Fairfax: the dumbest guys in the room

If every village has an idiot, and if Sydney is a village, then the idiot without peer is surely the former media giant, Fairfax.

That's the thesis of Pamela Williams, editor at large on the Australian Financial Review in her 352 page hard to put down indictment entitled Killing Fairfax: Packer, Murdoch and the Ultimate Revenge. And if what she says is true – something very hard for lay readers to really determine – then the idiot has cost shareholders billions and has ill served the interests of democracy by slowly eroding a once potent media player.

While to a cynic the book may look like a job application for a sinecure on a Packer controlled entity – the veiled praise of Mr James Packer is never far away - the purpose of the book is to relate how Fairfax over the years with its assorted CEOs ignored, derided and refused to cogently address the rising threat of digital media on its most prized asset: its classifieds advertising. Williams recollects, quotes and interviews a swathe of media identities and start up entrepreneurs in assembling her overwhelming charge sheet. The sources are first hand and on paper, credible. For the sake of a good story, readers would, more often than not, accept what Williams writes is what she was told (by interviewees) and that what she was told was the truth and the whole truth. She thankfully is very frugal on dishing out her own views. She lets the facts (as stated) speak for themselves.

The book begins with a gentle canter through the history of different start ups – carsales.com.au, seek.com.au and realestate.com.au and uncovers how the young founders operating very modestly, knocked on doors seeking finance from family, friends and private companies, before pan handling Fairfax, News Ltd (as it was then), and PBL. Again and again the writer demonstrates just how out of touch Fairfax was when compared to its media rivals in not acknowledging the looming reinvention of classified advertising and refusing to invest in it.

Williams clearly respects the business acumen of Mr Rupert Murdoch, his son Lachlan, Mr Kerry Stokes and Mr Kerry Packer in at the very least being alert to the challenge of the internet. But she saves the highest praise for the actions and foresight of Kerry Packer's son, James. And if the facts are as she states them, then the praise is certainly justified.

That's because James Packer, Lachlan Murdoch and many others 'got' the fundamental changes that were taking place, which would see journalism content and classified advertising becoming unhinged from each other. Everyone who was anyone understood this apart from the top echelons at Fairfax. Williams homes in on failure after failure of Fairfax's management, but is most reticent to sheet home blame to the board.

Rather than address the coming challenges by hopping into bed with digital start-ups, Fairfax over the years decided to grow its classifieds by expanding its print assets and in 2006 merged with Rural Press. This exercise a saw the major shareholder of Rural Press, Mr John B. Fairfax fold his firm into Fairfax shares and cash, totalling $1 billion only to have that eroded to $193 million just five years later. Much is made of JB's 14% share of Fairfax and the contempt in which other board members held him when he agitated for a seismic change in strategic direction. But at least JB was granted two seats on the board. Two more than the current Chairman Mr Roger Corbett, who was Chair in JB's last two years at Fairfax, has offered a present 15% shareholder, Ms Gina Reinhart.

There's no disputing, this is a good book.

Williams is a gifted storyteller who knows just how much detail to stuff into an episode she relates. She neither bores the reader nor has the reader's eye glaze over with the minutiae of events.

That said, this is not a great book.

To attain that status, three issues sorely cry out for investigation. These issues are not only not answered, they are not even addressed. They are however almost as mesmerizing as her book:

The first concerns Mr James Packer. While the book relates how he made far, far more smart decisions – both business and personal - than poor ones, readers are left guessing if he did so over the years all on his own, or was he guided by a very experienced hand or a trusted family friend? Perhaps it was one and the same. Perhaps it was the co-executor of his father's will, one Mr David Gonski? Perhaps we'll never know.

Second, while reviews and promos for the book - in addition to Williams and Packer themselves - have chastised and ostracized the conga line of Fairfax management for the death spiral of the corporation – its share price hit a high of $6.10 in 2001 - absolutely no ink whatsoever is spilled querying the fact that one chap was elected to the Board in February 2003 when the share price was $1.64, promoted to Chairman in November 2009 when the price slipped to $1.42 and is still lording as Chairman with the price hovering at $0.56. Why was this man, Mr Roger Corbett – who famously derided the potential threat of online classifieds given a "Get Out of Jail Free" pass by Williams? Why is he not crucified for rebuffing Mr Packer's offer of John Alexander to join the Fairfax board, after Packer exited the media business? And most importantly, why is he, the constant fixture in the demise of Fairfax, still occupying a seat on the board?