Breathing life into Fairfax and Ten

Is it just me or has the entire spectacle around the new book, Killing Fairfax, been a bit off?

Not only is the sentiment premature, but the idea of such vigorous, celebrated dancing on the grave of a valuable institution such as Fairfax comes across as plain mean.

But the real reason why it seems to be a waste of energy is that it focuses so keenly on the mistakes of the past while not recognising the efforts of the present or the vision for the future. The experts so harshly critiquing the company for their past fumbles seem unable to provide even the slightest nugget of insight into what the future of the company may require. With the benefit of hindsight, we all have the answers.

One of the main characters in Killing Fairfax is Lachlan Murdoch. His family’s investment into REA Group, along with the Packer family's involvement in Seek and CarSales, is considered to be among the bullets that supposedly 'killed' Fairfax. Both Murdoch and Packer attended the launch, with Murdoch’s wife Sarah even describing it as James’ "big day".

All this frothing over the corpse of Fairfax has meant its been hard for any other media stories of merit to get any oxygen at all. This issue was compounded when it was reported that Fairfax would accelerate the timetable around the closure of its weekday metro papers, a claim Fairfax chief executive Greg Hywood was quick to deny.

There is no doubt that revenue will decrease for the 12 months ending June 30 when Fairfax report their yearly results to the market next month. Revenues are likely to be $100 million-plus down on the year prior.

However, it’s far from the only media business with such a steep decline. Network Ten is staring down the barrel of a similar conundrum if figures released from Free TV Australia on Monday are to be believed.

Free TV Australia reported gross (pre media agency rebate) metro television advertising revenues of $1.377 billion for the six months ending June 30. Of this, Ten received a share of 21.9 per cent. For the first half of the year, metro TV advertising revenues were 1.526 billion, with Ten receiving a share of 21.5 per cent

If we rewind to January-June 2012 Ten was receiving a 25.5 per cent share. For the same periods in 2010 and 2011 it was 28.8 per cent. It’s a dramatic slump, even more dramatic when you consider the metro TV advertising market has remained still over that period, even without factoring in inflation.

If Ten maintains this share, it is likely its revenue for its current financial year (which ends August 30) will struggle to eclipse $600 million excluding any fees paid to it in the second half as a result of its programming agreement with Southern Cross Austereo. Ten’s half-year revenues at February 28 were $307 million in a period which saw it generating a similar share to what it has for the January-June period – 21.5 per cent. The back half of the financial year is generally 10 per cent lighter revenue-wise than the front half, given the Free TV figures released Monday it is unlikely Ten will deliver metro TV revenue for the March-August 2013 period above $280 million.

For its 2010 financial year Ten reported revenues of $991 million.

The parallels with Fairfax appear obvious – both companies have experienced similar challenges operationally which have severely reduced their capacity to maintain the earnings they both once enjoyed.

Both are in the midst of turnaround strategies. Fairfax, led by Hywood, is attempting to innovate in the print realm and increase non advertising revenue in digital. At Ten, Hamish McLennan is looking to programming and personnel to breathe life back into the network after a particularly turbulent period which has seen him become the third chief executive in as many years, and major changes within key sales, programming and digital roles.

Sure, both have made mistakes in the past but both should be judged on their ability in the here and now to create returns, rather than focusing on past decisions their leaders have inherited and need to resolve.

If Fairfax has been ‘killed’ and is ‘dead’, then one could argue Ten is in the same position. Ten right now is a single revenue stream business with significantly eroded earnings over the past three years and which has seen an 84 per cent drop in share price over the same period. It could be argued that Fairfax is better positioned to deal with the future challenges of the digitisation of the media industry. Fairfax’s relatively stable share price over the past year suggests investors may agree.

However, neither are dead. Nor do they deserve to be. Both are caught in the middle of unprecedented industry change which is happening faster than most can keep pace with. Both are attempting to introduce innovation and new thinking in a way that doesn’t spook their audience, their clients and their investors. It’s a tough task but it makes the industry all the more interesting.

Ben Shepherd is a media and technology consultant. He can be found on LinkedIn and on Twitter.