The sudden departure of Fairfax CEO Brian McCarthy marks something of an end to an era.
Just 55, McCarthy was born in Newcastle, the second of five children, and the eldest boy. None of his brothers and sisters work in the media but his father, Keith, spent his working life at the Newcastle Morning Herald and, when television came to the Hunter Valley, at NBN.
Quoting from a 5 May 2007 interview by Mathew Ricketson in the SMH:
McCarthy's first media job was as finance manager for Regional Publishers, where he was hired in 1976 by editor-in-chief Dan Austin, who taught him the truth of the phrase "the devil is in the detail", and the virtue of discipline and hands-on knowledge of a business.
McCarthy describes John Parker, who was Rural Press chief executive when he hired McCarthy in 1987, and more recently John B. Fairfax, as mentors.
From Parker, he learnt the value of "working on the relationships with people", and from Fairfax, the statesmanlike quality of "giving the people around him the room to move".
I was puzzled by the two conflicting dates in the story, but we can put this aside.
John Parker took The Land, the former Farmers & Settlers Association newspaper owned by an unlisted public company, and turned it into a regional press empire. There are links and interlinks here.
The FSA, the more radical farm group representing farming interests including small farmers, played a major role in the formation of the NSW Progressive Party, later Country Party. When my grandfather, David Drummond, ran for Parliament he had been active in the FSA and was nominated by local FSA branches. Later, he would become FSA State President .
While this happened well before I was born, our family still had shares in The Land Newspaper Company.
While rare today, small unlisted public companies were then quite common. They provided a vehicle for local business that made it possible to have a larger number of shareholders and for shares to be sold without the burden of listing. While unlisted public companies still exist, the old form is no longer possible because the regulatory costs and burdens associated with being a public company mean that they no longer a viable option for smaller businesses.
I should perhaps illustrate what I mean by quite common.
My grandfather had shares in six such companies: the Land Newspaper Company, preference shares in the local Armidale Ford dealership, the Grafton Brewing Company Ltd, Northern Newspapers Ltd, the Armidale Newspaper Company and Broadcast Amalgamated Ltd.
To a substantial degree, the rise and then fall of such companies is a key thread in the economic history not just of New England, but of country Australia in general. While the public company form facilitated cooperation and local ownership, it also made acquisition easier. Over the 1970s and 1980s, local and regional unlisted public companies vanished in a takeover blitz.
John Parker was part of this process. The Land acquired mast head after masthead, turning into Rural Press. Northern Newspapers was one company taken over, a takeover that I tried to block by organising opposing proxies. My opposition was partly sentiment, but I thought that the company was undervalued, and indeed it was.
John B Fairfax gained control of Rural Press. There was a certain irony in this, for both the Land and the country press in general had often been in opposition to the Fairfax controlled papers. The irony compounded later when Rural Press and Fairfax merged, returning the Fairfax family to their original company.
Brian McCarthy took control of Rural Press as CEO in 1994. While he was CEO, the company grew from a market valuation of $400 million to $3 billion at the time of the 2007 merger. The original Land shareholders who had stayed did very well indeed. Brian McCarthy became I think, head first of Fairfax media and then CEO.
Both John Parker and Brian McCarthy ran a very tight and profitable ship, but it was a country press empire. Fairfax was a bigger business, and one that had been in a degree of trouble especially in its two big city papers where the internet had been eroding the classified advertising cash cow.
In a 2007 interview (link above), Brian McCarthy was asked about the shift:
Regarding the shift from managing regional to city media, McCarthy says: "They are two very different businesses. We are certainly not taking a cookie-cutter approach to the two metropolitan businesses.
"Even the Sydney and the Melbourne papers need a different approach. I don't think it is a one size fits all argument.
"The newspapers need to be looked at very much in isolation. They are fantastic mastheads with great history and tradition. What we need to do is to take that history and tradition with us and look at the challenges that metropolitan dailies face today, not only in Sydney and Melbourne but around the world.
"Those key challenges are circulation and advertising fragmentation, with the rise of the online media. I feel very positive about the future for these two newspapers.
"Some people have said to me that we need to manage the decline. I don't see it that way. I'm not interested personally in managing declining businesses, and I seriously don't see that these businesses are in decline.
"By the same token, they are highly competitive markets. It just means we need to do things differently. We need to be smarter, we need to be more flexible as we move forward. That applies to all departments of metropolitan newspapers."
Asked about the view of some industry analysts that there is a core shift away from print to online media, he says: "I want the print businesses to, hopefully, grow and certainly not to decline, and the online business, if it is growing — and in Fairfax it is — then that is cream on the top. I certainly don't want to take a defeatist approach to the print business in isolation.
"I need people who want that to happen. I want people who are on the staff who have a passion about the printed product. I need people who are flexible and who can see the bigger picture. If we stick by the old traditional rules in publishing, that (future growth) won't happen."
As to how the change will be achieved, McCarthy says: "I don't know the exact structure of the businesses yet, but I think in a perfect world, the print and the online would work together far more in harmony going forward than perhaps they have in the past.
"What we are talking about here is delivering news and information and entertainment to our customers, so the print and online are really methods of distribution of content.
"Fairfax has some first-class content to deliver. We need to harness that content through the editorial staff who are so important."
You can see that Brian McCarthy is a newspaper man. To what degree this affected his performance as CEO is unclear to me. What is, I think, clear from the reports, is that he was uncomfortable with some aspects of the CEO's role.
Managing Rural Press was a very different matter to Fairfax. The company had a very particular culture that had evolved over a long period. It had a very successful business model, but one attuned to its marketplace. Importantly, both John Parker and Brian McCarthy were simply not exposed to the type of market games and pressures faced by their equivalents in Fairfax. They didn't need to play modern CEO games.
Greg Hywood who has been appointed acting CEO in place of Brian McCarthy is much more in the conventional Fairfax metro tradition. He is also more attuned to modern CEO games. It will be interesting to see how he goes.
In all this, it will also be interesting to see how Rural Press goes in the evolving Fairfax world. I do wonder a little if Fairfax itself can actually manage and maintain the very different culture required to run a regional newspaper network.
In checking around for this story, I found Press Council Notes from February 1995 on the Country Press. I have just recorded it here because I want to write a story on it.
As you might expect, the Australian has had a fair bit of coverage on this issue:
- Fairfax boss Brian McCarthy ousted after 'growing tired'
- Former Fairfax journo Greg Hywood replaces Brian McCarthy as CEO
- Hywood defends The Age to Fairfax staff
- Power struggle led to McCarthy departure
In this post I listed the Grafton Brewing Company as an unlisted public company. I'm not sure that's right, for it appears to have been listed at the time that it was taken over by Tooheys in 1961. Something to investigate.