John Fairfax CEO Fred Hilmer surprised with the news that he wants to go next year when he’s due to turn 60. This immediately sparked the usual conspiracy theories and the assembling of the usual starters in the Fairfax CEO stakes.
So, Fred Hilmer’s on his way out the door at John Fairfax and it’s of his own doing. He’s going for “business and personal reasons”. Smelling the flowers and more time to paddle his surf ski and keep as fabulously fit as he looks.
And, no doubt a couple of more boards. NAB, anyone? Is Fred feeling Aristocratic, or perhaps needs to keep in touch with Family and Friends via the Telstra board? He’s deputy chairman of Westfield Holdings, the key company in the Lowy empire, so that will help keep him in pocket money, assuming he survives the culling of non-executive directors that will inevitably follow the $24 billion three-way Westfield merger next month.
Fred’s retirement benefits will be nice, to say the least, after being at Fairfax for just over six years when he leaves. All up he will cost shareholders more than $10 millon and his departure will, of course, spark the usual round-up of the usual suspects.
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So to kick off proceedings, here’s an early list. What about Chris Anderson? He’s leaving Optus at the end of August. Several months of gardening leave, a few trips here and there and then he’s ready for Fred’s gig in the New Year. He’s 57, Fred’s closing on 60. Big drawback, Chris has already been at Fairfax with mixed results.
So too has another suspect, John Alexander. He’s been and gone from Fairfax twice. Third time lucky? Well maybe not. He’s a big cheese with Packerdom and when Peter Yates goes, JA is the pea for the top job at PBL. He gets on with Packer senior and that’s vital.
But Fairfax does offer him the chance to run a major media company, without BIG Brother. But he’s also having fun pulling the wings off flies at the Nine Network in his attempts to root out the evil, old ways of doing things.
A couple of early, probably doubtful contenders. But what about Greg Hywood? After being a balding version of a golden-haired boy at Fairfax he got bumped last year by Fred when Mark Scott came from nowhere to be superman. Mark Scott himself, a former Liberal staffer, education writer and now editorial executive with a management bent, would see himself as Rocky.
So too Robert Whitehead. He’s SMH editor and the man who made the trains run on time at the Chullora printing mess in Sydney, as it was when he took over. Those days are mostly behind them now. He could be used at the Tullamarine plant in Melbourne, which is still having teething problems. His contract is said to be up at the end of the year. A reasonable chance given his commercial background with the editorial overlay.
That also describes Alan Revell. Would he want to play at the top? He’s in head of Commercial Operations for Fairfax’s Metro newspapers. That makes him a contender.
Brain McCarthy, the CEO of Rural Press, is another of the usual suspects being mentioned.
The Hilmer management record at Fairfax
Fred’s had a mixed time at Fairfax. He’s changed the papers through a more corporate approach, thanks in part to the type of board he answers to, where Key Performance Indicators and the like are vital for measuring success, while the usual media measurements of scoops and acres of grey print don’t quite give the same buzz.
The cost controls are now legendary for their nitpicking, while the approach to staff has sometimes bordered on the McKinsey-MBA approach that Fred possesses due to his education and work experience.
The newspapers have performed in a decidedly mixed fashion with circulation losses everywhere.
The SMH Monday to Friday of 221,000 compares to 229,000 back in the September six month audit period in 1999, about a year or so after Fred took the helm, while the AFR has slid from 91,000 Monday to Friday in 1999 to 88,000 in the March audit period this year.
That’s despite a rebound in the stockmarket over the past 16 months in particular.
The Age has been a curate’s egg, slumping during the mid 90’s before stabilising around 192,000 in the September 1999 period and finishing a touch over 196,000 in March this year. That is no gain when population increase is considered. And a real problem has been The Sun-Herald in Sydney, which has shed readers and circulation at an alarming rate while Murdoch’s Sunday Telegraph soared.
When you consider that Australia has probably added more than a million people in the period of Fred’s CEOship, as well as the continuing strong economy and retail sales, the circulation figures are indifferent, showing the continuing problems of Fairfax, which Fred has been unable to arrest.
(The Packers don’t mind taking a shot at Fairfax’s alleged decline and future troubles and James was at it again in this recent interview with The West Australian’s chief reporter Mark Drummond which was picked up by The SMH.)
The only answer has been cost cuts and bring in stringent controls while lifting revenue through higher cover prices and advertising charges. That’s what John Alexander has done in a similar situation at ACP magazines and profit has ballooned. It is what he is attempting to do to the Nine Network.
Fred drove the New Zealand move last year which seems to be a conservative, solid and profitable diversification. The acquisition of Text Media will help the Age and in the Melbourne market in the vital area of real estate advertising.
Perhaps the biggest black mark against Fred was the way he dived headlong into the internet and then took much longer than many other CEO’s to admit the mistake and retreat. But not until the best part of $100 million had gone out the door in the black hole known as f2.
A smaller black mark was to fail to match the Packer offer for a minority stake in the seek.com jobs website that would have added to his online employment business and help the employment classifieds in the SMH and The Age.
But Fred’s announcement and the comments about giving the company time to find a replacement shows there’s no succession plan, with no one thought capable or groomed to takeover for Fred from within.
Unlike Optus which named Paul O’Sullivan to replace Chris Anderson in the same announcement on Wednesday. That’s both a big black mark against Fred and the board and in fact is poor corporate governance.
A key to the new person will be the attitude of the Melbourne First mob (or, as some wit says, the ‘Give us our Age, our Daily Age back gang). What will Ron Walker, Mr Melbourne, want in a new CEO? Chairman Dean Wills reportedly has his hands full dealing with the Melbournites.
Sir Rod Carnegie is another of the southerners stirring the pot over the editorship of the Melbourne Age and the general feeling of loss in the Victorian capital about their broadsheet daily. Mark Burrows, the investment banker who sold Fairfax to Conrad Black’s consortium in December 1991 and then joined the board, is returning from London. perhaps it will be he! And Roger Corbett, the Woolies boss, will want to give his ideas of what the ideal CEO should be like.
Then there’s fellow ANZ directors David Gonski and Margaret Jackson, the thinking person’s candidate from Melbourne for higher things in Australian business and politics, if only she would say yes.
Frankly, with that list of directors wanting a say in your role, why would any sane person want the role? Only megalomaniacs need apply. With apologies to Groucho Marx, but why would you want to be CEO of a company if those directors wanted you in the club!
But there’ll be a long list of contenders.