Upheaval at News as Williams walks

News Corp's Australian chief executive, Kim Williams, left the company on Friday in a surprise move as tensions emerged at a company struggling to cut costs and lift its online presence.

The upheaval has come less than two weeks after Rupert Murdoch's longtime confidante Col Allan returned to the group's Sydney headquarters, sparking speculation of change at the top.

It also follows an unusual period of internal change, with the editors of key Australian mastheads - The Sunday Telegraph, the Herald Sun and Brisbane's The Courier-Mail - all changing over the past year.

Hinting at the mounting pressure he had been under, Mr Williams told staff in a private email that while working for Mr Murdoch "the leadership roles and the issues encountered have at times been frankly really confronting".

For his part, Mr Murdoch admitted parts of his media group face "unprecedented pressure and economic challenges", while stating that Mr Williams had taken care of the first stage of the overhaul of the local arm.

Mr Williams has been replaced by Julian Clarke, a former general manager with the Herald and Weekly Times, who quit the News Ltd board in 2007.

Reverting to a manager with limited new media experience signals the surprising speed of the Williams departure.

"I'm surprised by the timing, but not that it has happened," said Margaret Simons, the director of the Centre for Advancing Journalism. "Col Allan's appointment can only have been seen as a slap from Rupert Murdoch.

"Since his appointment he has battled with the editors of the mastheads. But he [Williams] was appointed to drive change following his success in driving subscriptions at Foxtel."

Mr Williams' lack of newspaper experience meant he was an unlikely choice to run News's local arm after he replaced long-time Murdoch lieutenant, the former journalist John Hartigan, who left in late 2011.

Most recently, Mr Williams had run Foxtel, which he transformed into a hugely profitable venture - raising subscription numbers, boosting the number of channels on offer and spending $2 billion to buy out Austar.

His appointment to run News was part of a push to drive down costs and to speed up the shift to online distribution, but he has faced intense opposition to the cost-cutting regime that advisers such as Boston Consulting Group have advocated he pursue.

"The New York chatter is that the Australian publications are not moving quickly enough and the Kim Williams departure means he hasn't met his own goals," said Steve Allen of Fusion Strategy.

"He likes to lead from the front, and we saw that when he was at Fox Studios and then Foxtel. But turning around an organisation of 700 to 8000 staff is a bit like turning around the Queen Mary - it takes time. Those senior staff who agitated against the changes pushed by Boston Consulting shouldn't be celebrating. Those who adapt fastest will survive, and survive best."

The weak revenues of the Australian newspapers have been masked by the inclusion of Foxtel profits in its operations.

"Apart from the Herald-Sun, it seems that most of the group's newspapers are losing money," one analyst said. "Advertising revenues are declining which are not being matched by gains in digital revenues."

The pressures on traditional media were highlighted this week with the sale for $US250 million ($273 million) of the Washington Post and the $US70 million sale of the Boston Globe.

"National icons such as The New York Times or The Financial Times will be able to survive by charging for access," the analyst said, but city-based or regional titles will suffer.