Epilogue
The white wooden gate that marks the entrance to Retford Park in the southern highlands of New South Wales gives little indication of the grandeur that lies beyond. Thirty-two hectares of picture-perfect parklands and gardens—the knot garden, the peony walk, the laurel lawn, the fountain path, the Millennium Canal, the pool and pavilion.
At the end of the long red gravel drive is the house that Samuel Hordern, son of retailer Anthony Hordern, built in 1887. James Fairfax has owned it for the past fifty years. In his eighties now, James spends much of the year here surrounded by his art collection and tended to by the butler who has been in his employ for more than two decades. James is a noted philanthropist, especially in the arts, and has pledged Retford Park to the community when he dies.
Visiting Retford Park is like stepping into another era—one of privilege, civility and refined taste. From this milieu, James watches the travails of the once great media company that carries his family’s name and he chaired for just over a decade, until his half-brother Warwick made his disastrous takeover bid for the company in 1987. Warwick made James a wealthy man. He received $163.7 million for his Fairfax shares in the takeover. But he lost his birthright, his job as chair of a great media company.
Surprisingly, James and Warwick are very close now. The wrenching events of twenty-six years ago have been forgiven, if not quite forgotten. James is convinced that it was his father’s third wife and Warwick’s mother, Lady Mary Fairfax, who was primarily responsible for the bid to snatch the company from the rest of the family. James occasionally sees Mary at family gatherings but he has never once raised the matter with her. There is no point.
When the first tabloid version of The Sydney Morning Herald was delivered to Retford Park on 4 March 2013, it was just another reminder that the Fairfax media company James once chaired had gone forever. The new-look newspaper also landed on the courtyard tables at John Singleton and Mark Carnegie’s business headquarters in Underwood Street, Paddington, on that first Monday in March. It appeared in fund manager Simon Marais’ office in Sydney’s Martin Place. And it made its way to Perth, to Gina Rinehart’s office at Hancock Prospecting.
Fairfax Media has moved on from the patrician, old-fashioned proprietor and from the production of the broadsheet newspaper. The pages had been big in order to squash in more classified advertising. The proprietors had been powerful because their products had lined their pockets with cash. It is a different era. No more family fights, no more feuds with other media barons. Now it is all about the power of fund managers, the machinations of activist shareholders, the wealth of mining entrepreneurs and the pull of the internet. The changes at Fairfax duly reflect changes in Australian society.
Yet the saga continues.
Singleton and Carnegie declared an interest in Fairfax in late December 2012, just as the year drew to a close. Their vehicle, Gutenberg Investment Trust, bought less than 1 per cent of Fairfax shares. It was a tiny interest, but because they owned the Macquarie Radio Network, they disclosed their shareholding to comply with media laws, at the same time declaring themselves associates of Gina Rinehart. But what did it all mean? It looked like sniping around the edges of a corporate play that would never happen. Singleton and Carnegie remained convinced that Fairfax would eventually be broken up and that they would finally get the opportunity to buy the radio assets that would give them access to a national radio market. They tried to interest John Alexander, former chief executive of Packer’s PBL, to front their team, to give it more media industry credibility. He declined. They approached John Hartigan, former chief executive of Murdoch’s News Limited. He also declined the offer.
They had discussions with Simon Marais, whose fund now owned 11.43 per cent of Fairfax shares, in the hope that he would join their bid to force change at Fairfax. The break-up scenario was still the most attractive in their view, but it was difficult to gain traction. In the absence of Rinehart launching a full takeover bid for Fairfax, Singleton and Carnegie needed Marais’ support if they were to push for a spill of the board. Marais, for his part, was willing to give the Fairfax board and management more time. They were keeping to their promise to cut costs and they had offloaded their entire stake in Trade Me. Fairfax was now almost completely debt-free.
James Packer also re-entered the frame, albeit briefly. The word on the street in early 2013 had been that Roger Corbett might soon step down from the chairman’s position at Fairfax, fearing that Rinehart would force a spill of the board at the annual general meeting in November. Corbett had an illustrious business career behind him—he did not need to have it badly tarnished at this late stage. At least, that was the theory. Packer approached Corbett and suggested that John Alexander, Packer’s star employee and the former editor-in-chief of the SMH, join the Fairfax board as a potential replacement for Corbett when he vacated the chair. Corbett’s answer was a firm ‘No’. And for the next few minutes he wore a full blast of Packer’s fury. Alexander has a lot of supporters in the Rinehart camp. But it is likely that Fairfax has seen the last of him. Alexander joined the board of Kerry Stokes’ Seven West Media in May 2013.
Fairfax also made a new acquisition in early 2013. It bought the digital business Netus, founded by entrepreneurs Daniel Petre and Alison Deans. It was a tiny investment for a company the size of Fairfax, just $10 million. But it brought Petre and Deans to the media company. They could consult on the digital future. Petre worked for the Packer organisation in the 1990s and was managing director of Kerry Packer’s internet offshoot Ecorp. As he says, ‘I have been in digital since before it was cool to be digital’.
Petre is also a multimillionaire—he has been ever since he ventured out on his own— and is well known for his philanthropy. In short, he doesn’t need the money that Fairfax will pay for his expertise. So why is he doing it? ‘Because Fairfax matters’, he says. ‘We [Alison Deans and I] cannot imagine a media landscape in Australia that is just dominated by News [Limited]. It would be terrible for Australian democracy.’
Petre also understands the extent of the problems facing Fairfax now that it has lost its stranglehold on classified advertising. ‘Eight billion dollars of market cap [stock market valuation] is now tied up in REA [realestate.com.au], carsales and Seek. That has basically come out of Fairfax. And Fairfax is worth $1.3 billion. That is the scale of the tragedy’, he says.
Fairfax has to decide if it can be a growth company, attracting investors because of its capacity to increase earnings by double-digit percentages year after year, or if it has to settle for being more like a utility company—with earnings that are stable but high enough to put resources into producing high-quality journalism. Given the limits of Fairfax’s balance sheet, the pressure from fund managers to cut costs and its low stock market valuation, it is likely to take the utility company route. Unless the pressure to break up the company, and sell off its assets individually, becomes too great to bear. Or if there is a takeover of the company.
Rinehart’s role at Fairfax in 2013 remains a puzzle. ‘Who knows what Gina wants?’ is a familiar refrain from insiders.
Sam Chisholm is a veteran of the Australian media industry. He ran the Nine television network for Kerry Packer and then went on to run BSkyB in Britain for Rupert Murdoch. He was chairman of Foxtel and on the board of Telstra, where he stopped the telco giant from making a bid for Fairfax in 2004. Chisholm knew of Gina Rinehart’s media ambitions even before she made her first move. In late 2010, he received a call from the mining magnate. Would he meet her for a drink at the Park Hyatt at Sydney’s Circular Quay?
Rinehart wanted Chisholm’s advice. As she sipped tea and Chisholm sipped champagne, Rinehart outlined her vision for northern Australia and railed against the federal Labor government’s economic policy. The message was clear. Rinehart wanted influence and she wanted to buy into the media. And, by the way, she thought charters of editorial independence were nonsense.
‘What is it with you West Australians? You all want to get into the media’, Chisholm chided as he rattled off the media plays of Alan Bond, Robert Holmes à Court and Kerry Stokes. Chisholm’s advice to Rinehart was to stay away from free-to-air television. The Ten Network was realistically the only investment play and its future was bleak. He also advised Rinehart to buy Fairfax outright, to make a full takeover bid. And on charters of editorial independence? Be careful there, Chisholm warned, because slavery was abolished a couple of hundred years ago.
Rinehart didn’t take Chisholm’s advice. But perhaps one day she will.