The Australian Financial Review‘s editor-at-large Pamela Williams pulled off a major coup by convincing her bosses to give her six months leave to write a book chronicling Fairfax’s descent from powerhouse to financial basket case.
Williams attributes Fairfax’s downfall to its inability to beat — or buy out — “pure play” online classified sites Seek, CarSales or the REA Group. All three sites, she notes, came under the direct influence of Lachlan Murdoch and James Packer — both of whom went on the record for the book.
Killing Fairfax is out today, but Crikey has sped-read it to give you the juiciest revelations …
James Packer had a breakdown. He may be a big, burly, extremely rich bloke, but James Packer hurts like the rest of us. After the embarrassing collapse of One.Tel, Packer was a “broken spirit” and some friends even feared he would commit suicide. Kerry Packer was slow to realise how wounded his son was, but came to his defence when Fairfax ran hard on his son’s conversion to Scientology under the influence of Tom Cruise. Kerry sent a copy of the United Nations Charter of Human Rights to then-Fairfax CEO Fred Hilmer, with a warning his company was breaking it.
… And hates criticism. The book shows Packer has an extremely thin skin when it comes to media criticism and loathes Fairfax for the way it has covered him and his family, especially The Age and The Sydney Morning Herald. Williams recounts Packer meeting Hilmer at the Prime Minister’s Christmas drinks last November. Hilmer — whom many regard as a prime culprit in Fairfax’s demise — approached Packer to talk about the carnage at Fairfax. “I got out at the right time,” he said. Packer lashed back: “Don’t come up and try to be my friend. The damage had already been done by the time you got out Fred. F-ck off.”
…And wanted the Fin, but not Fairfax. In 2006, Fairfax’s papers were hammering James Packer over Channel Nine’s poor performance. So Macquarie Bank’s Nicholas Moore suggested Packer and Macquarie team up for a tilt at Fairfax. Under the advice of confidant John Alexander, Packer said no. But the pair had been keen to buy The AFR six years earlier and offered Hilmer a whopping $500 million for it. He refused to sell.
Rinehart wanted to sack journalists. Any plans Gina Rinehart had to take over Fairfax appear to be on hold — at least for now. Which is lucky for the journalists who work there. Williams reveals Rinehart tried to entice Packer to join her as a Fairfax shareholder and launch a cost-cutting program that would axe almost half the company’s 11,000 staff. Packer, now focussed on gambling rather than media, didn’t take kindly to the offer and left the dinner date abruptly.
Fairfax named CarSales. One of the biggest thorns in Fairfax’s side has been carsales.com.au. Which makes it all remarkable that a Fairfax sub-editor gifted the site its snappy, search engine-friendly name. The brainchild of ambitious car industry veterans Wal Pisciotta and Greg Roebuck, CarSales began its life in 1996 as carz.com.au. A year later, as Williams recounts, Roebuck raced into Pisciotta’s Melbourne office clutching a copy of Fairfax’s car insert Drive. The cover, directing readers to a feature on the drift of classified advertising online, was emblazoned with a logo reading carsales.com.au. Roebuck looked up the URL, found it was available and bought it for $200. CarSales now has a market capitalisation of $2.2 billion and a share price of $9.20; Fairfax has a market cap of $1.2 billion and share price of 50 cents.
These blokes love their boats. It’s a truth universally acknowledged that every self-respecting corporate hot shot has a luxury yacht in the garage. But at times in Killing Fairfax it seems our billionaires spend more time on their boats than at their desks. James Packer, we learn, was on the family’s converted ice-breaker, Artic P, when he heard that his father was gravely ill. And he was there again in 2009 when Channel Seven supremo Kerry Stokes called — from his own boat, Antipodean — to announce he was launching a raid on Packer’s media assets. The pair eventually became close friends after sharing a heart-to-heart phone conversation. Packer was aboard the Arctic in Tahiti for the call, natch. Then, in December last year, Packer and Fairfax chairman Roger Corbett had dinner and drinks on Packer’s new yacht, the Seahorse. It was there that Packer proposed his close ally John Alexander, a former Sydney Morning Herald editor, should join the Fairfax board. Fairfax’s directors rejected the offer and Alexander now sits on the board of Kerry Stokes’ Seven West Media.
Bruce Wolpe writes a mean letter. In February 2009, Fairfax’s veteran communications boss Bruce Wolpe left to work for US congressman Henry Waxman. On the plane to the States, he wrote two unsolicited letters to then-Fairfax chairman Ron Walker and CEO Brian McCarthy. His advice to Walker was simple: quit before November. Wolpe advised that Walker would be undermined by forces loyal to John B Fairfax, who had bought back into the company. He advised McCarthy to keep acquiring new assets, rather than just cut costs. Specifically, he should consider selling Fairfax’s radio stations and merge with the Seven Network. Neither man wrote back.
Loose lips sink ships. In 1995, Fairfax and the ABC were poised to sign a stunning deal to supply a 24-hour news channel to Foxtel (half owned by News Limited). Australian Financial Review media reporter Mark Furness had sniffed out the story and called Fairfax executive Michael Hoy for comment. Rather than the swift “no comment” one might expect on such a sensitive subject, Hoy summoned Furness to his office alongside writers from The SMH and The Age. Detailed stories appeared in all three papers the next day. Rupert Murdoch was furious when he saw the stories and kyboshed the agreement. No way was he was going to allow Fairfax and News onto Foxtel. Foxtel eventually went with Sky News, co-owned by BSkyB, Seven and Nine.