THE DISTILLERY: End of McCarthyism

Blood on the presses or did the job just become too, too much? Whatever the reason for CEO, Brian McCarthy's departure, Fairfax is looking for a new boss. It dominates the blats this morning – unfairly, seeing as the drug wholesaling sector took a body blow yesterday, Rio confirmed it had its takeover appetite back, the proposed changes to the CPI and the ASX finally produced a consultants report that claimed to justify the takeover from Singapore. Oh, and no one looked at today's Reserve Bank board meeting, the last for 2010. Instead it was the ructions at Fairfax that had the navel gazers drooling in self interest in the various papers this morning.

The Sydney Morning Herald played a straight bat this morning: "The Fairfax Media chairman, Roger Corbett, said the company's direction would remain on course despite the shock departure yesterday of the chief executive, Brian McCarthy. Two weeks after unveiling a new strategy to investors Mr McCarthy left the company's Sydney headquarters after handing in his resignation, ending his two-year reign at Fairfax and a 34-year association with either Rural Press or Fairfax. Fairfax merged with Rural Press in 2007. The Fairfax non-executive director Greg Hywood stepped in as acting CEO while a search for Mr McCarthy's replacement got under way."

But The Australian Financial Review had a different explanation: "The Fairfax Media chief and its chairman had different views on the way forward for the company." The paper said these differences emerged over a dinner. Did Woolworths cater? The paper also said that while Mr McCarthy failed to sell the new strategy ''Institutional investors will remember Brian McCarthy for his ability to run a tight ship and expect his successor to stick by Fairfax Media's recently announced strategy." So does Roger Corbett, the chairman.

Malcolm Maiden also wrote in the Fairfax broadsheets: "Two weeks ago Brian McCarthy said he was happy to lead Fairfax Media for as long as the media group's board wanted him to stay, and was looking forward to implementing the strategic plan he had just announced. Today he is gone, and while the official statement gives him space to say that it was his call, made after discussions with the board, it is clear that the Fairfax chairman, Roger Corbett, and the board decided that the new strategy McCarthy announced and crucial appointments that will underpin it should be delivered by a change agent – one more familiar with internet media platforms that sit at the heart of Fairfax's new structure. Whether the agent is Greg Hywood, the former Fairfax journalist who rose through management ranks, departed and then returned this year as a new non-executive director, remains to be seen, but he is the clear favourite after stepping in as acting chief executive."

The best analysis in Fairfax came from the SMH Insider, David Symons: "When Fairfax Media announced Brian McCarthy's departure as chief executive there was no hint that the new boss would be allowed any latitude to revisit aspects of the strategic plan unveiled last month. If that approach persists, it will be a mistake. There's a reason why Fairfax shares trade at a deep discount to analyst valuations, while also being the most shorted stock on the exchange. Fairfax's ungainly collection of old media businesses, new media operations and transactional internet sites is leading investors to focus only on the negatives – exemplified by a strategically challenged metropolitan print section – while overlooking the value of the conglomerate's best concerns, which include fast-growing transactional internet interests."

Over at News Ltd the chortling at Fairfax's expense was loud and long. Terry McCrann, though, had a sensible point in his piece this morning in the Herald Sun: "The departure of Brian McCarthy from Fairfax Media has the clear stamp of chairman Roger Corbett on it. But it speaks more to the Fairfax past than the Fairfax future. That awaits his replacement. That is clearly acting CEO Greg Hywood's to choose or to lose. McCarthy's departure and that of his former chairman John Fairfax, just a month ago, represents on a people level the 'de-Rural Pressing' of Fairfax. But only on the people level. The more important task is now to 'de-Rural Press Fairfax' in cultural and operational terms; and crucially, fill it with something else." Mark Day, a former senior News Ltd editor wrote: "Brian McCarthy's sudden departure from his post as Fairfax Media chief executive came after a reported power struggle with chairman Roger Corbett."

And an alphabet of reporters on The Australian this morning wrote what they claimed was the inside story: "The group's much-vaunted strategy day on November 23 went down like a lead balloon with already frustrated investors. The board has also been concerned about falling circulation and readership figures across the group. The September audit figures were damning. When Fairfax directors convened for a meeting last week to discuss the fallout from the strategy day and the suitability of McCarthy to carry on the message, the decision was unanimous." Funny how News Ltd papers don't report on News Corp matters with the same intensity.

Oh, no, not another chapter in the takeover of Hochtief, the owner of 54 per cent of Leighton Holdings. The Australian's Andrew Main reports this morning: "The German building company and takeover target of Spanish group ACS revealed it had placed 9.1 per cent of its stock to Qatar Holding, the strategic and direct investment arm of the state-owned Qatar Investment Authority. The deal, which may be part of a plan to frustrate ACS's all-scrip takeover bid for Essen-based Hochtief, will also tighten already strong links between Germany and the Middle East, as well as filling Hochtief's coffers with $539 million much-needed Australian dollars. Its immediate effect will be to dilute Spanish group ACS's 30 per cent holding in Hochtief. ACS, or Actividades de Construccion y Servicios, is offering eight of its shares for every five shares in Hochtief, valuing the target at $3.75 billion. Hochtief shareholders have until December 29 to accept the ACS offer."

The Australian's John Durie pointed out yesterday that: "Sigma Pharmaceuticals boss Mark Hooper is standing on the edge of a very steep cliff. He potentially has a long way to fall in the wake of the loss of the Pfizer distribution business. Wholesale distribution will be Hooper's sole business after the $900 million sale of his pharmaceutical business to Aspen late next month. If more big drug companies decide to follow Pfizer's lead, then Sigma doesn't have a business any more. But, then again, that is not necessarily a given and if that happens the entire structure of the industry will have changed." And other drug wholesalers, such as API are also going to feel Pfizer's pain.

Stephen Bartholomeusz wrote in Business Spectator: "The Access Economics report on the proposed merger of the Singapore Stock Exchange and ASX makes a quite robust national interest case for the merger, or at least provides arguments that undermine the case against the merger. While there are a number of mundane reasons for why the combination makes sense at a business level the more interesting and important elements of the report revolve around the increased engagement with Asia and its savings pool that the merger might help promote." And the AFR's Chanticleer wrote: "Finally, ASX Ltd chief executive Robert Elstone has produced the document that should have been delivered to the government, the opposition, the Greens and the independents six weeks ago when the $8.4 billion takeover by the Singapore Exchange was announced."

Fairfax's Ian Verrender says that the Rio Tinto approach to coal hopeful, Riversdale mining shows: "Put it down to luck or even fate, but Rio Tinto's boss, Tom Albanese, has proven at least that he's a survivor. Having exhausted at least four of his nine lives during the past few years, Albanese yesterday returned to the acquisition trail a much chastened individual with a small but strategically significant takeover bid: a $3.5 billion tilt at coal producer Riversdale Mining. It is a far more disciplined and well thought out play than Albanese and the Rio board's previous misadventure, the reckless $US38 billion takeover of the aluminium group Alcan at the peak of the 2007 stockmarket boom.''

And The Australian's Tim Boreham reminded us that Rio has a big task ahead: "There are a few obstacles in the path of true love: Riversdale is 22 per cent owned by Tata Steel, and has a non-binding deal to sell 40 per cent of its fully-owned Zambeze project to Wuhan Iron and Steel, for $US800 million ($810 million). This implies a $US2 billion valuation for the 9 billion tonne Zambeze deposit (Riversdale also owns 65 per cent of the Benga deposit – Tata owns the rest – and an anthracite mine in South Africa)."

Finally, Michael Pascoe wrote on SMH.com.au yesterday that Treasurer Wayne Swan's banks package won't do much: "Competition is a fine thing – but too much competition in the banking business can lead to loans being made that shouldn't be made. And I'm all for the mutual sector – I'm a member myself these days – but politically driven knee-jerk policy has a tendency to be bad policy that someone else ends up paying for. And it won't really reduce interest rates."