voice at a bargain basement cost.

  • 20
    PK93
    Posted Tuesday, 19 June 2012 at 4:36 pm | Permalink

    @David Eastwood

    Given the appalling quality now produced by Fairfax papers, I’m increasingly of the view that she will be doing us (by us I mean anyone interested in the truth) a favour. Large numbers still habitually buy the paper and increasingly large numbers flock to the website. I for one do out of habit (to the Age), despite its collapse in quality. There is no gaurantee that something will replace it serving its historic function but now the unknown is better than the status quo. The unknown creates a vacuum that would at least provide hope and possibility

  • 21
    Cassandra Steeth
    Posted Tuesday, 19 June 2012 at 4:56 pm | Permalink

    It angers me that one man’s arrogance and ignorance can have such a huge impact. It’s unfair to a lot of people, particuarly anyone who wants to get a job in journalism…

    It’s already so damn hard to get a job - but this just made things all that more difficult.

    I wish people in positions of power would get off their high horse, admit there is a problem and just move on!

  • 22
    Harry1951
    Posted Tuesday, 19 June 2012 at 5:06 pm | Permalink

    @ David Eastwood
    I agree. To flesh it out, if Fairfax died (of mis-management incl failure to adapt in time) it could suit Gina Reinhardt’s agenda of boosting right-wing voices, eg the Herald Sun and/or The Oz.

  • 23
    Suzanne Blake
    Posted Tuesday, 19 June 2012 at 5:12 pm | Permalink

    Corbett just copied what WalMart was doing. Right down to naming their headoffice Woolworths Way, like Walmart Way in Bentonville AK.

    I stand by my comments that EVERY RBA Director who was on the RBA Board, while they hid the Securancy fraud from the Federal Police, should have been stood aside pending an investigation.

    Swan was WEAK and pathethic and did nothing.

  • 24
    Posted Tuesday, 19 June 2012 at 6:32 pm | Permalink

    Anyone interested in our much vaunted democracy, and freedom of Press (just kidding folks) and our tolerance of fifth rate politicians should have a look at Ron Tandberg’s brilliant cartoon in today’s Age, Page 10, 19 June ‘12.

    In one way the Rhine Maiden may achieved what few people in the last twenty years have even come close to achieving. ie Making our big companies and our politicians realising it’s time to pull out the proverbial finger to stop the Rupert Murdochs and the Rhine Maidens of this world from having free rein to treat our institutions as the skittle alleys to be found in carny shows.

  • 25
    Geoffrey Walker
    Posted Tuesday, 19 June 2012 at 6:36 pm | Permalink

    Good heavens! What am I going to line my rubbish bin with? The Wentworth Courier is not absorbent enough. The body corporate will not be pleased.

  • 26
    Hamis Hill
    Posted Tuesday, 19 June 2012 at 7:14 pm | Permalink

    The five stages of “How The Mighty Fall” apply equally to Rudd or Abbott.
    And the shape that Australian Democracy is in points to it having no valuable institutions at all.
    Besides, it is “All Julia Gillard’s Fault!”.

  • 27
    Michael
    Posted Tuesday, 19 June 2012 at 7:49 pm | Permalink

    @HAMISHALL

    Institutions?
    Since when did Fairfax become an institution?
    It’s been a broadsheet one can tear up into small pieces to wipe one’s arse since the Fairfax Editors elevated Marr, Carlton & Tingle to senior journalist status.
    They will be the first Gina sacks.

  • 28
    AR
    Posted Tuesday, 19 June 2012 at 8:42 pm | Permalink

    Rhinohide has a new defender, AJ on 2GB, extolling the Divine Right of owners do do whatever they wish with their possessions (even though still way under 20%) “she’s not going to be telling them what to put on the front page, just saying that what they do put on is crap!”…WTF?
    Singo then bolstered with the reminder that Baron “Conman” Black of Crossharbour controlled F/FX with an even smaller shareholding once Wokka had worked his magic.

  • 29
    c d
    Posted Tuesday, 19 June 2012 at 10:43 pm | Permalink

    I’d like to know where all these ‘editorial independence’ people were over the years when Fairfax was spruiking property at the behest of the real estate industry.

  • 30
    Harry Rogers
    Posted Wednesday, 20 June 2012 at 2:38 am | Permalink

    The sad thing Eric is Fairfax is just one of many companies who have what I call “villainous” directors or Chairman viz

    Leigh Clifford was appointed to the Qantas Board in August 2007 and as Chairman in November 2007.

    Mr Clifford is a Director of Bechtel Group Inc. He is Chairman of Bechtel Australia Pty Ltd and the Murdoch Childrens Research Institute, a Senior Advisor to Kohlberg Kravis Roberts & Co and a Board Member of the National Gallery of Victoria Foundation. Mr Clifford was previously a Director of Barclays Bank plc.

    Mr Clifford was Chief Executive of Rio Tinto from 2000 to 2007.

    Shares 51,622 Paid $635,000 p.a

    Look a bit deeper and find what Clifford real background achievements are.

    This board also has Peter Cosgrove .. remember him from Australian army he’s paid $249,000 to say nothing.

    The lis goes on and on and I know in blogs I’ve already reached my word limit.

    I don’t want to bore readers with my catalogue of failed directors etc who are still picking up about $50,000 a month

  • 31
    Harry Rogers
    Posted Wednesday, 20 June 2012 at 2:40 am | Permalink

    Suzanne,

    I stand by my comments that EVERY RBA Director who was on the RBA Board, while they hid the Securancy fraud from the Federal Police, should have been stood aside pending an investigation”

    Spot on

  • 32
    Andybob
    Posted Wednesday, 20 June 2012 at 5:22 am | Permalink

    I’m trying to remember the last time I saw someone reading a broadsheet on public transport. It was some time ago.

  • 33
    Suzanne Blake
    Posted Wednesday, 20 June 2012 at 7:37 am | Permalink

    @ Andybob

    Yes, its all on iPads now.

  • 34
    monkeywrench
    Posted Wednesday, 20 June 2012 at 8:56 am | Permalink

    It will be an interesting situation if the crows do come home to roost, and Rinehart does ruin Fairfax to the point of collapse. That’ll leave Murdoch in charge of 100% of the national papers, more or less. What is the rule on media ownership again?

  • 35
    pritu
    Posted Wednesday, 20 June 2012 at 9:02 am | Permalink

    When Fairfax has gone the way of the Evil Empire, the rhino will probably turn her attention to Crikey… Be ready.

  • 36
    Dogs breakfast
    Posted Wednesday, 20 June 2012 at 10:17 am | Permalink

    It is time the whole cult of managerialism was done away with.”

    So true Mr Duffett, and just watch productivity rise when the managerial class gets out of the way. Much of workers time is spent mucking around on work they know to be rubbish that has ‘propping up the management group’ as its raison d’etre.

    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? “

    Exactly the same culpability that just about every other failed corporate board member gets - absolutely no culpability, usually some form of a golden handshake and no doubt a very expensive and well attended dinner where colleagues from the same private school/boys club/family will extol his brilliance and declaim his all-seeing knowingness, because any suggestion that the current capacity of boards is anything less than stellar is met with disbelief, horror even.

    Fact is that unless the board makes egregious and formal errors, such as mistaking short term debt for long term, or moving to Europe and leaving a compensation fund that is ‘fully funded’, when it isn’t, there is almost no comeuppance for these muppets.

    Group think as invented by these board members and they are the beneficiaries, don’t expect them to rock the boat and announce that the king is naked.

  • 37
    McMediaman
    Posted Wednesday, 20 June 2012 at 11:23 am | Permalink

    Eric Beecher, well researched and written and I can think of other companies right now who should take heed.
    PaperlinX, also in the media game in a way, is one. Despite an EGM and very persuasive alarm-bell ringing by a shareholder and lobby group, the ‘old guard’ remains, amputating limb after limb so eventually they can claim victory for the ‘new invigourated company’ - with zilch shareholder value. One is reminded of the insane Iraqi TV spokesperson during Desert Storm, claiming victories while his tanks and aircraft burned and denying any invasion.

    Back to Fairfax, you are right, all newspaper businesses have done better under ‘proprietors’ or ‘media barons’ call them what you will. It’s too much of a risk business for wibbly-minded functionaries and beaurocrats. Quite possibly Gina R. or one of her lieutenants, is such a proprietor; a Frank Packer, a John Fairfax, a Beaverbrook, Hearst or Thomson. Or Citizen Kane. Yes, agendas; yes bias, yes unreasonableness in the extreme but at least a media mogul apparent. As Charles Bradlaugh, 19th century UK MP said:
    “Better a thousanfold abuse of free spech than denial of free spech.”

  • 38
    barfiller
    Posted Wednesday, 20 June 2012 at 3:03 pm | Permalink

    “It is time the whole cult of managerialism was done away with.” I wrote an article on managerialism in the late 1990s. Still shaking my head about the KPI that focused on the number of patients discharged by a hospital. the higher the number, the more successful the strategy. Only one problem: it included people leaving the hospital in a pine box.

  • 39
    colin77
    Posted Wednesday, 20 June 2012 at 4:34 pm | Permalink

    *THUD*

  • 40
    Harry Rogers
    Posted Wednesday, 20 June 2012 at 10:20 pm | Permalink

    Frank Campbell

    but what should Fairfax have done- beyond Kohler’s observation that they should have faced the new reality “

    I ‘ll have a stab at this without the $600,000 pay. Kohler as far as I’m concerned has done a con job on everyone. Business Spectator is purely an advertising vehicle for the corporates it has no significant commentary eg Bob Gottliebsen who has waffled for years in the corporate pockets .

    Kohler appears on the ABC as supposedly an independent however his invited guests on Inside Business are often his business colleagues *(conflict of interest??surely).

    He interviews the corporates in a matey way never asking any hard questions knowing who pay his bills in the Eureka Report and Bus Spec etc.

    He like most business people has sacrificed ethics for money. I understand Bus Spec loses quite a lot of money. Murdoch can piss away $30m no problem( an unbiased view of his ballance sheet over the past 10 years shows some truly miserable failures) and Kohler knew this.

    Kohler hasnt got a clue like the rest of us about the future of print. Personally I think it will graually turn around and return to maybe 50% of its previous income.

    Id be happy to expand on why but I’ve probably bored readers enough. Business is so damned boring… and the answers are so bloody obvious.

  • 41
    MaggieP
    Posted Thursday, 21 June 2012 at 8:38 am | Permalink

    Come on… as if Australia’s media wasn’t a closed pit of self interest anyway, with Fairfax being the most toxic of all.

    Good riddance, and hopefully the purveyors of lies who lose their jobs will never work in the industry again.

    Read The Expendable Project. The truth will continue to chase the guilty, wherever they go.

  • 42
    Holden Back
    Posted Thursday, 21 June 2012 at 1:37 pm | Permalink

    @Barfiller who can forget the cheery euphemism ‘separation’?

    Transfer, discharge alive, or death: I’m sure there was some weighting?

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