Fairfax CEO Greg Hywood has taken to his company’s internal email system to slam The Weekend Australian for questioning his corporate strategy.

In the staff missive sent yesterday afternoon — and immediately obtained by Crikey — the Melbourne High School old boy unleashed on his News Limited rivals, accusing them of not being in touch with their digital side.

The Weekend Oz devoted a large chunk of its front page on Saturday to an analysis piece by Murdoch loyalist Mark Day — accompanied by a Hywood headshot — that attempted to debunk the “implausible” business theories propounded by Hywood at last week’s AN Smith Lecture in journalism.

Day zeroed in on the sick Fairfax share price, steady declines in print circulation and the decision by the Fairfax family to sever ties with the remnants of the firm that bears their name.

Shrugging off the criticism, the freshman chief hit the keyboard yesterday to imply News didn’t “get” the internet.

“While we were touched by their [News’] concern, we were somewhat entertained by their ongoing obsession with print circulation as the be-all and end all of media businesses,” Hywood wrote.

“I would have thought that they of all people would have a bigger picture about what makes a successful media business these days. Perhaps not. We certainly get it.”

He reserved special praise for Fairfax’s “great independent journalism”, which he says is “the best”.

A wry finale brands News hypocritical for not embracing journalistic competition in the spirit of the free market.

During last week’s lecture, excerpts of which were sent to staff yesterday in an attached PDF, Hywood maintained that the demise of print classifieds did not equate to the death of the business because Fairfax now relied on digital advertising and commissions from its transactions businesses to generate revenue.

Interestingly, a quick check of the PDF’s properties reveals it was authored by well-known spin doctor Sue Cato. Cato has intervened on Hywood’s behalf before, famously adding a mess of track changes to an internal email confirming his sacking of 82 subeditors in May.

It is not suggested Cato penned Hywood’s actual AN Smith speech, which included an amusing recollection of his first day at work at The Australian Financial Review that morphed into a seven-hour binge drinking session at notorious Melbourne pub The Grosvenor.

The Australian decided to run an edited extract of the AN Smith speech yesterday in its opinion pages. It featured fulsome praise for outgoing News CEO John Hartigan — an “honourable man” according to Hywood.

The renewed offensive comes as The Sydney Morning Herald ran a full-page house ad yesterday celebrating the “independence” of its output. An accompanying “letter to the reader” from publisher Peter Fray and a commissioned TV commercial also appeared, employing the strange tagline “we say no”.

The theory goes that eyeballs attracted by “quality journalism” can be harvested for corporate ads sold across the online network. By contrast, News has focused more on paywalls to force readers to stump up for “premium” offerings. However, analysts remain sceptical over both approaches pursued by Australia’s teetering dual pillars of legacy media.

The full Hywood email here:

From: Staff Notices
Sent: Monday, 21 November 2011 2:10 PM
Subject: Message from Greg Hywood

Good Afternoon,

You may have seen that The Australian somewhat oddly devoted a chunk of their Saturday front page worrying about Fairfax Media’s well-being. While we were touched by their concern, we were somewhat entertained by their ongoing obsession with print circulation as the be-all and end all of media businesses. I would have thought that they of all people would have a bigger picture about what makes a successful media business these days. Perhaps not. We certainly get it.

The comments they called ‘implausible’ were made by me in the AN Smith Lecture I gave last week. The relevant parts of the speech are attached in case you want to read them. You will see that I argue that while print is important, we know that people want to get their news and views in a variety of ways and we are leading the way in making sure they can. One of the quotes “The idea that circulation is the beginning and end of understanding how a masthead is travelling just doesn’t cut it any more” will give you an idea of what I was saying.

We know great independent journalism will determine the future of media businesses. We have the best and judging by Saturday’s front page piece it must really annoy them. Some people just don’t seem to enjoy competition. Funny coming from a paper that prides itself on being the champion of the free market.

Anyway have a great day – and know that while we are sorry to disappoint News Limited – we have every confidence in the future of Fairfax Media.

Regards

Greg