Fairfax’s latest staff cuts signal a crisis in Australian journalism, but international models offer a ray of hope. By Mike Seccombe.

What the future holds for Fairfax

Fairfax chief executive Greg Hywood.
Fairfax chief executive Greg Hywood.
Credit: AAP Image / DAVID MOIR

Even the union representing journalists at the Fairfax newspapers underestimated the anger and desperation of staff last Wednesday after the company’s announcement of another round of staff cuts.

The plan was to walk out for a couple of days, to protest Fairfax Media’s plans to make redundant 115 full-time staff from The Sydney Morning Herald, The Age, the Brisbane Times and WA Today, and slash the ranks and pay for its contributors, in order to pull another $30 million out of costs. But that was before that afternoon’s stopwork meeting at The Sydney Morning Herald.

For close to 45 minutes, the staff debated tactics. According to multiple sources at the meeting, two contributions from the floor hardened the troops’ resolve.

“The books and arts pages are to get absolutely smashed,” said one of those present. “And one prominent arts writer made a very emotional speech, along the lines that this cut was the end of times.”

The other key intervention came from a very different quarter – one of the paper’s economic/political reporters, who argued they should make a bolder protest.

“They said we should vote to go now, go for a week, including the federal budget, and make a big statement,” the source said.

That is not to say staff expected to be on strike for a week, or even to change management’s mind. They expected Fairfax Media would go to the Fair Work Commission and have them ordered back to work, in which case they would have complied.

But they wanted to drive home the enormity of what was happening not just to them but to a pillar of Australian democracy.

“The meeting wanted to highlight that Australia’s political leaders need to start taking this seriously and deciding whether they want a strong national media or whether they’re happy to watch it collapse,” said one source.

“It’s not just us. The Australian could have the plug pulled at any moment. The News Corp tabloids are struggling. The Guardian’s in a perilous financial position. It’s a looming national crisis.”

And so Fairfax journalists went out for a week.

For whatever reason, management did not order them back to work. Maybe it was out of some dim understanding that it was a bad look to go after people advocating public good, or maybe just to book the savings in wages. We can only offer informed guesses – Fairfax did not respond to The Saturday Paper’s request for an explanation.

But there are indications of some disagreement among senior management about the appropriate response to the strike. Addressing an investor meeting in Sydney last Thursday, as striking staff protested outside, Fairfax Media chief executive Greg Hywood said he “admired their passion” for quality journalism. But, he said, “Passion alone won’t cut it.” He defended the staff reductions as being necessary to make such journalism “sustainable”.

While Hywood was publicly admiring the staff, his lieutenants were threatening them.

A memo from Chris Janz and Sean Aylmer, respectively managing director and editorial director for Fairfax’s metro publications, warned of potential dire consequences for their “unlawful industrial action”.

Fairfax would of course not pay workers while they were on strike, and “the company may consider taking disciplinary action against those employees who participate in any unlawful industrial action, which may include termination of employment.”

The memo went on to note that the Fair Work Ombudsman had sought information from the company and “has powers to investigate unlawful industrial action, and to prosecute individuals and unions involved in any contraventions, including to seek the imposition of penalties”.

It takes a lot of courage to stand for principle these days. True, Fairfax had not gone after people for unauthorised strike action after previous redundancy rounds. But staff were also aware the company has over recent years dealt harshly with employees who protested dubious management decisions, particularly over the coverage of business matters.

Our source recollected the case of business reporter Paddy Manning, who strongly objected to plans announced in 2013 to integrate the business sections of the SMH and Age with The Australian Financial Review.

Manning wrote an article for Crikey about the “rubbishy” sponsored corporate editorial material and “PR-driven churnalism” increasingly evident in the Financial Review.

“The result has been to cramp space for news, features and the opinions and analysis of … reporters and columnists, who are guided by a code of ethics and have no vested interests to push,” he wrote.

Merging the content of the Financial Review and the other papers, he suggested, would further spread the infection. He was summarily sacked.

Of greater surprise was the fate of Michael West, another business reporter who probably did more than any other to expose the tax-dodging of large corporations, and who, like Manning, now writes for The Saturday Paper. When he was tapped for redundancy last year it only confirmed in the minds of staff that Fairfax was not, as the slogan says, “independent always”, but increasingly obedient to corporate sensitivities.

Lately there have been other concerning signs. A month ago, following the most recent rearrangement of the senior editorial positions at Fairfax, and coincident with the leaking of the latest plans for cost-cutting and staff reductions, came five pages of corporate bumf from the media company itself, directed at potential investors.

It was entitled “Metro Journalism – the way ahead”, and it came laden with platitudes – “Never have journalists been more important” – and statements of the obvious about the challenges to their business model.

The most interesting bit was at the bottom, where there was a new “mission statement”. It included the following:

“We believe in the merits of market-based solutions to economic challenges and an Australia that rewards aspiration and hard work. We want to be at the political centre of the rigorous debate over how best to achieve these important objectives.”

To staff, the statement seemed to be worryingly political, and all the more worrying for the fact that the new man charged with ensuring that Herald and Age reporters honoured the mission statement was James Chessell, appointed in February to be in charge of federal politics, business and world coverage across both papers.

Chessell is a friend of the big end of town and in 2014, when he stopped being The Australian Financial Review’s business editor to take up an appointment in London, they threw a party for him.

A report in The Australian noted very few of his colleagues attended, although Hywood and Financial Review editor Michael Stutchbury were there, along with the cream of corporate Sydney, various corporate PR flacks, merchant bankers and then treasurer Joe Hockey, who “flew straight from the Commission of Audit lock-up to attend”.

Hockey was there because he is both a close friend of Chessell and his former employer.

Said one of the striking Fairfax staff: “The idea that the company would appoint a Liberal Party staffer and friend to run federal politics is extraordinary.”

Or maybe not. The reality is that Fairfax these days is in the hands of institutional investors who see their politics and ideology reflected in that mission statement and the senior management such as Chessell and Hywood who signed it.

Hence the concern – articulated to The Saturday Paper by many of the striking staff – that their employers no longer see the commercial side of the business as a support for the journalism but see journalism as a support for the commercial side.

As if to confirm their fears, news broke at the weekend that there was a takeover offer for Fairfax – or at least parts of it.

Michael West reported it thus on Monday:

“Things moved quickly yesterday. By 6.30 in the evening, Fairfax Media chief executive Greg Hywood had confirmed a $2.2 billion takeover bid by US leveraged buyout group, TPG Capital. The crew from TPG are asset traders, they are not there for the journalism.”

West went on to detail TPG’s asset-stripping of its previous purchase in Australia, Myer, and their subsequent avoidance of tax on their $2 billion profit.

The raider was not interested in acquiring Fairfax’s regional papers, radio or other assets – just its three big mastheads, The Age, the Herald and the Financial Review, and its online real estate business, Domain. The bits left behind by this demerger would be saddled with 100 per cent of Fairfax debt.

A clue to TPG’s intent, notes former Fairfax journalist, now director of the Centre for Advanced Journalism at Melbourne University, Margaret Simons, lay in the name chosen for this new company: Domain Co.

The investors see the two great papers of Australia as vehicles for cross-promotion of the profitable real estate site. Indeed, says Simons, that’s happening under the current regime.

“See how they’ve been promoting Domain over the past few years and in particular the past few months: wraparounds replacing the front page, which are all Domain advertising. There’s editorial all about real estate, usually on page three.”

Back in February, Hywood confirmed plans to float Domain as a separate listed company, although Fairfax would retain up to a 70 per cent stake.

“People should see publishing as an asset that can drive new business, and Domain has been the proof of that,” he said.

So even if TPG does not win its bid – Fairfax has rejected it for now, although a sweetened offer or offers from other parties remain distinctly likely – staff has good reason to fear a future dependent on cross-promotion of commercial interests.

If you want to see where that leads, tune in to current affairs shows on commercial television.

Mercifully, print media have maintained higher standards than that, even as they have managed decline.

“There’s been some research done at the university, including at the centre I lead, looking at the quantum of investigative journalism in Australia generally and it hasn’t dropped yet,” says Simons. “But there will come a tipping point and this may well be it.

“What we are seeing though is the decline of the less glamorous but arguably more important regular work of covering the courts, the parliament, business, state and local government. Good old journal-of-record stuff.”

In 2011, Fairfax had more than 1000 editorial staff. After this round of redundancies, just 375 will remain. Talented and dedicated as those people are, the breadth and quality of coverage must suffer.

Nor is it just Fairfax. The News Corp papers are currently disposing of staff as they try to save $40 million. You just don’t hear as much about it because the Murdoch media are far less transparent and the level of union membership is far lower.

By the best estimates of the New Beats research project, a collective endeavour by academics at several universities tracking the number of redundancies among journalists and their post-layoff activities, some 3000 journalism jobs in Australia have gone since 2012.

While there have been some new entrants to the quality end of the market, the fact is the collective muscle of journalism is wasting.

Yet more people are accessing more news than ever. They just aren’t paying for it.

Says Simons: “The media business used to be relatively simple. You gained an audience by the content and then sold that audience to advertisers.”

But the internet has broken that nexus, and social media companies cannibalise quality content even as they spread fake news.

Trust in the media has declined, and powerful forces that see independent journalism as antithetical to their interests are working to further undermine that trust – consider Donald Trump’s attacks on The New York Times, or the attacks here on the ABC.

So, what is the solution to the decline?

There are many models. Across most of Europe, governments offer various kinds of subsidies. In France, for example, newspapers and magazines receive direct production support of about €400 million a year. Many countries offer exemptions from value-added taxes. The risk is politicisation of media, although that does not appear to be a problem there.

In the United States, much of the best journalism is funded philanthropically. But that is a hand-to-mouth business, as anyone who has ever listened through the endless, pleading fundraising drives of American public radio will know.

Margaret Simons thinks subscription-based models – likely with some advertising – will become increasingly important.

“I’ve never bought the view that people won’t pay for news. Over time people will pay for particular kinds of news – perhaps not the kind of commodified news you get everywhere.”

This paper is an example of that – subscriptions and newsstand sales are a key part of its business model. The question is whether this model can be scaled up to bigger media.

In the US, The New York Times offers some hope. Instead of taking the route of many media organisations, including Fairfax, and going down-market, particularly online, the Times stayed on the high road. It never resorted to clickbait; it continued to see itself as a journal of record.

Now about two-thirds of its funding comes from subscriptions. Only last week, it reported that its online business was profitable. Ironically, Donald Trump probably deserves a lot of credit. In the three months to March, the Times added 308,000 new digital-only subscriptions – the most of any quarter in its history – and now has more than two million online subscribers.

This week’s industrial action by Fairfax staff is not a strike, it is a campaign for a cure to an affliction of democracy. As a consequence, senators from the Labor Party, the Greens, Nick Xenophon Team and Jacqui Lambie this week succeeded in establishing an inquiry into the future of journalism.

Better late than never.

This article was first published in the print edition of The Saturday Paper on May 13, 2017 as "What the future holds for Fairfax".

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Mike Seccombe is The Saturday Paper’s national correspondent.

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