It’s exactly a year since Greg Hywood took over as chief executive at Fairfax Media, and became its fourth boss in six years. But you don’t need to feel sorry for him.
The tall, shaven-headed ex-journalist, who could be Stuart Littlemore’s twin, is delighted to have the gig, and confident his newspapers have a great future. The Sydney Morning Herald and The Age “are not remotely threatened”, he tells The Power Index. “The classifieds are gone, but it’s not going to get worse. We have a really strong revenue base.”
Sadly, the stock market doesn’t share his confidence: Fairfax’s value has halved since he took over, and the entire company could now be bought for $2 billion, or around one-sixth of what it was worth four years ago. Worse still, some analysts believe the future looks even worse.
But at least Hywood is going radical. He has sacked the subs at his metropolitan dailies and given the work to Pagemasters, thereby cutting 100 jobs. He’ll soon chop another 100 by closing the big Sydney printing plant at Chullora, and teaming up with News Limited to print and distribute papers. And he may shut The Age‘s shiny new plant at Tullamarine, which would see yet another 100 jobs lost.
We suggest he’s done more in 12 months than his predecessors did in four years, and he replies simply: “You’ve got to.”
“The internet has changed our business in two ways,” he explains, “one very good, and one very confronting. It’s good because it’s cheap, quick and easy to distribute our journalism. It’s confronting because it has completely changed our business.”
For 150 years, The Age and Sydney Morning Herald had a virtual monopoly of classified ads in Sydney and Melbourne and a profit margin of around 70%. The internet has slashed that to 20% or less, by introducing fierce competition. You no longer need to build a printing plant and buy a fleet of trucks to get into the game.
So why does Hywood believe the group has a rosy future? “Media doesn’t disappear, it changes,” he offers. “The VHS didn’t kill TV. DVDs didn’t kill cinema. And the internet won’t kill newspapers.”
But it has transformed life at Fairfax. “We’re now a media company that produces journalism,” says Hywood. “We create audiences and we sell those audiences.
“We produce a newspaper to read at breakfast, we’re on the net for people at work, and we publish to iPad or mobile for when you’re on the move. So we’re distributing our journalism throughout the day.”
Fairfax’s metro mastheads bring in only 20% of group profits, with the rest coming from 200 regional papers, nine New Zealand titles, the NZ classified site TradeMe, a radio network including 2UE and 3AW, and the group’s “digital transaction businesses” like Stayz, RSVP and InvestSmart. But journalism is still what brings in the punters. And Hywood says they’re not going to skimp.
“We need to invest in high-quality journalism. There’s no money to be made by commodifying news. Our role is to filter the noise and make sense of the world for our readers. Traditional publishers are good at that. And a trusted brand gives our readers confidence in accuracy.”
So does that mean journalists’ jobs are safe? Probably not. Hywood warns there will still be “enormous efficiencies”, but he will not cut “what matters to the reader”. That was his (much-disputed) rationale for getting rid of those subs. It will also be the justification for sharing stories between the Sydney, Melbourne and Canberra mastheads.
Hywood recently hired Gary Linnell, former editor-in-chief of The Bulletin, to fill the newly-created post of national editor. It will be his job to rationalise coverage of federal politics, business and lifestyle, where there is already less duplication than there used to be, but still plenty to cut.
So are Fairfax staff signed up to Hywood’s plan? “No one really likes the consequences of remaking the company for a competitive environment,” he says.
A recent staff survey showed morale at Fairfax to be at absolute rock bottom. But Hywood is not stirred. “If you’re in a company that has lost its business model and had lots of trauma and uncertainty about the future, then of course you’ve got low morale. What I’m trying to do is provide a sense of direction: this is the way to go, this is how we’re going to get there, this is where we fit.”