The Fairfax Media drama has ‘more subplots and twists than an Agatha Christie novel’
Morning Brief: Time to catch up with the weirdest story in publishing, occurring downunder, and often overshadowed by the political news out of Washington DC
This week the president is out of the country visiting the Middle East and then Italy and Belgium before returning in time for Memorial Day. That may, may mean a respite from the daily dump of breaking news from the NYT or WaPo, we’ll see. It also means, for those TNM, readers outside the US, that things will slowly wind down as we approach next weekend, as some take advantage of the three day weekend to make it a four or five day weekend. Friends of mine, for instance, have invited me to attend a doubleheader for the Sox on Friday, so that means an early start to the weekend (the forecast: rain, of course).
This last Friday was slightly different than the days that preceded it: rather than news breaking at 5pm ET, both the NYT and WaPo dropped their stories earlier, as if knowing that readers were exhausted and not willing to stick around until the appointed hour.
But the constant dropping of news about the Trump administration has a tendency to overwhelm other news, including news about the media world… and there is an incredible story occurring now in publishing, one so weird that it would normally be the talk of everyone in publishing were it not for Trump, and the fact that it is happening in Australia.
This story is so amazing that I will dedicate the entire Morning Brief to it so that readers can catch up, then follow along. Think of it as the Mad Max show for the newspaper industry.
If you haven’t been following the events, let me try and recap.
Fairfax Media, like other newspaper companies has struggled in recent years. But, like News Corp in the US, it owns a valuable digital real estate company, Domain. Recently it announced it would spin off Domain, a move sure to excite shareholders and executives at the company. Fairfax also was attempting to merge its New Zealand operations with another company. Meanwhile, it said it would have to layoff a large number of newsroom staff in order to cut costs.
Those three things began the avalanche of news from Fairfax Media. First, the New Zealand merger was stopped by regulators. Around the same time newsroom employees in Australia voted to authorize a one week strike against the layoff plans. Now enter the US private equity company TPG, which along with a partner, decided to bid on Domain and the metro newspapers of Fairfax in an unsolicited bid.
That bid would have been rejected, so TPG upped their bid and making it for the whole company. Then, another YS PE entered the picture, as Hellman & Friedman bid on Fairfax. Then on Friday, well, Friday’s twist featured TPG promising editorial independence, while admitting that like most private equity companies, it only looked to own Fairfax for five years. And then, amazingly, the Russians entered the story, really. See Friday’s developments here.
The one element to the story I was not aware of until today is that the head of Domain, Antony Catalano, is somehow involved in TPG’s bid, which would make him, should they successfully win the company, not just he CEO of a new, separate company, but the head of all of Fairfax.
The Fairfax Media takeover story has more subplots and twists than an Agatha Christie novel, so it is fitting that it is now playing out in public at the select committee on the future of public interest journalism.
“If the consortium does acquire Fairfax, neither I nor any other member of the consortium wishes to become a newspaper editor,” TPG’s local boss Joel Thickins told the inquiry on Friday afternoon – and everyone must have breathed a sigh of relief that he cleared that one up…
…Thickins’ public serenade of Fairfax – or at least the bits that it actually wants – was not helped by the distraction of the rival bid from San Francisco-based Hellman & Friedman, which has pipped TPG’s bid for the media group last week.
Everyone at Fairfax was meant to be partying like it’s 1998, given former Fairfax chairman, Brian “Austin” Powers, is the private equity group’s chairman emeritus.
Most journalists don’t understand the business of media and most media executives don’t understand the business of content. Business consultants understand neither.
This is at the heart of long standing problems at Fairfax Media, in the middle of a redundancy round for 125 journalists and under offer from two US private equity players with plenty of media experience. Anyone who has seen the way consultants perform up close and personal knows they are trained monkeys with one trick: strip out costs.
As director of real estate at The Age in the early 2000s, Catalano was a strong networker. One contact he developed was Fairfax chairman Ron Walker, who he used to visit at his property in wealthy Portsea to discuss business opportunities.
Walker was so impressed by the young editor he urged Fairfax to appoint Catalano managing director of its operations in Victoria in 2006, which would have given Catalano responsibility for The Age. Instead, Fairfax executives made Catalano redundant two years later. In 2010 he set up a rival real-estate advertising magazine.
Cleverly, Catalano signed up dozens, and later hundreds, of Melbourne real estate agents as shareholders in his business, guaranteeing they would direct their advertising to him. His was so successful that Hywood agreed to buy the company in cash and scrip transactions that culminated in 2015, giving Catalano and his backers 2.8 per cent of Fairfax.
Domain chief executive Antony Catalano says there is “no rift” between him and Fairfax Media boss Greg Hywood and he remains “fully committed” to the publisher’s strategy to spin off the real estate classifieds and services business.
Speculation has been rife that tension between the executive known as “The Cat” and Mr Hywood has been percolating, with the two rumoured to disagree on the separate listing of Domain, revealed by The Australian Financial Review in February, and Mr Catalano supposedly being linked to TPG Capital’s $2.76 billion tilt to buy Fairfax.
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