Media & Culture

David Kirk Heads For The Fire Escape

By Ben Eltham

December 05, 2008

The death throes of Fairfax are not pretty. It’s been a terrible week for the company that publishes much of the best journalism in the country, and today’s announcement of the resignation of CEO David Kirk is only the latest installment.

Kirk’s departure from Fairfax will not surprise many. The former All Black captain’s tenure saw a debt-fuelled expansion of the corporation in which Fairfax grew by gobbling up newspapers in New Zealand and regional Australia, but at considerable expense.

Ironically, it was Kirk’s most recent acquisition which has proved the catalyst for his departure. The 2007 merger of Fairfax and John B Fairfax’s Rural Press brought the last remaining scion of the Fairfax dynasty back into the company founded by John Fairfax in 1841. The Rural Press merger changed the dynamics of the Fairfax board and also brought Rural’s renowned cost-cutter Brian McCarthy into a senior role in the corporation; rumours soon started circulating that McCarthy and Kirk didn’t get on.

The maneuvering occurs against a backdrop of terrible conditions for the media industry. One by one, the pillars of the newspaper establishment are tottering and falling. Squeezed between a disintegrating business model and the worst circulation for more than a decade, old media is fighting a well documented struggle to survive. The response around the world has generally been to cut costs and retrench journalists, and Fairfax is no different, letting go 550 staff in a demoralising blood-letting earlier this year.

The troubled times have also taken their toll on newspaper editors. Yesterday the Sydney Morning Herald‘s editor, Alan Oakley, resigned. He joins The Age‘s Andrew Jaspan, The Daily Telegraph‘s David "Penbo" Penberthy and the Herald Sun‘s Bruce Guthrie among recent high-profile victims of the ongoing contraction in newspaper readerships and advertising revenues.

Now Kirk is also heading for the fire-escape after an effort which Murdoch analyst Mark Day describes as "not a World Cup winning performance". In different circumstances he might have been able to secure the exit of McCarthy, but with Rural’s John B Fairfax the majority share-holder, this was never going to be likely. The speculation must now be that Kirk issued some kind of "he goes or I go" ultimatum to the Board, which John B was only too happy to take him up on.

Fairfax chairman Ron Walker is also likely to leave now. The avuncular plutocrat with impeccable connections was the man chiefly responsible for bringing Kirk in as CEO, and he continued to back Kirk’s aggressive acquisition plans even while many questioned the debt piling up as a result. It seems inevitable that John B Fairfax will now end up controlling the Board of the company named after his 19th Century ancestor; he is, after all, the majority shareholder.

Kirk’s reign was not a total failure: he oversaw the slow migration of the signature Fairfax mastheads to a popular web platform and the build-up of Fairfax Digital, which continues to deliver strong profit growth. But he couldn’t pull off the trick of migrating advertising with the content. The old media part of the business is slowly dying, and it remains to be seen whether even the acknowledged talents of John B Fairfax and Brian McCarthy can halt the slide.

If anyone can turn the ship around, it’s certainly these two. John B Fairfax spent 27 years as a journalist and editor in the family business before selling out to half-brother Warwick in the disastrous management buy-out of 1987. He used the money Warwick paid him to buy a small holding in a series of rural newspapers, which he then turned into one of the most profitable media companies in the southern hemisphere. McCarthy has been his factotum and lieutenant through much of this.

Unfortunately the problems of old media are bigger than poor management. Like the music industry, the internet has radically transformed the business model of newspapers in a way that threatens even the most famous mastheads worldwide.

Further convulsions at Fairfax, including more job losses, are now likely. The ranks of salaried Australian journalists are rapidly thinning; indeed, the days of journalism as a steady job within a large media organisation may be drawing to an end. The future is almost certainly going to be much more freelance and multimedia-based, marking a return to the earlier models of news-gathering common before the newspaper empires of the late 19th Century were built.

Is this a bad thing? In some ways, of course, it is. Fairfax employs many high quality writers, reporters and editors. Not all of these will continue to enjoy the opportunity to contribute to Australia’s public debate. But in the long term, as I have consistently argued, new models of journalism are springing up to fill the gap left by old media, and newmatilda.com is just one of them.