John Fairfax Holdings Limited
John Fairfax Holdings Limited
Incorporated: April 9, 1955 as John Fairfax Limited
Sales: A$359.1 million (US$247 million)
Stock Exchanges: Sydney
SICs: 2711 Newspapers; 2721 Periodicals; 6719 Holding Companies, Nee
John Fairfax Holdings Limited is the holding company for an Australian publishing enterprise established more than 150 years ago. Family owned and operated until the 1990s, Fairfax is the oldest publishing group in Australia, and one of its largest. Its operations are centered around three publications—the Sydney Morning Herald, the Age and the Australian Financial Review.
The Fairfax family originated in Warwickshire, England, where the patriarch of the family publishing empire, John Fairfax, was born in 1805. At the age of 12 he went to London to work as an apprentice bookseller, librarian, and printer. Returning to Warwickshire in 1827, he started his own printing business and later established a small newspaper, the Leamington Spa Courier. In 1835, having converted to a “dissenter’s church,” he turned his energies to a less conservative paper, the Leamington Chronicle.
But after being sued twice, Fairfax decided to emigrate with his family to Australia, then an English penal colony. Arriving in Sydney in 1838, he found work as a typesetter for the Commercial Journal and Advertiser. After a short stint as a librarian, he purchased an interest in the daily Sydney Herald and in 1841 purchased the paper with a partner, Charles Kemp, for £10,000.
With the closure of the rival Australian in 1848, the Herald dominated local journalism. By 1852 “Granny Herald,” as the paper had become known, had a circulation of more than 4,000. The following year, Kemp sold his interest in the paper to Fairfax, who enlisted his son Charles as a partner.
A leader in his community, John Fairfax stood for election in 1856, but lost. Still, with circulation now over 6,600—third in the British Empire only to London’s Times and Telegraph —Fairfax exercised considerable influence over public opinion.
Bringing his second son, James Reading Fairfax, into the partnership, the enterprise became John Fairfax & Sons. The company launched a second paper, the Sydney Mail, and installed new, more efficient Richard Hoe rotary presses.
Charles Fairfax died after being thrown from a horse in 1863 and was replaced in the partnership by a third son, Edward. The business continued to expand, particularly after the demise of another competitor, the Empire. John Fairfax died in 1877, leaving the business to his two sons.
James Reading Fairfax strengthened the Herald’s reputation for evenhandedness and authority and, with his large build and Edwardian beard, was an imposing figure. It was his bold decision to turn over daily operation of the business to a capable former rival, Hugh George. Under George, the appearance of a competitor, the Sydney Daily Telegraph, cut into circulation but not into advertising revenue.
After George died in 1886, Edward grew openly weary of the business and sold his interest to James, who in turn brought his three sons into the company. Meanwhile, Samuel Cook, a parliamentary reporter for the Herald, replaced George as general manager.
Cook oversaw the conversion of the Herald to mechanical typesetting in 1895, an important move that lowered labor costs and sped production. Such an investment was risky, as the economy was plagued by depression, but soon paid off. Cook left the company in 1907 and was replaced by William George Conley, a former reporter.
James Reading Fairfax, now in his seventies, began to delegate more authority to his sons James Oswald and Geoffrey. James Oswald was more domineering than his lighter spirited brother. Due to a weak voice, though, he was forced to precisely punctuate his sentences—a habit that most found annoying.
In 1916, with the outbreak of war in Europe, Australia’s involvement as member of the British Empire brought hardship to the Herald’ s readership. The Fairfax company, too, had grown beyond effective family administration. So, to limit the family’s liability from litigation and facilitate the transfer of interests between family members, John Fairfax & Sons was registered as a limited corporation.
The cost of newsprint increased dramatically during World War I, forcing the company to declare its first operating loss in 1919. This was remedied by raising the sale price of the paper from Id to 1.5d. With the end of the war, however, came the death of the elder James Fairfax at the age of 85.
Within years, both Geoffrey, who had no children, and William Conley also died. The principal heir to the family business was James Oswald Fairfax’s son Warwick; he had held only brief tenure on the board. When his father died in 1926, Warwick found himself in control of more than a third of the company’s shares.
The young Warwick Fairfax placed tremendous trust in his managing director, Rupert Henderson, despite an often acrimonious relationship. A previous director, Charles Harris, was fired after four years for drinking and gambling to excess. Another, Athol Hugh Stuart, fared better, involving the Fairfax enterprise in a collaboration with Sir Keith Murdoch’s Herald and Weekly Times (HWT) company to form the Australian Associated Press and a newsprint operation in Tasmania. He also oversaw Fairfax’s reversion to proprietary status, eliminating the obligation to publish its balance sheet. But Stuart’s demeanor grew violent, and in 1938 he too was fired.
After successive years of declining profit, Henderson reorganized Fairfax. He was so successful in shoring up the bottom line that the company’s profits—when compared to the low figures of the previous years—became a source of embarrassment, especially during World War II, when after-tax profits more than doubled.
Warwick, who often wrote for the paper under pseudonyms, was frequently ill during World War II. In 1944 one of his articles so enraged Henderson that he accused Warwick of developing “an evangelical fervor” and threatened to resign. The two made amends, however, and Henderson stayed on.
Warwick Fairfax had a troubled personal life, which led to his first divorce. While he remarried in 1948, he and Henderson became concerned about the possible loss of family control of the enterprise. They convinced some family members to relinquish their interests in the company to them and virtually ran the company as a committee of two until 1949, when Angus Henry McLachlan was promoted to general manager.
Fairfax fought numerous battles for niche markets during this period, substantially expanding its publishing empire in and around Sydney with such papers as the Australian Financial Review. When rival Frank Packer made a bid to acquire several papers run by the independent Associated Newspapers, Henderson beat him to the punch, in effect merging that business with Fairfax. Later, several of the papers and their operations were consolidated into one facility, a new production house on Sydney’s Broadway.
In 1955 Fairfax also acquired a license for Sydney’s ATN7 television. The expansion stretched Fairfax’s financial resources so thinly that the company was forced to go public on April 9, 1956.
Warwick Fairfax, meanwhile, had become embroiled in another matrimonial debacle when, it was charged, he forced the breakup of a friend’s marriage. He divorced a second time, married his friend’s wife, and was forced to leave the company temporarily to settle litigation. Warwick renewed his waning interest in the company, which, under Henderson’s managerial direction, had obtained a second television station, QTQ in Brisbane. The company also took over its number two rival in Sydney, the Mirror Newspapers, through a shell company.
The Mirror, however, was a poor fit and was sold in 1960 to Keith Rupert Murdoch, who had inherited his father’s publishing group. Murdoch used this entree into Sydney wisely, utilizing the Mirror’s publishing facilities to launch a rival national paper, the Australian. In 1972 Murdoch also snapped up Packer’s Daily Telegraph and Sunday Telegraph, which competed directly with Fairfax.
Fairfax, however, had also been busy during the 1960s, acquiring the Newcastle Morning Herald, Newcastle Sun, and Canberra Times, an interest in Canberra television station CTC, and the Australian share of the British television group ATV. Six radio stations that came with ATV were later spun off as Macquarie Broadcasting Holdings Ltd.
Henderson retired in 1964 but retained his seat on the board. He was succeeded as chief executive officer by McLachlan. Under McLachlan, Fairfax acquired the Melbourne-based Syme company, which published the Age and, beginning in 1969, the 114-year-old Illawarra Mercury. Later that year, McLachlan suffered a coronary occlusion that forced his retirement. Unwilling to return managerial control of the paper to the 68-year-old Warwick, McLachlan, Henderson, and Warwick’s cousin Vincent nominated R. P. Falkingham as the company’s treasurer. Outraged, Warwick put up a good fight and later won, though from the ceremonial position of chairman. At last, he had direct editorial control and the power to fire people.
However, after the company launched a nationwide weekend paper, the National Times, in 1971, Fairfax’s directors and other employees grew increasingly irritated by the arch-conservative views of Warwick. The situation came to a head in July of 1976, when the directors asked Warwick to resign in favor of his son, James Fairfax, who had distinguished himself at the helm of Amalgamated Television. This time, they succeeded.
While relegated to a minor position in the company, Warwick mounted an ill-conceived attempt to take over Fairfax and was forced to cede even more power as a result. R. P. Falkingham, meanwhile, finally assumed the position of chief executive officer. He was properly suited for the job, showing no bias for Fairfax’s newspaper business over its other important mediums.
All aspects of the Fairfax Group, though, were suffering reverses in the marketplace. Falkingham responded by adopting more realistic rates and prices and, in 1977, placed D. N. Bowman in charge of the flagship Sydney Morning Herald. Bowman made several changes, including the implementation of the computer-based Arsycom cold type press system, which drastically reduced production costs.
In 1979 Rupert Murdoch surfaced again with a bid to take over Fairfax’s other rival, the Herald and Weekly Times. Determined to thwart Murdoch, Fairfax began amassing a “friendly” holding in its competitor. In the end, however, the government compelled Murdoch to abandon his bid on antitrust grounds. The defense of the HWT cost Fairfax dearly, causing it to sell off its interests in CTC and QTQ television.
In addition, sales of Fairfax’s Herald and Sun were stagnant, the company’s Sungravure magazines—acquired with Associated Newspapers during the 1950s—were in trouble, and its interest in Macquarie Broadcasting showed no gains. Perhaps out of desperation, Falkingham recommended that he be replaced as general manager by 36-year-old Gregory John Gardiner, and that Fairfax’s five Sydney papers be put under the editorial direction of Maxwell Victor Suich.
Warwick Fairfax, still offering his opinions, opposed the appointment of Suich and Gardiner, whom he considered too young. Nevertheless, under the direction of the two men, the tenor of the Herald and its sister papers became decidedly cynical, even sensational. While this was extremely distasteful to the aging board, they could not deny that circulation, if not yet profits, was rebounding strongly.
Despite attempts to modernize Fairfax, much of the company’s labor-intensive production capacity was outdated and increasingly uncompetitive. A decision to overhaul several facilities led to serious labor trouble, particularly at Sungravure Magazines, where workers were already on strike for higher pay. Gardiner championed the cause of upgrading the facilities and, in the end, succeeded, resulting in the lay off of 375 Sungravure employees. The division subsequently changed its name to Fairfax Magazines Pty. Limited.
Opposing Gardiner in this and many other matters was Falkingham, who quickly fell out of favor with the board and was forced to resign. Rather than replace him, the board split Falkingham’s responsibilities between Gardiner and Fred Benchley, a veteran of the magazine group.
The pressure for consolidation in the Australian publishing industry hit a fever pitch in the mid-1980s. Financiers such as Rupert Murdoch, Robert Holmes a Court, and Alan Bond swarmed over the market, raiding smaller companies to consolidate their operations with other papers they controlled.
After Murdoch’s aborted attempt to enter Fairfax’s Sydney market in 1979, Holmes a Court launched an unsuccessful bid for Fairfax in 1981. Far more serious, however, was Murdoch’s second attempt at the Herald and Weekly Times in 1986. This time, the company’s board advised its shareholders to accept the buyout offer from Murdoch’s News Corporation. A combined HWT/News organization was capable of dominating advertising rates throughout Australia through network advertising.
Fairfax Group was determined to foil Murdoch; so, however, was Holmes á Court, who offered nearly A$2 million for HWT. Murdoch countered with a A$2.3 million bid for HWT and its Queensland Press subsidiary. Although Fairfax offered a bid of its own, it was too low to be taken seriously. Fairfax could do little but watch. Sir Warwick was by now gravely ill, which only complicated matters.
In January of 1987 Murdoch struck a deal with Holmes a Court, in which Holmes a Court would sell all of his existing shares in HWT to Murdoch, increasing his control of HWT to 44 percent. Later, he arranged to purchase Advertising Newspaper’s 11 percent share in HWT and emerged with a majority.
In order to stay ahead of regulators and make his deal work, Murdoch was forced to reorganize his television properties. In a complex deal involving Murdoch, Fairfax, Bond, Holmes a Court, and HWT’s Kerry Packer, virtually every major station changed hands. Fairfax emerged with the Melbourne television station Murdoch had promised to Holmes a Court, and thus held television, radio, and newspaper interests in Sydney and Melbourne.
Warwick Fairfax died in 1987, but the battle for supremacy in Australian journalism was not over. Later that year, fearing that Holmes a Court would bid for Fairfax, Warwick’s 26-year old son, Warwick, Jr., launched a surprise bid for control of the company, under the belief that many of the 150 Fairfax family members would not sell their shares to Holmes a Court.
Warwick’s takeover, launched through a shell company called Tryart Pty. Limited, succeeded in taking the company private. But in the process, he deeply split the family and placed Tryart A$1.7 billion in debt. In order to service the company’s heavy debt, Tryart was forced to sell off several assets of the Fairfax Group.
In December of 1990 the leveraged buyout failed when Tryart proved unable to meet its debt service obligations and was forced into receivership. Warwick Fairfax, Jr.’s bid to protect the company had only made it more vulnerable for a takeover. Almost immediately, a bid was made for the company, not from the Australians Murdoch or Holmes a Court, but by Canadian newspaper financier Conrad Black, in partnership with Kerry Packer, whose paper the Fairfaxes had once endeavored to rescue from such a takeover.
Black was widely despised in world banking and publishing circles, but had distinguished himself some years earlier by turning London’s Daily Telegraph into a highly profitable venture. Upon news of the bid in 1991, Fairfax’s employees went on strike, protesting Black’s antilabor record and right-wing political views.
Despite the opposition, Black ironed out a deal with Tryart’s creditors and assembled a consortium called Tourang Limited, which consisted of Black’s Telegraph PLC, Hellman & Friedman, and Consolidated Press Holdings. Consolidated Press was forced to withdraw from Tourang after Australian regulators questioned the legality of its participation under media cross-ownership regulations.
Tourang succeeded in taking over all the assets of Tryart, including John Fairfax Pty. Limited. On January 7, 1992, Tourang changed its name to John Fairfax Holdings Limited and gained a listing on the Australian Stock Exchange.
The ill-fated attempt to save Fairfax Group Pty. Limited from nonfamily interests only speeded the family’s loss of its patriarch’s company. But it may have happened soon enough to save Fairfax from several years of poor performance under what many considered to be inept “newspaper man” management. Black restored financial strength to the Fairfax organization and ensured that, if nothing else, at least the company didn’t fall into the hands of Rupert Murdoch.
In Black’s first year as nominal head of the resuscitated Fairfax group, the company’s publications garnered numerous awards and marked respectable financial performances, in spite of the depressed Australian economy. It remains to be seen what efficiencies Black may extract from John Fairfax Holdings Limited if the company’s profitability begins to lag.
Associated Newspapers Ltd.; AAV New Zealand Ltd. (95%); David Syme & Co., Ltd.; Dysford Pty. Ltd.; Fairfax Community Newspapers Pty. Ltd.; Fairfax Corporation Pty. Ltd.; Fairfax Finance Pty. Ltd.; Fairfax Ian Ltd.; Fairfax Investments Pty. Ltd.; Fairfax Letterbox Australia Pty. Ltd.; Fairfax Newspaper Holdings Pty. Ltd.; Homes Pictorial Publications Ltd. (80%); Homes Pictorial Unit Trust (80%); Illawarra Newspapers Holdings Pty. Ltd.; Intercity Hire Pty. Limited; John Fairfax Group Pty. Ltd.; John Fairfax Group Finance Pty. Ltd.; John Fairfax Group Inc. (United States); John Fairfax Ltd.; John Fairfax & Sons Ltd.; John Fairfax Ltd. (New Zealand); John Fairfax Ltd. (United Kingdom); John Fairfax Ltd. (United States); Joynton Ave No. 2 Pty. Ltd.; Magazine Promotions Australia Pty. Ltd.; Magazine Properties Pty. Ltd.; Magdiss Pty. Ltd.; Manoa Investments Pty. Ltd.; Morisset Courier Unit Trust (80%); Newcastle Newspapers Pty. Ltd.; Rozelle Terminal Handling Company Pty. Ltd.; Ridge Publications Pty. Ltd.; S. Richardson (Newspapers) Pty. Ltd.; Suburban Investments Pty. Ltd.; Syme Communications Ltd. (New Zealand); Syme Electronic Communications Pty. Ltd.; Syme Media Pty. Ltd.; Syme Travel & Entertainment Pty. Ltd.; Suburban Community Newspapers Pty. Ltd.; The Rockwood Pastoral Company Pty. Ltd.; Votraint (No. 297) Pty. Ltd.; Votraint (No. 427) Pty. Ltd.; Wattle Street Properties Pty. Ltd.
“John Fairfax Board Moves to Put Firm Into Receivership,” Wall Street Journal, December 11, 1990; Souter, Gavin, Heralds and Angels: The House of Fairfax, 1841-1990, Melbourne University Press, 1991; “Conrad Black Likes a Good Fight, and He’s Getting One,” Business Week, December 2, 1991; John Fairfax Holdings Limited Prospectus, 1992; Fairfax Annual Report, 1992.