The Fairfax board and management couldn’t have made a bigger hash of things if they’d tried during the recent industrial dispute in which 1200 journalists were locked out. How on earth do they survive in their jobs?

Let’s start our coverage on this issue with an insider’s account of what happened.

Age Insider Tells: How We Won The Day
By Julian Journo

After a series of interminable meetings Age Journalists decided to strike on Thursday October 31. This was followed by a lockout of editorial staff the following day. Age old timers were shocked at the decisive and incredibly ill-advised action by Michel Foucault lookalike and chief executive of the company, Professor Fred Hilmer.

Even a member of Peter Reith’s staff was heard to have described the lock out and the Fairfax pay offer of 5% over three years as ” a bit rough”.

It was a media strike for christ’s sake and what better opportunity was there to shore up positive publicity for senior union officials.

Trades Hall Secretary Leigh Hubbard and Electrical trades Union head kicker Dean Mighell took the unusual step of appearing in the newsroom as staff decided on what to do next.

Mr Mighell busied himself identifying as many health and safety issues as he could find around the office and introducing himself to an increasingly perplexed Age editor Michael Gawenda.

Speaking of management, as the crowd of journalists now locked in the newsroom resolved to try and settle the matter they were knocked back by their harder-line comrades in Sydney.

We all saw the selectively edited TV footage from Friday night’s picket line and it surely demonstrated what can be achieved when a group of people steel themselves to achieve something.

ACTU President Sharan Burrow was instrumental in preventing trucks access to the loading bays and hence stopping the publication of the Age on Saturday. She parked her beemer (wait up, it’s a working class 3 series at least ten years old) across the bays as other staff had done and joined the human picket line to stop the transfer of papers.

Some fuckwits from The Age’s advertising were shanghaied to act as strongmen for management but only succeed in earning the eternal loathing of editorial staff, as if they needed any further reason. One of them even through a few punches.

The Age’s award winning AFL team were the real losers/martyrs in this dispute. The lockout meant they’d miss writing about the AFL Grand Final which is, really, their major event of the year.

Publisher and Editor-in-Chief Steve Harris sent staff an email after the negotiations were concluded which smacked of Jeff, post-election. Just as Jeff refused to accept any responsibility for his election loss, Mr Harris told staff to take a long hard look at themselves and not let these sort of shenanigans happen again.

In the end Fairfax came up with an offer which no doubt would have surprised the MEAA with its’ generosity.

It certainly annoyed Rupert’s bean counters at News Ltd whose senior execs were rumoured to have called Fairfax board members bollocking them for making far too generous offer, one which prized journalists too highly

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And before Crikey reveals a few secrets about Mr Steve Harris’s industrial record, let’s check out how the lefties at Workers’ Online covered the dispute.

Fairfax Joins The Industrial Ferals
From The Lefties At Workers Online

The Fairfax media group has become one of a select few employers in this country in the past week by thinking that a lock-out of workers is a good way to resolve an industrial dispute.

Until now, only the notorious Joy Mining company at Moss Vale, NSW, and GK O’Connor’s abattoir at Packenam in Victoria, have used lock-out provisions available since 1997 under Peter Reith’s Workplace Relations Act, against their workers.

What Fairfax’s chief executive, Professor Fred Hilmer, thought he would achieve by locking 1,200 journalists, photographers and artists out of the company’s headquarters in Sydney and Melbourne may never be known. If there was a strategy it wasn’t clear.

Maybe Hilmer – whose appointment to head Fairfax was a mystery to many after his career as a time-and-motion academic and not a hands-on company boss – thought he could instil fear in the hearts of employees whose professional work he apparently still fails to appreciate, as well as failing to understand their united position.

And yet the lock-out, for all its lack of forethought and subtlety, was the catalyst for what is now a settlement of Fred’s dispute with staff after he discovered that a lock-out can rebound on a newspaper company that wants to publish without the talented people who put it together.

A dispute at Fairfax has been simmering for months in the lead-up to the Olympics after management refused to improve a pay offer or discuss resourcing issues such as staffing. On Wednesday, 30 August, staff of The Sydney Morning Herald, The Age, The Australian Financial Review, The Sun Herald and Business Review Weekly voted nationally to exercise their right, after three days formal notice during a bargaining period, to take legally protected strike action.

Some of the group’s newspapers workers did not return to work after the meeting vote – but a general strike was held the next day, as well as a picket outside Fairfax’s Sydney offices. On Friday 1 August, staff returned to work but began a campaign of rolling stoppages in which certain sections of the papers were to walk out at times to coincide with production deadlines.

Fred obviously didn’t like this and, using what Fairfax called its own right to take industrial action, informed staff in writing that they were to be locked out. Management was to put out the papers on its own.

In Sydney and Melbourne staff stayed at their desks awaiting advice from their union, The Media Alliance. It was decided in Sydney to walk out en masse at 6pm. It was in Melbourne, though, where the actions of staff were critical to the outcome of the dispute. Unlike Sydney, where the printing presses are far away from the media offices in the city, The Age still prints and distributes newspapers in the same building as its media staffs in Spencer Street. After eventually leaving the building The Age’s editorial staff set up a picket outside and refused to allow trucks carrying papers for Saturday’s AFL Grand Final Day to leave the building. Even a court injunction obtained by Fairfax to stymie the picket did not work following support at the picket from printers and the wider trade union movement.

Fred Hilmer and his executives had a rethink. They re-entered negotiations with staff negotiators, ended the lock-out by Sunday and agreed to make an improved pay offer, as well as committing to negotiations on better resourcing of the group’s newspapers.

By Wednesday, September 6, the scheduled end of a company-union truce, Fairfax was offering staff pay rises averaging 9 per cent over three years, plus a profit share agreement of about 5 per cent over the same period. The company also agreed to a summit on resourcing newspapers that would involve staff.

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Harris Fails To Repeat Herald Sun Treatement On Age Militants
By Stephen Mayne

Paid Up MEAA Member

It was a very uncomfortable period being one of the first people to sign one of Steve Harris’s a no-strike, union-busting contracts at the Herald Sun in 1994. But being a lifelong Liberal voter and having just come out of Jeff Kennett’s media unit, unionism wasn’t exactly a philosophical calling.

Steve Bracks’s current press secretary Colin Radford was the union rep attempting to fight the process but Harris played a cagey game and picked people off one by one.

By the time I left the paper in June 1997 the union was shot because an estimated 100 staff had quit the MEAA and signed up for no-strike contracts. Management would joke that they would have to run rosters next time there was a strike because so many people would be obliged to work.

The contracts spread all the way to Canberra, Spring St and even police rounds. When combined with the management thuggery on offer by News Ltd in Sydney, it is no surprise that the News Ltd staff got screwed in their latest deal.

What happened to me was a case in point. I started on $65,000 and then was bumped up to $69,000 within a few weeks after signing the contract but this reflected a few other union benefits that had been surrendered.

The following June the annual pay review kicked me up to $75,000 as Harris rewarded those that joined his contract team early and continued to pick others off one at a time.

However, it wasn’t so rosy the following year when Bruce Guthrie and Simon Mann put together an offer of $80,000 to join The Age as deputy business editor.

I went and saw Harris who said he’d have no problem matching it in a couple of months when the annual pay review came up, but when the letters went around he only managed to come up with $78,000.

The move to Sydney as business editor of The Daily Telegraph did not see any salary change for a further 18 months until I was made chief of staff and bumped up to $95,000. In a salutary reminder that the best way to get a pay rise in this industry is to move around, I then quit the Telegraph and was subsequently offered $105,000 a year to edit Rear Window on the Fin Review. During the two months I was there no-one even mentioned a union or any industrial trouble but there were many early signs that the paper was being squeezed until the pips squeaked. On one Sunday the investment editor had just a single reporter for his entire section.

The disastrous impact of this latest strike has raised further questions about the publisher model that Fairfax has adopted whereby the chief executive of each business is also in control of editorial.

The three publishers, Michael Gill, Steve Harris and Greg Hywood, are all extremely unpopular with their staff at the moment, but not quite as unpopular as Fred Hilmer who one editor has described as being “unbelievably greedy”.

Hilmer was conscious of the shithouse deal that News Ltd staff had negotiated for themselves and wanted to do even better for himself. However, Fairfax journalist are more union-inclined that those at News and they’ve also been around a lot longer. So when Fred reneged on earlier promises of a decent profit-share arrangement just as the record profits were kicking in, the Fairfax staff arked up.

The union then dug in for a fight in what really could have been its last harrah in Melbourne given Harris’s union-busting history. The Age was most vulnerable on its grand final edition with the printing presses all based at the city office until the new $200 million Tullamarine plant is finished next year. Faced with the prospect of a disrupted Olympics and in shock that its most important paper of the year never materialised, Fairfax capitulated.

It just goes to show that if you have a board and chief executive with absolutely no long-term newspaper experience, you’re going to suffer these sorts of stuff ups.

Crikey bumped into Harris at the Nelson Mandella lunch and he seemed in a reasonably chirpy mood.

Which brings us to the next issue of standing for the Fairfax board. I’ve just nominated for their board after being unable to persuade a better candidate to stand. We’ll be publishing a detailed story about the candidacy on www.shareowner.com.au shortly but for now take a look at this piece we carried a few weeks back about the completely inappropriate structure of the Fairfax board and then if you’ve got a sense of spirit about you, lodge your nomination forms promptly.

Wanted: Candidates to Stand for the Fairfax, PBL, News Corp, Seven and Ten boards

The headline on this story is not as stupid as it sounds because Australia’s media companies have some of the worst corporate governance practices around.

Rupert’s nomination committee comprises himself and his inhouse lawyer Arthur Siskind, Packer’s PBL board is choc-full of his mates such that no-one is in there batting for the people who own the other 65 per cent of the company.

But it is the John Fairfax board that is the cause of most alarm and one that we are particularly keen to focus on over the next two months ahead of the AGM on November 3 in Sydney.

Australia’s high levels of media concentration have been extremely damaging to the nation. It has meant that dodgy politcians or lobby groups can prevail just by doing some deal with one or two media outlets.

This is what makes Fairfax so important because it does not have a controlling shareholder. It certainly dominates the financial press in Australia like no other company and is an opinion leader in Canberra, Sydney and Melbourne through The Age and The Sydney Morning Herald.

However, you now have a situation where the chairman of John Fairfax, Brian Powers, is a close mate of Kerry Packer’s who lives in America. There are two other close Packer mates on the board – lawyer David Gonski and former Hudson Conway chairman Sir Rod Carnegie.

Rupert Murdoch told me after the News Corp AGM last year that “all” of the Fairfax directors are Packer stooges. Now Rupert often sees things in black or white whereas this is an issue that is decidedly grey.

They certainly are not “all” Packer stooges because some would argue that merchant banker Mark Burrows is a Murdoch stooge. It was Burrows who brought Rupert into the Seven float with 15 per cent and a quick read of Mark Westfield’s recent book on Australia’s pay-TV industry would suggest the two are very familiar with each other.

A Complete Lack Of Media Industry Expertise

One former Fairfax editor told me recently that presenting to the board was like “presenting to a group of monkeys” because none of them appeared to have much of a clue about the subject matter.

The first rule of good corporate governance is that non-executive directors should have some experience in the industry that a company is operating in.

Crikey has raised this issue at the last two Fairfax AGMs and Brian Powers has answered it by saying that suitable people with newspaper experience are very hard to find.

However, on both occasions he has created the impression the board is about to appoint a second Melbourne-based director – Sir Rod Carnegie being the only one at the moment.

Now Sir Rod should not be on the board for a number of reasons: He’s been discredited on other boards, he’s too old, he’s associated with Kerry Packer and he has a conflict of interest through his investment in Eric Beecher’s Text Media group.

Crikey is working up a list of Australian directors that should be ousted from boards and Sir Rod’s Fairfax gig will definitely be in the top 10.

The Hunt is on for a Melbourne-based Fairfax Candidate

Despite Brian Powers’ promises at recent meetings, Fairfax has still not appointed a second Melbourne-based director. Therefore, maybe it is time someone with newspaper experience put themselves forward to shareholders at the November AGM.

Crikey has already approached The Age’s Stephen Bartholomeusz and the Fin Review’s Ivor Ries but both have declined our suggestion to stand.

Ivor, a seven year veteran of the Chanticleer column, would be particularly good because he is looking to leave the Fin Review and get into funds management or stockbroking when the right opportunity arises.

He was also passed over in favour of Michael Gill to take charge of the group’s Business Publications – in other words chief executive Fred Hilmer had shortlisted Ivor as someone with management talent.

Ivor is very bright, well-connected and well-respected. And it would give the publishers a good shake-up to finally have someone on the board asking them well-informed questions.

But alas, the Fairfax board is not a particularly attractive combination of people for a quality outsider to join. And that’s why we need someone who will step up and start arguing the case for wholesale changes to the board before quality candidates such as Ivor would be prepared to step forward.

I’m quite happy to stand as the candidate of last resort but would prefer to find someone of the callibre of Ivor to take up the fight. Does anyone know of any names or can anyone twist the arms of the obvious Melbourne-based candidates? Why doesn’t the union or some of the staff get involved and stand a candidate?

The Changes That Need To Be Made At Fairfax

It really is unbelievable that a boring operational company like Fairfax has three investment bankers on the board. It has done so few deals over the past 10 years that one investment bankers would probably be too many. Then we get to the conflicts and associations. Two of them, David Gonski and Brian Powers, have worked extensively for Packer over the years and the third, Mark Burrows, has worked extensively for Murdoch. They really should all go.

The Westfield clique is also a bit of a worry. Three Fairfax directors – Gonski, Dean Wills and CEO Fred Hilmer – are all great mates of Frank Lowy’s and sit on some of his boards. However, Wills is a well-respected marketing man who did a good job building Coca-Cola Amatil so the removal of Gonski would be enough to deal with this problem.

Luis Vuitton boss Julia King brings some advertising and magazine publishing experience to the board and David Shein, despite being associated with the Packers, brings some IT experience which would be more than useful for the expansion of Fairfax’s online businesses.

That leaves former Freedom Furniture CEO and Brierley Investments representative Jonathon Pinshaw who has done nothing we know of to deserve the boot as deputy chairman.

So all you need to do is throw off the merchant bankers, find a new chairman and find a couple of directors with newspaper experience. Fred Hilmer seems to be doing a reasonable job but is surely damaged goods for what happened at Pacific Power. Alan Kohler’s article in the Saturday Fin said it all. NSW taxpayers appear to have blown hundreds of millions of dollars in these crazy power contracts that Pacific Power struck with Powercor. The Supreme Court battle has been quietly settled with no details revealed publicly. Fred Hilmer was the chairman when these deals were done and Peter Graham was chief executive. Now these two people are running Fairfax and no-one seems to care about the disaster that took place at Pacific Power. One thing is for sure at the AGM, we will be raising this issue with chairman Powers and we expect more than the usual “not a matter involving us” line.