It was the deal Kirk needed but he was overruled by the board…
A new book by Pamela Williams investigates the decline of the Fairfax company. Killing Fairfax is mostly about the significant structural changes in newspapers and the board room and ownership politics behind the company’s attempts to come to grips with that change in recent years.
Excerpts from the book have been published in Fairfax Media’s rival News Limited newspapers.
While most of the book concentrates on the newspaper business, one excerpt sheds light into the beginnings of the long running take over dance between John Singleton’s Macquarie Radio Network and Fairfax Radio Network.
After the Southern Cross Radio network was acquired by Fairfax, CEO David Kirk wanted to merge it with Singleton’s Macquarie Radio Network, as discussed in this extract.
The second and crucial stage of (David) Kirk’s plans to diversify earnings from radio on the back of the Southern Cross investment fell victim to a dispute in the boardroom.
On 20 February 2008, Kirk took to the board a proposal to merge Southern Cross with the entrepreneur John Singleton’s Macquarie Radio Network.
He faced open revolt from JB (John Brehmer Fairfax) and Nicholas Fairfax. Kirk’s objective was for the company to establish a monopoly position in Sydney by merging the two commercial talk stations in the city on the back of the powerful talkback hosts in Macquarie’s pay, including the controversial and top-rating Alan Jones.
Already Fairfax had a monopoly in Melbourne, Perth and Brisbane. A merger would create a powerhouse Sydney talkback presence and a national network that advertisers could not ignore.
Kirk’s financial modeling indicated that Fairfax could substantially improve earnings from its radio investments from around $30 million a year to more than $60 million a year with this expansion.
It was the deal Kirk needed but he was overruled by the board for the first time, with JB and Nicholas leading the revolt, They argued that the Southern Cross business had just been bought and needed to settle in.
There was a political aspect to the resistance in the boardroom too. JB and other directors expressed their personal reluctance for buying a business with Alan Jones on the payroll.
JB recalled later: “I said it was ridiculous and we shouldn’t go anywhere near metropolitan radio, and all the trouble that brings with the big name prima donnas. They’d paid a lot for Rural Press and they had paid a lot for Southern Cross.”
The other Macquarie, Macquarie Bank, former majority shareholder in Southern Cross, does not get off lightly in the book either, according to this article in The Australian.