Stopping the Death Spiral

The brouhaha over Gina Rinehart’s investment in Fairfax Media is simply astounding.

Fairfax has been in a business death spiral for at least a decade with declining circulation and lower advertising revenues. Many commentators suggest the business needs major changes to ensure its survival.

The confirmation of the rate of decay in a once mighty news organisation is reflected in the publicly quoted share price. As the fortunes of the Fairfax press have declined, so too has the value of its investors’ shareholding. 

The fact that Australia’s most successful business person is prepared to invest hundreds of millions of dollars in an ailing organisation should be celebrated as a lifeline.

Instead, the bleating of the professional left has been deafening.

The most public rancour is over the issue of editorial independence. According to those who have presided over the fall of Fairfax, all board members must sign the charter guaranteeing not to interfere editorially with the operations of the empire.

That none of the current board have reportedly actually signed the charter letter seems to go mostly unmentioned. True to form, whether in business or in matters moral, the left apply different standards of accountability according to one’s political views. As Orwell wrote “some animals are more equal than others”.

Importantly, why would any shareholder, large or small, sit idly by while the business in which they invested was in a sustained decline? Any business on a downward path needs change if it is to endure. 

In the media space, there have been many structural changes that have proved very challenging. The impact of the Internet, the rise of citizen journalists and the ready flow of up to the minute ‘news’ have all challenged the management skills of media organisations.

However, business success under the capitalist system is always going to be determined by providing a product that the purchaser actually wants – either in format, function or some other intangible way.

In short, news organisations need to provide newspapers or other content that people are prepared to pay for; content that reflects or challenges their own internal ideals. The smaller the target market, the less appealing it will be to the mainstream.

That Fairfax papers in Sydney and Melbourne, our two largest media markets, have higher declines in circulation than other dailies suggests that management has got the editorial mix wrong.

To suggest that the board, particularly those with a huge amount of their own money invested in the business, have no place in determining the future direction of the print editions, editorially or otherwise, is to suspend common sense.

However, that is what the shrill entitlement crowd do. They suspend common sense in the belief that a magic pudding of capital will sustain the unprofitable catering to the left leanings of a minority of the population.

Reflecting diverse opinion is the mainstay of engaging readers. I am not alone in thinking that Fairfax Media has a strong lean to the left and believe that leaning is out of step with the majority of Australians.

While SMH columnists like lone conservative Paul Sheehan remain the most popular of the regulars on the Fairfax roster, it would suggest that more left/right balance might actually help with rebuilding the Fairfax Media fortunes.

I am also sure that doing so would be welcomed by those who have been long-suffering investors in this once great company.

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