Last week in Perth, Fairfax CEO David Kirk delivered a glowing speech to an audience of local luminaries in which he spruiked his company’s creation of “a dynamic program of diversification and growth” that makes it “as well positioned as any heritage publishing company in media worldwide”.

To put it in terms that non-journalist Kirk probably won’t understand, that speech was a giant beat-up. The real “dynamic program” now occurring at Fairfax is a plunging share price, stockbroker downgrades, a terrible financial outlook and increasing talk of the removal of the CEO who is responsible for positioning the heritage publishing company in the doldrums.

Last Friday was an awful day for Fairfax Media. Its shares hit an intra-day price of $2.92 — almost a ten-year low — and a major broker, Goldman Sachs JBWere, relegated Fairfax from “Hold” to a “Conviction SELL” and downgraded the 12-month share price target from $4.90 to $3.15.

This follows an earlier downgrade from Deutsche Bank, which two weeks ago cut its valuation from $4.35 to $3.50 because of the “structural shift” of advertising “out of print [which] is most evident in the large metro markets such as Sydney and Melbourne, which are key markets for Fairfax.”

The key question now at Fairfax has nothing to do with Kirk’s waffle. The key question is whether the company’s biggest shareholder, John B Fairfax, will continue to stand on the sidelines as he watches the value of his investment collapse under the hand of a novice CEO and board who (apart from John B) have no media background or instincts.

The likely answer to that question will come very soon when John B replaces Ron Walker as chairman, and deputy CEO Brian McCartney is handed the CEO chalice.

One senses that David Kirk is about to exchange his “dynamic program of diversification and growth” for a stint of “spending more time with my family”.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey

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