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National Press Club -

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live. Today at the National Press

Club the CEO of Fairfax

Holding, David Kirk. A former

New Zealand rugby captain Mr

Kirk was appointed CEO of

Australia's largest newspaper

publishing group a year ago. Since then the massive

Government shakeup has seen the

introduction of new cross media

and foreign ownership laws.

What's ahead for Fairfax? David

Kirk with today's National

Press Club address. Ladies and gentlemen welcome

to the National Press Club and today's National Australia Bank

address. Today it is a particular pleasure to welcome

as our speaker Mr David Kirk, a

former captain of the New

Zealand All Blacks, Mr Kirk

first trained as a doctor of

medicine but has ended up after

first completing a road

scholarship to Oxford and later

working as a management

consultn't and then as chief

policy adviser to former New

Zealand Prime Minister Mr Jim

Boldger he has ended up in the

media business. Mr Kirk comes

to the press club today with an

exquisite sense of timing with

rumours flying about possible

takeovers and mergers in

Australia's $12 million media

sector. Most of those rumours I

think involving Fairfax in one

form or another. Mr Kirkby will

have to shortage of material to

expand upon in today's speech.

National Press Club address. Over the you David for today's


Thank you Jason and good

afternoon everyone. I'm very

pleased to address you today on

Fairfax media, the media

industry, deregulation and the

dynamics shaping our future. I

want to talk to you today about

where we're going and why and

how we see our future following

the enactment of the media

reform legislation. A significant change is in our

name which reflects how we are

thinking of our company and its

future. As many of you know

we're now referring to

ourselves as Fairfax Media.

We're putting a resolution to

our shareholders next month to

formally change the name of the

company from John Fairfax

Holdings limited to Fairfax Media limited.

Fairfax media deneats an

evolution of fundamental

importance. Not only in with

what we do but how we conceive

of our company and our mission

in the 21st century. The

emergence of Fairfax Media

result of an organic and tra

steedgeic growth, both in print

and especially on-line and what

these mine mean in a world of

convergence which is driven

principally by the internet and

digital technologies. It

reflects our aspiration of

being a genuine ly intergrated

digital media company. Let me

spend a few moments setting the

scene by talking about Fairfax

media in Australia and New

Zealand. A number of masked sed

heds in circulation we're the

in circulation. The Australian

Financial Review and Fairfax

business media are the unparalleled leaders in

business publishing. Our stable

of over 60 regional

publications is growing,

augmented most recently by the

acquisition of the board of

mail. On-line we have the

number one news position in

Australia, our classified sites

are first or second in their

markets. Fairfax Media in New

Zealand is that country's

largest media company. We

operate across three broad

divisions, newspapers,

magazines and interactive or

online services. We own 67

newspapers including major mast

heads such as the Dominon Post,

the press in Christchurch, the

Sunday star times and the

independent financial review

through to community place

pay%. We own 13 magazines. Our

best known on-line service is

stuff dot co. Nz. We have a

successful audience reach

across Australia in and New

Zealand. Fairfax Media

publications in print and

on-line reach 4.5 million

people per day in Australia,

New Zealand and around the

world. It is this great

strength that can be utilised by advertisers to reach the

most attractive audiences.

Trade Me was a break through

acquisition for Fairfax not

only because of its commercial

success but because of its

connectedness with New Zealand

society. Trade me scap me is

quite slim pli an integral part

of the daily life and times commercial and social of New

Zealand. There is nothing like

it anywhere nels the world

which helps explain the healthy

price we paid for it. But more

fundamentally it has driven our

thinking about the need to

develop a brand such as Fairfax

media and the kind of company

we want Fairfax media to be.

Therefore I want to talk about

Fairfax in two dimensions.

Firstly the dimension of change

and managing change, something

that is a daily fact of life

for us and then I want to talk

about the company and our

strategy. All of us in this

room have a stake in these

things. For you and journalists

and practitioners of a craft

that is indispensible to our

democracy and the freedoms we

cherish, this is the time of

concern and challenge. And it

herrals a period of significant

change. On the one hand this is

new, there have not been

significant reforms to the

media laws in this country in

20 years. But in another more

enduring sense managing a

changing environment is about

as endemic to media as you can

get. Consider the following

raft of factors. As of last

week there were an estimated 35

million blogs on the Internet

and 42,000 were added in the

last 24 hours. The English

version of whickypedia

contained 1.4 million articles

with users making 85 million

edits or 14 per page over the

last four years. 2006 the world

will take more than 100 billion

photographs or about 16 per

person, more than 90% of the

new cameras purchased today are

of course digital.

The on-line retailer Amazon

dotcom has a total entry of 2.3

million books compared with the

average Barns and noble stock

of 130,000. Net flicks has

25,000 DVDs, your blockbuster

has about 3,000. Tower record s

filed for bankruptcy. There are

245,000 Indias working in call

centres this morning with great

deals for you on credit cards

only slightly less than the

total number of people working

in Australia's ICT industries.

So what are all these facts

tell us. In the media business it is very straight forward -

there are two iron laws of

media - media always evolved

and changes and audiences

always fragment. This is the

way it is. If you're not

nervous you're not paying attention.

Media and the management of

change are therefore

synonymous. In the beginning

there was the wireless now we

have wireless back in a big way

except today it carries

broadband. If you've studied

our industry it's history is a

litany of change, of evolution

and threat. Those who follow

our industry will recall how

cinema was going to kill radio,

how television was then going

to kill cinema and the VCR

would tell kil television, pay

TV was going to kill thely le

vision, satellite radio would

kill commercial radio. Ipods

will kill radio. The internet

will kill television. There is

a constant litany of change and

threat and adaptation.

While television will still be

anning a gra grey gavor of mass

audiences for some time to

come. The last prediction the

internet is going to have a

profound effect on television

does I think have bite. Credits recently issued a report a

couple of weeks ago and I quote

from that . "We are now

witnessing the biggest change

in media consumption attitudes and habits since the advent of

TV. Here is what they cited as

evidence - in the US households

with Internet access watch 4 to

5 hours less TV per week than

those without. Among 12 to 24-year-olds the internet is

taking up 30% of their total

media consumption hours that is

more than any other media

source. The web and social

networks sites are soaring.

This week we saw Google swallow

You Tube.

There was little wonder that

the free to air TV crowd

lobbied the Government so hard

for protection from

competition. The Government's

compliance with free TV's

request for protection is much

to discredit. Media experts confidentally predicted in the

late 90s that newspapers in this environment would be

banished to the memories of

senior citizens in museums by

the middle of this decade.

Clearly this has not happened.

Even though we have suffered

some loss of audience in print,

more people are reading our

content in print and on-line

than ever before in our

history. Every industry faces

structural changes, but they

driven by technology,

regulation, or consumer tastes.

Recognising trendsnd in consumer behaviour is important. Changes which in the

short term may not be dra natic

in themselves but over a longer

period will have a profound

effect on your business and its

future. It is this type of

change that I spend the vast

majority of my time on. We need

to plan for these changes

because changers in our

reader's staiss will drive what

our advertisers want and how

information will be conceived and consumed.

The managing change is

important to utilise the

knowledge and expertise of our

people. I believe the most

fundamental asset in any

organisation facing change is

the right people. It may be a

cliche but it doesn't make it

any less true - managing change

is managing people. Having the

right people in the right place

at the right time with all the

resources necessary for them to

do their jobs effectively. The

capacity to adapt personally

and to lead and manage change

is an attitude of mind,

requires interlect, self-belief

and courage. To manage change

leaders of organisations have

to conceive and to an extent

design the future they want.

And then not knowing all they

would wish, nevertheless set

off from a familiar shore and

set sale. The interlect begins

the journey but it is emotional

strength that completes it. So

this preface I want to discuss

our strategy, the strategy for

our business and a world of

structural change for media and

how and why we will succeed.

There are three key priorities

Fairfax has to ensure we remain

the pre-eminent media company

in Australia tra lay sha.

Firstly we are ensuring that we

defend and grow our newspapers.

We're concentrating on the

editorial quality of our

newspapers to deliver to our

audiences the best in news

commentary and opinion. The

Sydney Morning Herald, the Age,

the AFR, the Sunday Star Times,

these are all agenda setting

newspapers that shape public

policy debates in Australia and

New Zealand. The Sydney Morning

Herald turned 175 years old in

April . The oldest newspaper in

Australia and one of the most

respected in the world. The Age

is 152. The Post part of the

Dominion Post next year

celebrates its 140th birthday.

Our publications did not reach

these milestones by accident.

The value of trusted

independent journalism has

never been higher. We are

utilising better and smarter

marketing to drive circulation and readership and have started

to see positive results from

this, particularly the growth

in circulation experienced by

all our major publication s over the past year.

We have the fastest growing

newspapers in Australia by

circulation and readership.

We've also credited innovative

products for our advertising

customers such as post it notes

and superpanorama advertisement

s. These innovations combined

with the excellent printing facilities we now have

available have increased the offerings we can make to

advertisers, offerings that

ensure advertisers reach their

target markets and provide

Fairfax Media with new revenue

streams. We're not naive about

the challenges faced by large

metropolitan newspapers with

heavy classified loads. But

overall we are bullish on

print. In New Zealand we

recently acquired the Rodney

Times, we bought the

Independent and recast it as

the Independent financial

review, with superb AFR

content. In Australia we

completed the purchase of a

great regional paper the Border

Mail. In ensuring the viability of newspapers is the same

element as faced by every other

business around the world. That

is the control of the cost

base. Fairfax has achieved

significant cost reductions

over the past three yoors and

this will continue. Change in

the ways we think and do things

is paramount to improving our

operational performance. The

second pillar of our strategy

is to build strong online

businesses. We have built and acquired very strong digital

positions in a number of areas

and as a result we 100% own and

manage the leading portfolio of

Internet sites. In Australia

we're number one in news,

dating, and holiday rentals. We're strong number two in

jobs, homes and cars and we're

improving our position in these

areas on a daily basis. In New

Zealand we have Trade Me with

its exceptional position in

online auctions and that market

a growing presence and

classified. We have been

steadily building our online

businesses over several years

and have developed a pool of

talented people who can take us

forward in this high growth industry. Publishing companies that have

not moved as quickly as we have

to develop their Internet

positions now face some very

big problems. Fairfax's

management of our expose pois

sure to the down side of

classified migration has been

crucial to the successful

future of the company. Because

we understood the urgency we

turned it into an opportunity.

Publish ers in Australia and

New Zealand without our scale

and more widely exposed in

regional and rural publishing

where Internet penetration has

been slower have nod not seen

the need to respond and now

have a very big problem.

National online news and

information and associated

national display advertising

has gone, it's no longer up for

grabs. We have most of it.

National online classified s

have already gone and we have a

big share of that. What remains

are local news and local

advertising streams. They are

not the most profitable pools

on-line and it will cost

millions to develop a position

but with the real risk of no

return. But let's look at Fairfax Media's Internet

position in a little more

detail. In 2006 our Internet

revenue grew by 75% and it was

just under $25 million. That

growth is continuing. Trade

Me's earnings were $26 million

in the local currency in the

year to March 2006 and will be

$45 million in the year to

March 2007. A range of analysts

have forecasting that Fairfax's

Media's Internet earning s will

amount to 20% of total earning

s in the next 18 months or so.

Let's look even one level

deeper. With a sick lickal down turn in New South Wales and

Victoria effected print display

advertising in the 2006

financial year, growth was just

0.5% or 2.5 million. On Lyne

display advertising grew by $15

million. Taken together, we

achieved credible growth in

display advertising in a down

market. That's something the

company has never done before.

We got more out of a smaller

market. We diversified our

media platforms and we extend

ed our audiences. Those are all

measures of a very healthy well

positioned media company in a digital world.

As you can see we have benefitted from

diversification, but the flip

side of diverse fication is

integration. From some quarters

I have seen reports saying that

Fairfax would be more valuable

if it were broken up. This is

un adult rated rob bish. A few

simple example also make the

point. The Metropolitan

regional and many of our

suburban papers operate as an intergrated package when

selling to national display,

real estate and employment

advertisers. The digital news

and information business is

dependent almost entirely on

the scale and quality of the

Metro newspapers for content.

The news rooms are intergrated

and will only become more so.

The online classified

businesses in turn are

intergrated with the SMH and

the Age sites from which they

drive a great deal of their

traffic. The online classified

sites drive my career and

domain are co-branded with the

Met tro newspaper advertising

sections each reinforcing each

other. The New Zealand digital

content management system

hosting and technical services,

but not of course the content,

will all be provided from

Australia. All of the

businesses share IT,HR, finance

and other corporate services

including IT platforms, all the

publishing business on the same

IT platforms across

advertising, publishing and


And of course procurement is

entirely intergrated across the group.

So Fairfax enjoys clear

benefits from the scale and

diversity fi case and the value

of integration we have

achieved. The dis synergies of

breaking that up are very

substantial indeed. I know of

no other company that is as far

advanced in this transition as

Fairfax Media. When I travel

I'm repeatedly told by

analysts, investors and

industry colleagues outside

Australia that we are far more

advanced in our management of

the changing digital media

world than any of our

international publishing peers.

Finally the third fellow of

our strategy is to be a great

digital media company. To build

a company that creates,

commissions and distry tri Buts

digital content over multiple

platforms. Broadband will be a

key driver of future growth for

our company and we intend to

for Fairfax to be a prime

content provider on broadband

to enable us to reach our

audiences wherever they are and

where Howe they want to receive

us. Being a great digital media

company has made us revisit our

culture, not our values of integrity, honesty and

independence, but the chulure.

The changes we want to make inside the company in order to

be true to all the potential

captured by the evolution of

Fairfax the newspaper publisher

and to Fairfax media.

Given the rapidly changing

nature of media markets we need

to build a culture that

encourages innovation,

considered risk takes

creativity and agility. Not

attributes always associated

with safe old newspaper

publishers. We are the internet

with Fairfax Digital and Trade

Me have taken us are is the

realise yietion that we need to

be clobive and collective

across the boundaries of

editorial in Sydney and Melbourne, New Zealand and

Australia . We - newspapers,

magazines the Internet, mobile

phones and anywhere else we can.

So this is our vision and I've told you this afternoon how

we're executing it. To

summarise my thinking, on our

company and our future, our

challenge at managing a

changing environment is to

adapt our publications to it

while remaining true to our

journalistic values. We are

leaders on-line in that part of

the world with not only news

but blogs. Not only with

classifieds can but with

commercial marketplaces not

only with words and pictures

but video, processed by our

people in our digital news

rooms. Most importantly, we

have the resources and critical

mass to significantly originate

substantial amounts of news.

Other mediaing aing gra gate

information that is provided

primarily by us as newspaper

publishers. We set the news

agenda. We're a primary source

every morning for what you hear

on the radio and the trigger

for television coverage that

evening. I'm confident of our

ability to understand the

changing nature of the

environment in which we

operate, to compete and exkud

the changes necessary for us to

grow. We know where we want to

go - we want to build Fairfax

Media into a digital media

company with strong growth. As

long as we perform strongly we

firmly believe we are

positioned to do that with our

company in tact and well

positioned. Our strategy is

clear and our resolve is firm.

We are extremely optimistic

about the future of Fairfax

Media. Thauning you and I'm

happy to take some questions.

David thank you for your

address and as usual a period

of questions now. Samantha from

the Australian Mr Kirk. Welcome

to Canberra. This week of frenetic activity on the stock

market has been accompanied by

some comic side lights

including the prospect that

media executive also be forced to collect the morning

newspaper in the three-piece

suit after the editor of the

Sydney Morning Herald in his

pjs. I'm worrying what you

think the time line should be

for the Government when

determining the prob

proclamation date of these laws

and in your quest to become the

great digital media company,

what should happen with these

digit channels, are you

interested or do you want to

let someone else and get in

there on the ground floor and become involved through some

sorlt of access arrangement?

I think the Government should

get on with the Channel A I

think on record I have said is

a flop. I don't think that will

drive any diversity and I don't

think there is a commercial

model around channel A. Channel

B however does have some

potential. I think the

Government needs to move

quickly and work with ACME and

get the arrangements for that

channel the sorted out. What

sort of content can be on it.

What sort of - any if there are

any audience restrictions,

clearly it is a mobile phone platform restriction. That

should move adds quickly as

possible. The fundamental issue

is the access regime. We're

pleased there is an access

regime. We think that's

appropriate and it is likely to

support grooi greater diversity

than if there wasn't.

Nevertheless, I stick by the

position that we as an

organisation have taken

consistently that free to air

TV and possibly Telstra have a

very strong motivation to buy

that channel to prevent

competition. So I think those

are going to be the strongest

bidders for it. If the access

regime allows third parties

such as ourselves to bid

effectively for one of the

channels, then we will look at

that very strongly. But, anyone

that knows the history of

Foxtel and the history of

trying to get on to Telstra's

copper wires would at this

point I think be sceptical

about access regimes driving

diversity because they

certainly haven't in the past.

I am hopeful of the minister understanding that and working

hard to make channel B a

genuine opportunity for some

diversity in these

reforms. James Gribble from

Reuters. I'm just wondering,

one of the many things you've

talked about channel B there,

in your speech you talk about

Internet, synergies between

news, advertising and content.

You don't talk much about

television. Over the weekend

CanWest said it is open for

discussions if anybody is

interested in opening talk. Is

Fairfax interested in talking

about the Ten Network and have

there been discussions at the

point? We wouldn't make any

comment on potential tiups but

we can be clear on that one.

The board of Fairfax has made

it very clear that they don't

see that metropolitan

television has a business model

that they would seek to enter

into and also I think it is

fair to say that the prices

have run up even since the

board maek made that decision.

No, we're not interested in

free to air metropolitan TV.

I was impressed by Fairfax's

faith in the future of the

newspaper business, though I'm

not sure you're the leading

media company in Australia, I

would have to disagree with you

on that. A few years ago Kerry

Stokes who used to own the

Canberra Times sold the paper

regretfully and said at the

time the big buzz is in TV and

he meant it. I think one of the

most interesting developments

is that he has bought into West

Australian Newspapers. As an

executive his dealing with

these changes at the moment.

What is your take on that and

should Fairfax be more

optimistic about synergies of

buying a network in relation to

their own press publishing activities? To answer your last question

first - I don't think so. We

think given the fundamental

structural changes going on in

TV, the relatively limited

synergies and the current

prices it just doesn't make

sense. So we've ruled that out.

Mr Stox will have to comment

himself on why he purchased 14.9% of West Australian

Newspapers and whether he sees

that as something that will

lead to him owning the whole

paper or whether he sees

synergies in the television

network over there. It is not

something I could comment on.

Nick Butterly from the

Australian Associated Press. Do

you have any plan force the

Queensland newspaper market.

Think Peter Beattie said he'd

like to see Fairfax challenge

News Limited there on the daily

news front?

It is always good to have

supporters in high places but

we don't have any particular

plans. We do think notwithstanding our confidence

and in newspapers and print are

extraordinary difficult and

expensive and risky to launch

major metropolitan papers and

to establish the markets that

are well established. We don't

have any plans to launch or buy

newspapers in Queensland.

Katherine Murphy from the

age. I won't stand up because

I'm in a crook position here.

Since the media reforms were

passed by Parliament we've seen

a lot of activity around the

share market, all the major

media players in Australia have

taken strategic positions in

their competitors. Why has

Fairfax not adopted that

strategy and why are we

standing still in a dynamic

market at this time?

That's not quite true to say

that all the media competitors

have taken positions. One has

actually sold so has partially

exited the media positions and

two have taken, I think, you

interpreted them as defensive

positions I think that is

right. There is ourselves, West

Australian Newspapers, APN,

there is Ten who haven't done

anything, I don't think we're

Robinson Crusoe when it comes

to not taking positions. We

don't see any value in taking

passive minority holdings in

other media companies to day

particularly at this these

prices. We're very happy. We

have a clear strategy and will

get on with doing it. We don't

see any need to do something

that is not in the end in the

interests of our shareholders. Andrew phrase

frer the Canberra times. I

believe you and your chairman visited your team at Parliament

House today. Can I ask what

plan use have to expand, reduce

or otherwise modify the way way

Fairfax cover s politics?

It will stay the same. So long

as we keep delivering the

quality we are delivering, very

happy with that. I think we've

got the right mix of people and

the might mix of resources here

in Canberra.

Lisa Murray from the Sydney

Morning Herald. I note your

arguments about why Fairfax

shouldn't be broken up and even

though Rupert Murdoch did play

it down there is a lot of

speculation that perhaps he

would like to take the

financial review and he could

do that, I guess if he closed

down the Australian, no

offence, anyone, but I'm

wondering if you could see that

type of situation and also I

note the name change is Fairfax

Media and it is not Fairfax

Media and Gaming and

entertainment. How serious

would you consider acquisitions

outside the media space?

To answer the first question I

take Mr Murdoch at his word.

He's made a passive entirely

friendly investment. He doesn't

see a breakup of Fairfax at all

likely and he's not

particularly interested in any

other assets in this part of

the world either. That's what

he said in New York. I take him

at his word. There are no plans

to do anything other than

invest in media is the answer

to your second question.

Barbara Adam from news wires.

With all the positioning in the

media sector that's been going

on in the last couple of weeks.

Can you tell us how you see the

media sector looking this time

next year? What Fairfax may

look like this time next year

and if you were planning to

make any acquisitions how you

to would fund them?

Firstly I'll get my crystal

ball. Things are going to

change. The media law also be

proclaimed and they will become

law. Foreign investment will be

possible. It's very very

difficult to predict and it

would be foolish of me to try

to do so. I'm clearly not going

to speculate on anything that

Fairfax may or may not do.

There will be a range of ways

in which we could fund any

expansion activities that we

thought were in the intes

interests of our shareholders.

Clearly we're very happy with

share price, that gives us more

option with script than we

would have had previously. I've

always found in markets that

good deals have no trouble attracting capital. So whether

it was equity or debt we'd have

no trouble raising appropriate

money. Just two quick

questions - one, you the

picture you described today of

your fully intersgrated company

which is - intergrated company

which is positioned in two of

the eight capital cities, first

of all are there any of your Opposition newspapers that you

would like to have if you had a

magic wand? Secondly, it seems

to me in the picture that you've portrayed of the company

and the way you're trying to

redesign the company it seems

without a major shareholders

you're a sitting duck for a

takeover. How would you feel

about our cashed up Telstra

taking over Fairfax?

The first question about

whether I'd be interested in

buying other newspapers. We're

bullish on newspapers but it's

a matter of price. I think it

is true major metropolitan

newspapers don't have quite the

same growth profile as

businesses that they have in

previous years. That's the same

all around the world. We have

no particular targets or aims for particular newspapers in

this part of the world and not

many that we know, if any that

are foresale. You never say

never and if the price was

right you'd have a good look at

it. We don't have a major

shareholder that has been the

case for Fairfax ever since the

business was refloated. There

are many benefits for that. I

don't think you're right when

you say that without a major

shareholder the company is a

sitting duck for takeover. In

the end, I mean the media seems

to attract buyers for whom it

is difficult to justify on the

basis of economics alone more

than just about any other

industry. But in the end most

deals are done for rational

economic reasons. I think so

long as we're running Fairfax

well and we're getting a fair

valuation, people have seeing

the value and the medium term growth prospects in the

business then we'll see our

share price sit up at a level.

Once people pay 20% 30%

premiums to take the company

over they can't make money out

of it. That is our aim at board

and management to run this

company well, to make sure we

have growth opportunities and are growing the comm company

and to see that fairly

reflected in the share price. I

think that's the best defence

we can have in terms of ever

wanting to take the business


Before I ask the next

question. Can I ask is it

possible that you see the open

share register as a virtue for

Fairfax and not the negative

that some commentators are


I think there is at least one

very big virtue and I'm not

suggesting that proprietor run

media organisations,

particularly in this room are

likely to be less independent

or have a less independence of

integrity when it comes to

reporting the news. I do think

there is a special quality in

organisations that have for a

long time been completely

independent of any proprietor

ownership. I'm not krilt sizing

proprietor owned organisations

but I am praising independent

organisations that don't

operate in that environment.

There is a down side of course

that when you come to the

situations that frenzies around

as we're seeing at the moment.

It is a more challenging time

for staff and more difficult

for morale when the company is

kicked around but I think we're

a mature organisation focussed

on what we can control. As I

said before so long as we grow

and succeed in our own right

then that's our best defence.

I was interested when you

were talking about the culture

of Fairfax, talking about the

need to be collaborative and collected across natural

boundaries including an

editorial and advertising, does

that mean that editorial gets

to have a greater say over the

advertising we sell or that advertising has a greater say

over the news we run?

No, it doesn't. Just because

it makes no comment about where

the boundary actually is. But

once we collectively have

determined where the boundary

is, then it makes absolute

sense for us to work together

to maximise, opt miez the

position we've got in both

commercial sense and an

editorial sense. The two are

intimately related. Failing

commercial organisations don't

have the commercial resources

to invest in commercial

quality. The two intimate ly

related in a range of ways but

that's one of them.

About five years the Sydney

Morning Herald spent about $6 million redesigning the paper

to look really fabulous for

readers and advertisers. It all

looked really fabulous but ran

into a terrible problem which

was when the readership which

was predominantly old picked it

up they couldn't read it

because the print was too Pale.

I was wondering given what you

thood say about Fairfax

digital, what the age scap age

profile is of the newspaper

readership and your digital

strategy and your Internet

services and how much that

influences the company in the

way it wants to take the company forward because

obviously, we have to find new

readers and new users of our services?

I think that is an interesting

kal Len dge for us. We have a

younger readership online for

very obvious reasons. I do

think it is also important that

the papers continue to think of

themselves and market

themselves, position themselves

both the editorial and design

and use of colour and whole

other range of ways as mass

medium organisations, so the

choose the older demographic

and to say that's predominantly

the people that read newspapers

we need to Taylor a paper for

that demographic would be a

mistake. Newspapers need to be

lively and have a high story

count. They need to use colour,

pictures and Koreaive way, they

need to deal with the fact that

everyone is time poor, particularly those in the

workforce. They need to do

things interesting for young

people, for poo children. That

won't be on every day of the

week. We see particular

sections in the newspapers, a

range of things at the weekend

much more designed for younger

people as well. You have to

adapt the paper and that's one

of the great things about

newspapers, they've been end

Leslie adaptable as consumer

tastes have changed and people

have become time poor and

people have had access to other

media for breaking news.

Newspapers have adapted to

remain relevant to people's

lives. Irthink the demographic

challenge did another one of

those and it is really important we continue to do that.

Intergrating our online

position with our print

position in a sense of having

flags and markers which move

people between the two. You see

much more in most papers,

certainly in our paper, much

more to the online and online

we're talking about a story

broken in the Sydney Morning

Herald and so on, we're pushing

the two media complimentary to people's media consumption.

That I think that's the right

thing to do and I think it is

effective. I have to say I

don't think I've been to a more market sensitive National Press

Club address than this one. I

did appreciate your sentiments

about the durability of

newspapers and if I can quote

my organisations, David, the

editor of the Sydney telegraph

was asked whether the internet

would destroy newspapers he

said, "No, because you can

never wipe the barbie down with

the internet." On the question

of the net and the challenges

and the questions they pose to

newspapers. I wonder if you can

comment on whether there'll

ever be a regulatory regime

that can deal with the absence,

in a lot of cases on the net,

of what you call honesty and

integrity in journal. I.

Having been a victim of that

myself, how we deal with

information sites that have no

tangible assets?

In the long run I think that

plays out because honesty,

integrity, independence, people

get a reputation for that, your newspapers and our newspapers

have a reputation for that and

those brands are where people

go. The two major newspaper

groups in Australia basically

aggregate the leading o

audiences for news and

information on-line for two

reasons - we have the major

mast heads and with all the

credibility we go with

particularly if we have the

content generation and

journalists. People do go to

aggregated or scraped sites but

it's a very brief touch. They

go there, go through it and see the headlines and buzz off some

where else. They don't go for

the depth, the buy lines or

even blogging because you want

to blog, blogs are really a

conversation between a moderator or someone with a buy

line and a range of individuals

who can commune Kaye Kate with

each other. You need that

environment to make that valuable place for people to

go. In the long run that plays

itself out through commercial

and brand integrity. In the

short term it's a real issue. I think individual organisations

have to be particularly vigil

lant. We've made mistakes and

put stuff up on-line or we've

got stuff offline and printed

it in the newspaper that didn't

turn out to be true, that was

very embarrassing. We've

redoubled our focus on training

young journalists on how to

deal with Internet sources. For

major media organisations we

will be vigilant. I guess in

the end the fly by nighters

that write any old stuff up

there just to without caring

much will not have viable

business models in the long run

but may do a bit of damage in

the short run.

Can I ask you the Prime

Minister had has maintained a

public non-sha lance when it

comes to media reform, I wonder

whether you thought he is as

disinterested as he maintained

publicly? Secondly, do you

think what we've ended up with

is good public policy? Funnily

enough is has never been the

attitude I've associated with

the Prime Minister and I still

don't associate that with the

Prime Minister. So that's the

answer to the first one. I

think it's a real mixed bag as

a public policy. I mean it is a

form of protection of free to

air, it is no doubt about it.

There is a transition plan to

help free to air to deal with digitalisation Rev using,

that's not good public policy.

It is not good to choose one

section of the media and give

them a transition plan not

switching off analogue until

2010. We'll allow you to put

all these dar Barrers to

digital takeup in place. We'll

give you the digital channels

and give you the mobile. For me

that's not good public policy.

It's also not good public

policy to have a hold on

regulations that can by and

large strain the free flow of

capital. This Government and

other previous Governments have worked hard to make Australia

very competitive environment

for people to invest in. In

principle it is good to do

that. The media in a small

country like Australia is a

sensitive and important sector

and there needs to be balance

and I think diversity is a

fundamentally important value

in a country. The media

reflects that diversity. I

think it is difficult, it is

easy to stand up here and

criticise what is. It is a darn

side harder to design what

should be. The Government's had

a fair go, I don't think

they've got it all right. But I

hope, I genuinely hope that

channel B does drive a bit of

diversity and frankly if they

talk off the restrictions

around channel A I think you

would have the decent go at

some new content and new players. It's kind cough okay.

Scott Murdoch from News

Limited. Two questions -

firstly you mentioned foreign

investment. Given what we've

seen from PBR with CVC Asia

Pacific will we start to see

more overseas buying activity

into the Australian media

market? Particularly is the

media market mature enough for

private equity? You mentioned broadband as well the

development of that, given what

we've seen there between

Telstra and the Government is

Australia's broadband speed

holding back business, do you


I think we're unlikely to see

too much more massive foreign

investment in the business.

From trade buyers it is

difficult because media assets

in Australia trade on higher

multiples so they're more

expensive. For them to buy into

a relative ly small market that

they would consider to be high

prices is pretty tough. Private

equity and financial buyers

will go anywhere in the world

there is a good deal. You have

to look at individual deals and

see if there are any deals that

make sense for private equity.

That is hard to predict. Again

the prices are pretty full at

the moment. That would be hard

from a private equity perspective.

Do you think a fourth

commercial television licence

encourage diversity and would

Fairfax bid for a licence if it

were to be legislated for?

There is no doubt it would.

You have another player out

there providing you and

different and diverse content.

Whether Fairfax would bid for

it is a very, I don't know is

the answer, I would have to go

into seeing how you could

differentiate yourself. It

faces fragmentation like a lot

of markets but is perhaps more

on the lead ing edge as an

economic challenge to the

business model than any other

media. It is not clear at all

that you'd want to jump in


As the former leader of a

national rugby team I was

wanting to ask you Fairfax was

right in its weekend's exerts

in the herald to put such a

high emphasis on the sexuality

of the former leader of another

national rugby team?

I'm trying to remember who the

leader is. Given it was in our

papers the answer is yes it was

right. I can't remember the

exact issue, though. Alan

Jones, he was the leader you

mean the coach? No that is very

news worthy. Alan Jones is

obviously very news worthy

person. He has a big influence

in a whole range of areas in

Australian society so I

certainly don't have any

criticism of our papers for

syndicating or running excerpts

of the book.

Barbara Adam from Dow Jones

again. Given the comments you

made recently about having the

open share register. Just

wondering if you're actively or

passively seeking a major

shareholder to someone who

could take a blocking stake?

Also are you noticing any

pickup in advertising with the

petrol prices coming off recently?

No we're not actively or

passively looking for a major

shareholder. We have an AGM in

a week at which point we'll

give an update on trading

conditions. I notice in your

speech you make the point you

have achieved significant cost

reductions over the past three

years and this will continue.

Can you give Australia hint of

where you plan to slash costs?

Slash - go the gents. Just

slip that one in. I think a

more accurate description would

be continue to manage the

business for productivity and

efficiency gains. Because we're

not into slashing costs, we did

do a redundancy round last year

which took out 70 journalists

that was in November and

completed by January or

February. There is no intention

to do that sort of redundancy

round. During the last

financial year if you corrected

for a couple of onoffs ARX a

new magazine and our Australian

publishing business the kors

were flat year on year. That is

taking inflation into account

the cost base was reduced by

$35 million in a year. That's a

great outcome for the business

that was done with some

redundancies but a whole range

of other sensible cost saving

initiatives which are driven

down to the business which are

done throughout the business

running the business more

efficiently. We will keep that

up. There are a range of other

things we're moving our of the

office in Sydney to a lower

cost area. There is a whole

range of things that we will

do, consolidate and move out that won't effect the quality

of the journalism and the

products that we put out but we

will just grind away getting

our significant costs out of

the business over time. Mr

Kirk, hi. Does Fairfax have a

view on proclamation. The

Government so far has refused

to specify when these new law

also take effect. Do we have a

view as to what would be the

best sooner rather than later,

off into 2008?

I think they need to get on

with finding the access regime

around licence B and get on

with it and proclaim the whole

thing and move ahead. There is

absolutely no point sitting

around and I imagine from their

perspective as well, given

there is an election next year

they would want to get on with it as well. APPLAUSE

Well David on behalf of all

members of the National Press

Club we thank you for today's

address. We'd like you to

remember us so you have a

National Press Club tie here

and a membership of the club so

next time you're in Canberra

feel free to drop in. Thank

you. Closed Captions provided by Captioning and Subtitling

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