The climate of Murdoch

The climate of Murdoch

Killing Fairfax: Packer, Murdoch and the Ultimate Revenge

by Pamela Williams

HarperCollins, $39.99 hb, 352 pp, 9780732297664

Book Cover 2 Small

Rupert Murdoch: An Investigation of Political Power

by David McKnight

Allen & Unwin, $32.99 pb, 296 pp, 9781742373522

With James Packer and Lachlan Murdoch grinning smugly on its cover, Killing Fairfax: Packer, Murdoch and the Ultimate Revenge projects a strong message that they are indeed the company’s smiling assassins. Pamela Williams mounts a case that these scions of Australia’s traditional media families landed killer blows through their investments in Internet start-ups, which were ultimately responsible for siphoning off Fairfax’s fabled ‘rivers of gold’, aka classified advertisements for jobs, cars, and real estate.

In 2003 Seek was a small Melbourne online jobs site worth about $100 million. Packer recognised its potential for wresting classifieds from the dominant Fairfax newspapers. Packer stunned the owners with an approach and bought a twenty-five per cent stake for $33 million. A few years earlier, Lachlan Murdoch had done even better, with a mere $10 million investment (only $3 million of it in cash) in the fledgling realestate.com.au, leading to control ofthe company in 2005, the same year Packer’s Australian Consolidated Press increased its carsales.com.au holding to forty-one per cent.

Today, Seek and REA Group, operator of realestate.com.au, are worth about $2 billion apiece. Not far behind is carsales.com.au. Fairfax bounces around $1 billion depending on the share price, and is in financial free fall. Having dithered through the early 2000s, all three start-ups were snatched from under its nose and with them Fairfax’s once impregnable sources of revenue. Packer and Murdoch acted because they regarded the start-ups as the way of the future and as a means of damaging Fairfax, a bonus given years of personal and business enmity between the Murdoch, Packer, and Fairfax media groups. Williams, who has obviously had full access to both Packer and Murdoch, portrays them in this context as being a whole lot smarter than some of their other business dealings might suggest. Their presence on the cover and in the title is also a handy marketing ploy.

The killing of Fairfax is in fact a much longer and more drawn-out saga dating back to the late 1980s under Young Warwick’s (son of Sir Warwick Fairfax) erratic reign. In the wake of his failed takeover and the subsequent administration, valuable assets were sold off that could have bolstered Fairfax’s defences against the radical changes to come. Williams doesn’t dig back that far but focuses on the effects of the Internet revolution that began a decade later. When that rumbled into view Packer and Murdoch were undoubtedly prescient and ready on the sidelines to twist the knife, but various boards and managements must take the bulk of the credit for Fairfax’s terminal decline. As business writer Michael West observed in The Age on 26 August 2013, ‘Fairfax management a decade ago did not need anybody to kill it. They were more than capable.’

Indeed, like so many wombats staring into the lights of the oncoming Internet road train, they were blinded by ignorance and arrogance, as is conveyed by Williams in frequent depressing anecdotes about ignored or overlooked opportunities. Believing initially in the infallibility of print classifieds, and too busy protecting that business to embrace online properly, Fairfax was wrong-footed in the race to embrace digital change and further stymied by infighting at board and management level.

For two decades, Kerry Packer had tilted at a Fairfax takeover, and until John B. Fairfax joined the board in 2007 it was largely ignorant of, and uninterested in, publishing. Add an unstable share register mischievously tickled by Rupert Murdoch and Kerry Packer, and circled by opportunistic takeover sharks, and Fairfax was like a beached whale surrounded by players poised for the kill. Then along came the Internet, the rivers of gold dried up, and Kerry Packer lost interest – a lucky escape for him but an opportunity for his son, who recognised other ways to wound Fairfax.

‘Fairfax was like a beached whale surrounded by players poised for the kill’

Fred Hilmer, a management academic with no media experience, took the helm at precisely the wrong time in Fairfax’s fortunes. His quixotic contribution was to take Fairfax online but with sites devoted to service directories, while the classifieds went on leaking to the start-ups. The global financial crisis of 2008 hastened the decline. Ironically, the start-ups benefited from it because their lower costs plus consumer caution drove even more traffic their way. Fairfax, meanwhile, was caught in an economic downturn with only one possible exit strategy: to wait for the economy to recover while cutting staff and selling profitable assets.

Fairfax journalists past and present have looked on in dismay for years, including Walkley Award winner Pamela Williams who, despite penning this damning how-not-to-manage manual, remains employed by Fairfax Media’s Australian Financial Review. Indeed, the Fairfax she describes is defined not only by outstanding incompetence, but by the ways in which its own journalists subverted it in a business sense, revealing deals in the Fairfax press, which led to their unravelling. A prime example is Rupert Murdoch’s eleventh-hour scuttling of a 1995 agreement between ABC Television and Fairfax to supply a 24-hour news channel to Foxtel, the pay television operator owned fifty-fifty at the time by his own News Corp and Telstra. The first Murdoch learned of it was from a Fairfax newspaper on the very day the deal was to be signed. Needless to say it wasn’t: Murdoch had no intention of giving his foes a free kick. Years later, as Williams points out, his move proved to have delivered a strategic blow to Fairfax by blocking its entry to subscription television, a media growth sector as newspapers struggled.

Regardless of how mismanaged it might be, Fairfax remains a traditional media company which, by and large, upholds the values of free, fair, independent journalism, a defining quality it has taken to advertising in its publications, doubtless as a point of difference fromNews Ltd, given what goes on there, where the boss’s interests are protected and his views projected at any cost.


Murdoch plays at another level entirely. Politics, ideas, and the pursuit of power are what motivates him most, argues David McKnight, Associate Professor in Journalism at the University of New South Wales, and a former journalist for the Sydney Morning Herald and Four Corners. Indeed, in Rupert Murdoch: An Investigation of Political Power, the mogul’s every move and media outlet are viewed through the prism of his ideological world view, with frequent examples of Murdoch’s interference in, and manipulation of, the political agenda on a global scale.

The views now shared with his readers and viewers across Australia, the United States, and the United Kingdom were formed as Murdoch evolved from a left-leaning, rebellious individualist into a neo-conservative, free marketeer, and dragon-slayer of liberal élites, inspired by Ronald Reagan – his first political and ideological love, according to McKnight. He accuses other Murdoch observers of being dazzled by his financial acumen at the expense of analysing his real modus operandi. In light of Williams’s depressing tale, it is indubitable that Murdoch grasped early the benefits of embracing opportunities to preserve, expand, and enrich the empire, in his case by vertical integration on a global scale of newspapers, book publishing, movies, and cable and satellite television. He is immensely competitive, and he likes to win.

Murdoch is not only one of the world’s most powerful businessmen, but one of its most politically motivated. He knows how to generate profit, but McKnight argues that power and influence are the ‘main game’, while making money is the means. Accordingly, Fox News, Murdoch’s American news channel, is Murdoch’s ideal business model, delivering enormous profits and huge political clout. It is also a major influence on, and advocate for, the Republican Party, contravening its declared fairness and editorial balance. It is not even a news channel, for its content closely resembles propaganda. Fox News’s misleading tirade in support of the Iraq War would have made Joseph Goebbels proud.

‘Murdoch is not only one of the world’s most powerful businessmen, but one of its most politically motivated.’

Cooler heads (including many Fairfax journalists) believe the press exists to keep governments honest, to expose wrongdoing, and to interrogate policy; that is, to fulfil the traditional role of the fourth estate in a democracy. Murdoch sees himself as a political player pursuing and promoting his own agenda, not only in his media outlets but with News executives, who are treated to the views of like-minded politicians and thinkers at the regular global News love-ins at Aspen – as if News Corp were some kind of think-tank, McKnight observes.

Meanwhile, Fox News and other profitable sectors of Murdoch’s media entertainment arm (now recognised as such and quarantined off in a separate company, following the Leveson inquiry) subsidise Murdoch’s unprofitable but politically influential mastheads, plus a raft of right-wing journals and think-tanks he personally supports.

Murdoch’s controlling grip on his company’s culture is well documented in Rupert Murdoch and elsewhere. Where McKnight sheds new light is on the craven behaviour of politicians who, just like News Corp staff, live in anticipation of what Murdoch might think or want. McKnight shows how, throughout Tony Blair’s long premiership, Murdoch ‘loomed as a shadowy presence in the government ... achieving his goals of acquiring ready access to Blair, protecting his newspaper and television empire and perhaps most significantly influencing British foreign policy’ (the latter is a reference to Murdoch’s pro-American, anti-European agenda).

Indeed, Lance Price, a former Blair adviser describes Murdoch as seeming like ‘the 24th member of cabinet. His voice was rarely heard ... but his presence was always felt. No big decisions could ever be made inside Number Ten without taking into account the likely reaction of three men, Gordon Brown [then Chancellor of the Exchequer], John Prescott [then deputy prime minister] and Rupert Murdoch.’

When it comes to Murdoch’s views holding sway, climate change doesn’t quite fit the mould. Prompted by his son James, according to McKnight, Murdoch changed direction in 2007 and announced in a global broadcast to employees his decision to make the company carbon neutral, a transition in which he proceeded to invest considerable sums. The balmy army of climate sceptics throughout the Murdoch empire quietened down for a while, but have since returned to form, especially in the United States and Australia, regardless of Murdoch’s proud announcement that in 2011 his company had achieved its ‘first sustainable milestone’ by becoming carbon neutral.

McKnight fails to come to terms with this equivocal stand on the environment, if indeed that is what it is. Maybe Murdoch is conflicted; maybe his troops don’t believe in his conversion or are beyond redemption on this issue; maybe he doesn’t ride herd on it; maybe it’s the one failure of the pervasive Murdoch domination theory that proves the rule. Maybe, and most probably, while Murdoch is indeed interested in ideas, his attack dogs, by their very natures, are not. Such is the culture he has created.

Published in November 2013 no. 356
Jan McGuinness

Jan McGuinness

Jan McGuinness has more than thirty years’ experience in print and television journalism. She teaches feature writing in the School of Journalism at Monash University and is researching a biography of Shirley Hazzard.

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