Selling Fairfax assets for a song

Fairfax CEO Greg Hywood will be thinking that I had been chatting with former Fairfax chairman Ron Walker and Lazard managing director John Wylie before Hywood's KGB interview because I asked Hywood about his views on the links between print and radio. (KGB: Greg Hywood, April 21)

This morning The Australian revealed that Walker heads a group of wealthy Melbourne families who want to buy 3AW and The Age from Fairfax. Lazard's John Wylie, who is a shareholder in Business Spectator, has been doing some of the negotiating.

The absolute truth is that I have not this year discussed The Age or 3AW with either Wylie or Walker and I had no knowledge that a bid was being considered.

My questioning of Hywood arose because many years ago when I was at Fairfax I was a director of 3AW (I was part of the hiring of Derryn Hinch) and I learned how radio and print can be used for magnificent cross promotion and advantage. My radio links were one of the reasons why in the 1980s and 1990s BRW magazine was so successful.

This is the relevant transcript of the KGB interview with Greg Hywood which was undertaken prior to the announcement of the radio sale but at the time of the interview there had been wide-spread speculation that a sale was likely.

Gottliebsen: Do you see capital city radio as linked to your major mastheads like the Sydney Morning Herald and The Age, or do you see that as a totally different business?

Hywood: The thing about radio is that it does provide you some protection in a cyclical media business. People were saying free to air TV was dead a few years ago. They're not saying that now. So, the advertising dollars move around the various mediums over time and it's good to have a mix. So, we're happy around radio as well in those terms.

Gottliebsen: But you don't see it as a cross promotion exercise where radio boosts The Age and The Age boosts the radio and the Sydney Morning Herald with the Sydney stations, 2UE and so on?

Hywood: I think that you wouldn't directly relate the Sydney Morning Herald audience to the 2UE audience. It is good to have a new media; there are some cross promotional opportunities, but not what I would call a direct linkage through there.

Gottliebsen: So, you might sell the radio? (Laughing)

Hywood: Well you're really good at creeping up on people, Bob. You always have been, so I saw you coming. As I said to Alan earlier, that's not something that I would even speculate about.

There are no rights and wrongs in the media business given the level of change the sector is going through, but, while I respect Greg Hywood's view that his print and radio businesses are different audiences, I believe owning a co-ordinated print and radio business in the same city is a huge advantage to both assets.

In Sydney 2UE is weak so the benefits to the Sydney Morning Herald are not as great as a tie-up between The Age and 3AW in Melbourne because 3AW is much stronger. But Hywood is right – 3AW and The Age audiences are different.

However, to prosper in Melbourne The Age needs the 3AW audience. You could not control a Age/3AW business out of Sydney just as you could not control an SMH/2UE business out of Melbourne.

Greg Hywood revealed big plans for The Age and SMH in his KGB interview. If those plans lead The Age to prosperity then the status quo will prevail. If they don't then my belief is that if 3AW is sold then the buyer of that radio station will in time be the logical buyer of The Age and they will get it for a song.