In the early nineties one joke went “How do you start a small business?” The punchline “Give Warwick Fairfax a large one.” It was a reference by the privatisation and near destruction of the Fairfax media group by the twenty-something great-grandson of the founder.
The culprits have changed, but the joke is quite similar, if you substitute “the Fairfax board” into the punchline.
Which makes it even funnier to hear communications minister Conroy claiming on ABC radio this morning that this century’s Fairfax predator, Gina Rinehart.
“… is entitled to representation but what she is not entitled to do is trash the brand for all the other shareholders,” he told ABC radio.
“If she was to directly interfere and breach that charter, it would actually lead to a crisis of confidence among the readership, and if the readership deserted, the share price for every shareholder would decline.
“Now that is not in the interest of all of the other shareholders.”
Rinehart appears to be the only potential manager of Fairfax to have credentials that read “How do you start a monster business?”
If I were a shareholder of Fairfax I’d take the view that Rinehart is the only chance of Fairfax actually escaping with something intact from the technology wreck. And failing that, she’s probably the only person that would buy my shares, giving me a clean exit from the company.
Either way, I’d be as relaxed as it is possible to be when investing in media at the moment, and having watched my shares decline from over $5 five years ago.
Which begs the question as to how the board managed to Bonzai such as venerable institution. One answer to that is also provided by Conroy – any board of directors that would accept something like the editorial charter of independence is obviously weak, incompetent and in breach of their duties as directors.
In what other business would the board accept that it is OK for the staff to have the final say on virtually everything related to the product? Micro-managing is one thing, but taking your hands completely off the steering wheel and only retaining control of the accelerator and the brake, is lunacy too.
I would be the first to accept that a business run merely for profit will most likely founder, but so will one run without any regard for it.
One wonders what business the communications minister thinks he has interfering in corporate affairs like this. As far as I know the commonwealth has no legitimate interest in what is a private company. I certainly don’t remember anyone hyperventilating when Young Warwick launched his ill-fated bid, so why now?
If Conroy is right, then Rinehart will fail and Fairfax will fade into irrelevance. Not something any of us should worry about, least of all the government, as Rinehart loses her chance to influence public opinion through the group and some other news organisation will fill the void.
And if she succeeds, again on Conroy’s analysis, it will be because the “readership” supports her by buying the product, and what could be wrong with that?
One is left with the impression that if there were more Gina Rinehart’s and fewer Stephen Conroy’s then the business of Australia would end up much bigger than it is now. Ultimately, the joke appears to be on us.