Stop the Presses: How Greed, Incompetence (and the Internet) Wrecked Fairfax

By Ben Hills

How has the Fairfax empire arrived at its current shabby, sorry state -- and what does its demise mean for the future of independent journalism?
A decade ago Fairfax Media was one of the most powerful institutions in the country; staffed by gun reporters, funded by its 'rivers of gold', offering up high quality, fearless journalism. Since then, it has become a car wreck in slow motion. But how did it come to this? Why did one overpaid, underwhelming manager after the next fail to see the future coming - or come up with a coherent plan? Why were they fighting with each other rather than fighting to save the company? And what was happening to journalism in the meantime? In his dramatic, no-holds barred book, Ben Hills exposes the characters who took Fairfax to the brink of destruction - the dynastic princes, the acolytes, the self-interested, the would be owners waiting in the wings. He tells the sometimes poignant, sometimes hilarious tales of what unfolded behind boardroom doors and at team bonding retreats. And he asks if the trail of greed and incompetence could have been avoided. More than just another Fairfax book, Stop the Presses tackles vital issues around the death of independent media and the rise of the Internet age and asks what the price will ultimately be for democracy itself.

• Language: English
• Publisher: HarperCollins Publishers Australia
• Release date: Jul 1, 2014
• ISBN: 9781743098721

Ben Hills

Ben Hills, one of Australia's best-known journalists, is a Walkley Award winner and a previous member of Fairfax Media's investigative team. His books include the international best-seller Princess Masako: Prisoner of the Chrysanthemum Throne, a biography of Japan's Crown Princess.

Book preview

PREFACE

Tackling a book about the death of the industry in which you have spent your life is not unlike being asked to write your parent’s obituary. Newspapers, particularly the Fairfax newspapers, have been my life since I began work as a teenaged cadet on the midnight-to-dawn shift at the now long-defunct Sun in the 1960s. I stepped back from full-time journalism in 2007, which, ironically, was the year a few of the thousands of newly unemployed American journalists set up the grimly titled website newspaperdeathwatch.com. Today that site lists 272 newspapers, a dozen of them major metropolitan dailies which had served their communities for more than a century, that have gone out of print in the past decade. This book sets out to ask: will Australia’s two greatest and oldest newspapers, The Sydney Morning Herald and The Age, be the next to succumb? Will Sydney and Melbourne, which a generation ago had four daily papers each, become one-newspaper or even no-newspaper towns? Who is responsible? And what will it mean to the public?

It is too easy, and too obvious, to put all the blame for the collapse of circulation and revenue on the internet. True it is that the Herald and The Age, more than probably any other papers in the world, depended on what Rupert Murdoch once drooled over as ‘rivers of gold’ for their profitability, the huge revenue streams from the hundreds of pages of classified advertisements they carried. And those rivers have now run dry, drained off by the new, cheap, slick online marketplaces for real estate, employment and cars, ‘pure play’ electronic brokers without the huge costs of maintaining printing plants and newsrooms with hundreds of journalists. You would have to have spent the last few years in a cupboard not to know this.

So what? There is hardly an industry which has not been affected by the internet, from struggling city department stores to music companies, from universities to book publishers, from fixed-line telephony to travel agents, film cameras to postal services, from adult shops to law firms to the shuttered suburban stores which once hired out DVDs and videos. Free-to-air television will be next as IPTV rolls out with the National Broadband Network. The internet is what management gurus call a disruptive technology of the sort that comes along perhaps once or twice a century – Caxton’s printing press in the 15th century, Isaac Newton and the birth of modern science in the 17th, Jethro Tull and the agricultural revolution in the 18th, electricity and the steam engine in the 19th, and air travel, telecommunications, broadcasting and the computer arriving in a rush in the 20th. Farewell town criers, cart-horses, sailing ships, most whaling (for the oil, for the lamps), sedan chairs and stagecoaches, telegrams and typewriters. And now along comes the internet to turn everything on its head once again. Tomorrow the printing press and the daily paper will take their place in museums and libraries, another quaint anachronism from a bygone age.

And yet newspapers are different. For 300 years they have been the way people find out about the world beyond their neighbourhood. It is no coincidence that in the same period the West transitioned from rule by bishop, king and general to democracy. From Thomas Jefferson to, well, Malcolm Turnbull, people have argued that democracy is impossible without free speech, without a prying press to hold those in power to account, to defend the rights of the individual against the state, to afflict the comfortable and comfort the afflicted, to debate the big questions and, as Hugo Black – one of the great US Supreme Court justices of the 20th century – once said, ‘to prevent any part of the government from deceiving the people and sending them off to distant lands to die of foreign fevers and foreign shot and shell’. And that was long before Iraq. If you need further proof of the importance of a free media look at any military coup – the first thing the generals do is seize the TV station and jail the newspaper editors.

A lot of media people who should know better argue that the internet need not spell the end of the newspaper, just its long-overdue transition from crushed-up trees to an electronic signal on a screen. For a while Fairfax took comfort from the fact that even as its circulations plummeted, its ‘mastheads’ had more readers than at any time in the papers’ history: four times as many people were accessing them online as in print.

But this is not the point. It is not a lack of readers that is killing the papers. It is a lack of money. The classified advertisements have long gone, migrating like swallows to the warmer climes of the new internet companies. Newspapers have managed to attract only around 10 cents’ worth of online advertising for every dollar they have lost in print, and there is no way a $25-a-month digital subscription will make up the difference, unless you happen to be a global brand like The New York Times. Ninety per cent of what had been Fairfax’s main source of income for the last 200 years has disappeared forever. Ninety per cent of the money needed to run those great newsrooms has gone.

After hoping for years that the problem would go away, treating it as a temporary downturn in revenues that could be remedied by yet another round of cost-cutting, Fairfax finally bit the bullet in mid-2012 and decided to sack one in five of its 10,000 workers, shutter its vast, obsolete printing plants and become a ‘digital first’ news provider. Out the door went hundreds of my former colleagues in the greatest diaspora of journalistic talent this country has ever seen. The papers shrivelled in both quantity and quality, outsourcing their sub-editing, amalgamating their newsrooms until they came to resemble one newspaper with three mastheads. But why had the company taken so long – nearly 20 years – to realise what an existential threat the internet posed to its business? Why had successive generations of management and boards of directors been so wilfully blind? Why did Fairfax not meet the threat head-on by launching its own internet sites, or by taking over the fledgling rivals which would, within a few short years, dwarf Fairfax in size and profitability? These are some of the questions I set out to answer.

This is not just a book about mismanagement on an epic scale destroying one of Australia’s greatest and oldest institutions. It is not just a book documenting the decline of what was once Australia’s premier media company, with its empire of hundreds of newspapers, magazines, TV stations and a radio network serving an audience of millions. It is both of those and it is more.

Above all, I have tried to tell the story of the people involved in the disaster, through their own eyes, in their own words. The fat-cat directors with no knowledge of the newspaper industry, whose foolish feuding squandered opportunity after opportunity. The heirs to the Fairfax family fortune whose attempt to reclaim their heritage instead contributed to its downfall and cost them a billion dollars. The predatory moguls, the Packers, Murdochs and Stokeses, circling like dingoes in the darkness just beyond the campfire, waiting for their chance to pounce. The procession of chief executives, caught like deer in the headlights, whose only plan to meet the challenge of the new technology was to cut, cut, cut. And when that didn’t work to call in the management consultants. And when that didn’t work to call in some more. The pension fund managers, proxy advisers, share shorters and other faceless powerbrokers manipulating the share price and pulling the strings from behind the scenes. The hundreds of journalists, photographers and printers who, having given their lives to a company which still, at least at The Age, dishes out gold watches for those with 25 years’ service, found themselves on the scrap heap. The people of little outback towns who were suddenly, at the stroke of a pen by a faraway bean-counter, without the paper that had chronicled their communities for more than a century. You will meet all these, and many more.

I write this with as much sadness as anger. Yes, there is anger that the people of Sydney and Melbourne are losing the papers that have served them since the days of the convict, the sailing ship and the gold rush, to be replaced by an online wraith. Anger that one man’s folly delivered to a market interested only in short-term profit an institution as fundamental to a fully functioning society as the Fairfax papers. Anger that a board, arrogant in its ignorance, and its incompetent executives could cause so much pain and grief. But there is sorrow, too, at the recognition that no matter how smart the strategy, how savvy the managers, it might have all ended in tears anyway. So pitifully few great newspapers anywhere in the world have made the transition from print to the internet without sacrificing the very things that made them great.

By the middle of 2014, Fairfax’s fortunes had made a modest recovery from their lowest ebb, although the company’s share price still languished at less than one-fifth of what it had been at the height of the media bubble more than a decade before. The recovery was due not to the success of its newspapers, which were still bleeding revenue and circulation apace, but to its transformation from a news organisation to a hodge-podge of online businesses. The Fairfax of the Future is an eclectic combination of real-estate spruiker, lonely-hearts matchmaker, baby goods retailer, organiser of food fairs, and promoter of fun runs, ocean swims and soirées showcasing business moguls. The newsrooms continued their inexorable decline with the departure of many of their marquee writers, photographers and editors. I had my lifetime during the golden age of newspapers. The people I feel sorriest for are those left to labour bravely away among the ruins. As one very senior editor told me: ‘Mate, I was born 20 years too late.’

PROLOGUE

One day you’re writing for the papers, the next you’re sleeping under them

– Malcolm Tucker, The Thick of It

The chatter died away, ‘got to goes’ were whispered into mobile phones, and 60 pairs of eyes followed the business-suited figure to the lectern. Tall, with his shaven head shining in the spotlight and deep frown lines etched above his nose, Greg Hywood was dressed, appropriately, like an undertaker at an upscale funeral: buttoned-up black jacket, starchy white shirt, iron-grey tie tightly knotted. His voice, when he began to speak, was ominously leaden. The only thing missing was a coffin. The deceased were there, alright – not laid out in fancy caskets but sitting in the audience. Although they did not know it yet, the newly arrived were about to become the dearly departed.

Matthew Moore had been among the first to make his way to the ground-floor auditorium in the five-storey glass-and-steel box down by Sydney Harbour. By 2012, Fairfax Media had called the building home for the past five of its 181 years. One Darling Island is the official address, although it ceased being an island more than a century ago when the land was reclaimed for a shipyard. A lanky, affable type, with wire-rimmed glasses and a blond quiff tumbling over his forehead, Moore would have been familiar to a generation of readers of The Sydney Morning Herald. Like quite a few of the senior people at Fairfax, he had never worked anywhere else. For 28 years he had been one of the paper’s stalwarts – state political correspondent, Olympics editor during the 2000 Games, two years in Indonesia covering terrorist bombings and the devastating 2004 tsunami, freedom of information editor ferreting out government secrets, and winner of a Walkley Award, Australian journalism’s highest honour.

Moore had been one of the few journalists in the building at 9 o’clock on that sunny winter’s morning. Although the demands of ever-earlier deadlines and the insatiable, sleepless pace of the internet have transformed newspapers into a 24/7 business, many of Moore’s generation cling to their old nocturnal habits, when the working day often began with lunch and finished up in the small hours after the presses rolled at midnight. Sitting next to him was another early starter and Fairfax veteran, Anne Davies, Moore’s friend and colleague for two decades. Another familiar byline, Davies spent a decade covering federal politics for the paper, did a tour as Washington correspondent, and was now the Herald’s investigations editor with a string of scalps on her belt. She had shared a Gold Walkley for exposing a salary cap scandal that cost the Canterbury-Bankstown Bulldogs the 2002 Rugby League premiership.

Moore had been getting his thoughts together over his first coffee of the day in the cafeteria off the Fairfax foyer when he got word that there was to be an important announcement at 9.30. After years of relentless bad news, of job cuts, executive sackings, corporate raiders attacking the share register, ‘You just knew it was not going to be some great announcement about some property we were acquiring,’ he recalls. ‘The only question was – how bad was it going to be.’ Full of foreboding, he and Davies took their seats among a crowd of people from other divisions of the company – administration, finance, information technology, sales and marketing, human resources. Off to one side, observing proceedings, sat the frosty figure many thought should have been facing the music – not the company’s chief executive but the long-standing chairman of the board, Roger Corbett.

With his head haloed by the circular blue Fairfax Media logo, Hywood faced the video camera that would live-stream his speech to hundreds of terminals on the company’s intranet and began his presentation:

Good morning, everyone – thank you for making the effort to be here. Some of you may have seen our ASX [stock exchange] announcements this morning detailing significant changes in our company. I want to take you through them before we talk to anyone else.

This is an historic day for Fairfax Media. We are making the biggest changes to the business ever made, and none of us underestimates the enormity of them. We are determining our future by decisively moving us along the journey from print to digital.

While some of the decisions that we are announcing today were very hard to make, others were exciting because of what they will unlock and the problems they will solve. All are necessary, all are inevitable, and we will not and have not shied away from making them. We know there is no choice.

You will have heard and read that various people have views about how best to run this company. These include calls for a breakup of Fairfax Media, or possibly even the total shutdown of our metro businesses …

Shutdown? Moore and Davies locked eyes and gripped each other’s arms. ‘They’re shutting down the papers,’ he whispered. They looked back to the podium in time to hear Hywood continue:

We do not agree with them, but we do have to make sweeping changes, and we have been working on them for some time. Let me make it clear, the pressures on [the newspapers] are not because the editorial is not good enough, or the sales team has missed opportunities, or that cost control has been less than rigorous. We are confronting a perfect storm of structural and cyclical forces – and it is global.

He was not exaggerating. The revolution Hywood was announcing would gut the country’s oldest and most prestigious newspapers, which for nearly 200 years had provided millions of Australians with their daily news, commentary and commerce. It would change forever not just the way in which news is disseminated and paid for but its very nature. Hywood’s plan for a ‘digital first’ newsroom amounted to the greatest transformation in the transmission of information since William Caxton’s movable type put the town crier out of business: the eventual move to a print-free future where people get up-to-the-minute headlines via the internet on a screen or a smartphone rather than rolled in a plastic wrapper on their front lawn every morning.

Although they felt a sense of relief that the papers were not to be shut – at least not straightaway – the two old hands were staggered at the scale of the ‘Fairfax of the Future’ plans. Stripping away the business-school bunkum, there were four main planks to the announcement. First, Fairfax was ‘reducing the headcount’ – the latest euphemism for mass layoffs. Of the company’s 10,000-odd staff around Australia and across the Tasman in New Zealand, 1900 would go, either by voluntary redundancy or sacking. Among them would be around a third of the company’s 1000-odd journalists and every printer at the two sprawling plants on the outskirts of Sydney and Melbourne. This, incidentally, is almost twice the number of workers who will be jobless when Ford shutters its Australian car factories in 2016. But there were no crocodile tears in Canberra for the Fairfax layoffs – let alone any $50 million government assistance package.

The printing works, in gritty Chullora in Sydney’s south-west and at Tullamarine, under the Melbourne airport flight path, are less than 20 years old, cost hundreds of millions of dollars and had been hailed at their opening as the largest and most technologically advanced in the world. Now they would be decommissioned and sold for the real estate and whatever knockdown price the machinery would bring on a world market glutted with second-hand printing presses. From mid-2014 the Herald would be printed at a rural print works in North Richmond, and The Age would be printed not in Melbourne (population 4,250,000) but 113 kilometres away on the presses of the paper which serves the old gold-mining town of Ballarat (population 94,000).

There was more. For two centuries the Herald and The Age had prided themselves on being ‘broadsheets’, a hallmark of quality, twice the size of the competition ‘tabloids’ – a term, incidentally, first coined by the British pharmaceutical company Burroughs Wellcome in the 1880s to describe their method of compressing bulky medicinal powders into compact tablets. So accustomed had readers become to their unwieldy size that for many years the cubicles in Melbourne’s public toilets were required by council regulation to be at least 82 centimetres wide, to allow people to read The Age in comfort whilst seated. But in more recent, less leisurely, years even newspapers such as the venerable Times of London had shrunk to what its new proprietor, Rupert Murdoch, preferred to call a ‘compact’ size. And now, Hywood announced, so would Fairfax’s weekday newspapers, with the lone exception of The Canberra Times.

Subsequently the company made much of the greater convenience of the new format, particularly for people travelling on public transport, and even boasted that it had boosted sales. In fact the change was really made for production reasons – it would have been difficult to print a broadsheet at Ballarat and Richmond. The much-vaunted increase in newsagent sales would prove to be a temporary blip. The papers’ circulations soon resumed their precipitous downward plunge.

Third, and far more important than the cosmetic change in format, was the announcement that, from now on, the papers would be operating on a ‘digital first’ policy. Although Fairfax had established a website nearly 20 years before, and in recent years had built this into one of Australia’s most popular news and current-affairs destinations, there had been a reluctance by some of the older ink-in-the-veins journalists to satisfy the demands of the papers’ online ‘platforms’ (as well as the website, tablet and smartphone ‘editions’ had recently been launched) for instant news, let alone updates on social media such as Facebook and Twitter. Now, however, there would be no avoiding these digital demands. As the papers’ new editorial director, a hard-boiled former Murdoch tabloid editor named Garry Linnell, put it in a later memo to staff: ‘Our future begins today … [this] blueprint will fundamentally change the way we work … The old divide between print and digital has been dismantled. No more silos.’

The changes would spawn a whole thesaurus of excruciating neologisms such as ‘silos’, causing great hilarity among the old hands. Reporters going to cover stories – crimes, courts, press conferences, the daily grist of the newsprint mill – would be called ‘first responders’. A whole new echelon of ‘platform-agnostic news directors’ would decide whether to Tweet breaking news, link to video content, or protect a scoop by saving it for the next morning’s print edition. But the message was clear. Print is dead. Digital is the future. Get with it or get out.

Hywood saved the most important news until towards the end of his speech. As from the first quarter of 2013 (the deadline later blew out to mid-year) Fairfax would start charging for access to its online sites. All that stuff – news, comment, interviews, photos, video, wire-service output, sports – which more than a million people a week had been accessing for nothing would now have to be paid for.

The devil would be in the detail, which Hywood was not announcing just yet. In fact it would take Fairfax and its expensively imported consultants almost a year to work out just what kind of access it would provide and how much it would charge – vital in formulating a new business model for the ancient, ailing company. There would, of course, be savings from the savage cuts: within three years the company’s costs, principally its wages bill, would be slashed by $235 million a year. But with the classified advertising having evaporated onto the internet, this would not be enough to save the business. The company was pinning its hopes on persuading at least some of those million freeloaders to cough up a few dollars each week for access to its ‘unique and independent journalism’, and at least a few of its fickle advertisers to switch to smh.com.au.

In the previous decade, investors had all but abandoned Fairfax, wiping billions of dollars off its stock market valuation as the company’s revenues dwindled and Fairfax shrank from being one of Australia’s top 30 companies to barely clinging onto a place in the top 150. The company would report a staggering $2.7 billion loss for the 2011–12 financial year, one of the worst results in Australian corporate history, writing the value of its once-mighty newspaper mastheads down by more than $2 billion. To put that in perspective, the loss was more than half the size of the entire budget of the state of Tasmania. The share price had collapsed more than 90 per cent since its peak a decade earlier.

At the company’s annual meeting a few months after Hywood’s bombshell, there would be an unprecedented vote of no confidence in the board, with the company’s biggest shareholder declaring: ‘How could we not be critical when we’ve lost so much money? The shareholders have more blood on the floor than you’d find in the US Postal Services camper van at the Tour de France [but] there’s no blood been spilt at the board level’ – a reference to the Lance Armstrong blood-doping scandal which was in the headlines at the time. Some of the bolder fund managers who had lost tens of millions investing in the company were publicly calling for Fairfax to be broken up and sold off.

Even more ominously, the day of Hywood’s announcement, 18 June 2012, a notice was quietly lodged with the Australian Stock Exchange announcing that Fairfax’s largest shareholder, one Georgina Hope Rinehart, had purchased 143,003,304 more shares in the company, ballooning her stake from 12.5 per cent to 18.7 per cent of the company. The outlay, $88 million at the shrivelled price of the shares, would have been small change to the world’s richest woman, whose wealth was calculated at $20 billion even after the value of the iron ore buried beneath her vast tracts of West Australian desert plunged. But it brought her perilously close to the 20 per cent threshhold at which, by law, she would have to launch a takeover bid for the company. The dark shadow hovering over proceedings at One Darling Island was the prospect that Fairfax might be facing yet another time of turmoil and tumult – its fourth would-be mogul at the helm in 25 years, its seventh change in ownership, and yet another chief executive with yet another grand plan.

Extraordinarily, Hywood was the 12th person to head the company in 25 years – one every 25 months. When the average longevity of chief executives at Australian public companies is more like six or seven years, one of Fairfax’s bosses had been sacked after just five months. Moore and Davies and their colleagues in the newsroom had initially welcomed his appointment, since Hywood was, at least, one of the very few to lead the company with any experience as a working newspaperman. Previous incumbents had included a business academic, a former New Zealand Rugby All Black and a man who had made his name planting the golden arches of McDonald’s hamburger outlets all over Australia.

Although he had studied economics at university and his first job was with the car company GM Holden, Hywood had been recruited to write for the Fairfax business daily the Australian Financial Review, where he had a 17-year career. The highlights were winning a Walkley (for a story about Holden, funnily enough) and having the paper’s annual award for a mangled metaphor named after a phrase from one of his articles. ‘There is light at the end of the tightrope,’ he had written. Subsequently Hywood had been editor and publisher of all three of the company’s metropolitan newspapers, the Financial Review, the Herald and The Age, before falling out with the chief executive and taking a job with Victoria’s Bracks Labor government. He had been the head of the Victorian tourism promotion authority when he got a phone call in October 2010 inviting him to join the Fairfax board. The following March, after the dramatic sacking of his predecessor, Hywood was appointed chief executive at the age of 56.

Over the following months, the company’s dire straits became clear and revenues continued to contract. Some people felt sorry for Hywood. ‘He got a shit sandwich,’ said one of his colleagues – although one should remember the old adage that the more bread you get the less shit, proportionately, you have to eat. Hywood’s salary for the 2012 financial year was a touch over $2 million. And there was little sympathy for him at the company’s belligerent annual meeting in Melbourne, when it was disclosed that he had forfeited only half of his $840,000 bonus for the year. Fairfax’s shareholders seemed to feel that losing $2.7 billion hardly qualified him for any of what the Oxford Dictionaries define as: ‘a sum of money added to a person’s wages as a reward for good performance’.

As Hywood finished addressing his staff, the room was silent. Fortunately journalism provides the clichés to match the mood. ‘Everyone was shocked,’ says Moore. ‘There was just stunned disbelief.’ Since no-one seemed inclined to put their hand up, Moore – who held no fear of confronting management after many years as a member of the Herald’s notoriously stroppy union branch – asked a couple of questions, eliciting the information that 20 per cent of the redundancies were to come from production (the printers) and 20 per cent from editorial (the journalists). So 380 journalists had to go, the greatest exodus of talent in Australian newspaper history.

As surprised as anyone else by the scale of the announcement was the editor-in-chief and publisher of the Herald and its Sunday sister paper The Sun-Herald, Peter Fray. A stocky, square-jawed figure with close-cropped greying hair and a spark of humour in his eyes, Fray was another Fairfax ‘lifer’ and one of the more popular of the procession of editors who had preceded him. And, you would have to say, one of the most successful – at least from a quality viewpoint. Although its circulation was sliding, the Herald had twice been named the best newspaper in the Asia-Pacific region by PANPA, the Pacific Area Newspaper Press Association, under Fray’s stewardship.

‘We knew it was going to be a character-forming announcement, but I don’t think anyone anticipated just how massive the cuts would be,’ he recalls. Hywood hadn’t consulted his editors beforehand? Well, no. In the brave new world of corporate Australia, ‘the market’ must be informed first of any changes that might affect the price of a listed company’s shares – stock traders were already digesting the news and registering their buy and sell bids before any of Fairfax’s editors and even some senior managers knew that change was afoot.

One week later, Fairfax – and the wider world – knew what Fray and his fellow editors thought of the planned restructuring of their newspapers. Staff were shocked when all three of them resigned – Fray; his deputy, Amanda Wilson, who also happened to be only the third woman to edit an Australian metropolitan newspaper; and the editor-in-chief of The Age and The Sunday Age, Paul Ramadge. In a generous farewell to his newsroom, Fray said, ‘I have enjoyed a wonderful and rich journey in this company, and after much soul-searching decided that now is the time to step out and seek new challenges … I wish everyone all the very best.’ Said Ramadge: ‘I want to thank The Age’s hard-working and passionate staff, and I pass on my best wishes for the future to Fairfax’s current leaders.’ Less graciously, but perhaps more frankly, Amanda Wilson noted that in the new hierarchy of the digital-first newsroom there didn’t seem to be a place for her. ‘Thanks, guys,’ she said.

And then it was over – Black Monday, probably the most momentous day in the company’s long and eventful history. The staff trickled away to their workstations to consider their futures. For the next month little else would be discussed around the water coolers and coffee machines than who was going, who was staying, and what sort of a future there was for the papers.

It was a conversation that would echo around Australia and overseas. Although its glory days were long behind it, Fairfax still owned, as well as about one-third of the metropolitan newspaper circulation in Australia, more than 400 other suburban, rural and regional titles around the country and online news outlets in Brisbane and Perth. There was a chain of newspapers in New Zealand, even some agricultural publications in the United States. The Fairfax radio network controlled seven capital city stations, including the Melbourne and Sydney talkback flagships 3AW and 2UE. As well, there was a grab bag of online sites, including TradeMe, the New Zealand equivalent of eBay, RSVP, a dating site, and Stayz, a broker of holiday home rentals. Hywood’s announcement would have a profound impact on thousands of Fairfax’s workers – as well, of course, as millions of readers of its journalism.

As stunned as the Herald staff were the 100 or more people gathered in another conference room 900 kilometres away, through the security turnstiles off the buzzing café in the entrance foyer of The Age. Like One Darling Island, Media House is a spanking new building, opened less than three years earlier at a cost of $110 million. Its seven-storey glass facade is dominated by a giant display screen, and it sits on the western fringe of the city, where the central business district intersects with the Docklands redevelopment. And like One Darling Island, within a year the Fairfax occupancy would have shrunk to around half the available space, and the company would be scavenging for sub-tenants to take up the space vacated by hundreds of departing employees – and to fatten up the balance sheet with a few million dollars’ worth of rent.

Sitting in the audience was one of the paper’s best known writers, Shaun Carney, a gently spoken man in his 50s wearing the handsome gold Longines watch with which he had been presented just 18 months before, when he completed 25 years’ service with the company. Now an associate editor, Carney was an acclaimed columnist and the author of several books, including a biography of the former federal treasurer Peter Costello. He and his colleagues had been notified of the planned announcement the day before – in fact Melbourne seemed to have had more warning than Sydney; TV camera crews swarmed as staff arrived for the big announcement.

The news was broken by two of Hywood’s most senior lieutenants, David Hoath,