By David Cohen
Thursday 17th April 2003
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What happens beyond that point is anybody's guess or everybody's guess, if the journalistic talk inside the company's Press House about this week's shock acquisition by Australia's second-largest publishing group is any guide.
According to a number of senior employees within the organisation spoken to this week, a common theme to emerge was that the new owners could be embarking on a mission that appeared to be largely completed.
In its boldest strategic move in 20 years, John Fairfax Holdings has confirmed it will buy virtually all of the publishing assets owned by INL for $1.18 billion.
INL's businesses include , its flagship paper, Wellington's Dominion Post, the Christchurch Press, seven daily provincial titles, 61 community papers, the two Sunday titles, and an array of lifestyle magazines, including Cuisine, its most recent acquisition. It employs some 2200 workers.
This country's other major newspaper player, Irishman Sir Anthony O'Reilly's APN News & Media, owns the New Zealand Herald.
The cash sale is conditional on approval by the Overseas Investment Commission, completion of due diligence and a final vote by shareholders.
The announcement immediately prompted speculation that the New Zealand company would soon be wound up in its current form to make way for the new guard and increase its controlling stake in Sky Network Television, the pay-TV network it holds a two-thirds share in.
Fairfax chief executive Fred Hilmer has indicated that serious changes will be needed for the New Zealand operation to generate 30% of its overall revenue and add 20% to earnings per share by the end of the next financial year.
The job of implementing Mr Hilmer's designs has fallen to Brian Evans, the chief of Fairfax's Australian community newspaper business, who will be based here from July 1.
Noting the company's sometimes turbulent managerial history, as well as the notably trim operation that INL has become, a number of Fairfax analysts expressed disappointment at the deal's final price while others asked how the publisher of the Melbourne Age, the Sydney Morning Herald and the Australian Financial Review intended delivering on its promise to boost long-term returns from this side of the Tasman.
At best, it has achieved only mixed results in trying to forge such new cost efficiencies at home, while the room for significant price increases in such a fiercely competitive market appears to be limited.
"This has been as mystifying as it has been dramatic," one fund manager and long-time Fairfax watcher said.
Among the mystifying issues is the question of how Fairfax can seriously remodel a company that has effectively been remodelled once already over the past year, as well as the interesting parlour game of trying to unearth historical clues that could help better explain this week's developments.
As it happens, both lines of inquiry converge on a single red-letter date not April 14, 2003, the date of the new announcement, but December 13, 2000, when the company's former managing director, Mike Robson, died suddenly at his Wellington home.
Mr Robson, a widely respected newspaperman, was steeped in the traditions of the earlier, more courtly era of the family-run Evening Post, where he served as editor from 1975-81 and out of which INL's corporate predecessor, the Wellington Publishing Co, forged its down-home brand.
His presence at the helm of INL was always said to have constituted the single-most compelling reason that media mogul Rupert Murdoch's News Ltd, INL's biggest shareholder, generally opted to keep a polite distance from day-to-day running of the group's operation.
Following Mr Robson's death, however, Mr Murdoch moved swiftly to strike a much clearer brand on the organisation, shaking up its managerial structure and bringing together many of the back office and editorial and distribution systems that had remained separate up until that point.
In a move long opposed by Mr Robson while he was at the helm, Mr Murdoch also set the wheels in motion for last July's folding of the Dominion and Evening Post into the one Dominion Post title.
As well as giving INL its first real chance of producing a serious national title to rival the Herald, the last decision can now be seen as Mr Murdoch affixing the necessary jewel in the group's crown for any future sale.
The changes also signalled an end to the company's old system of loyalty and reward dating back to the Robson era, in which well-behaved employees were invariably tapped from the ranks of the Post to become future editors and managers.
One of the individuals who most benefited from that old culture, former Post editor and onetime INL deputy chief Rick Neville, was himself one of the earliest casualties of the regime.
Mr Neville had been widely expected to follow in Mr Robson's footsteps as chief executive but found himself passed over for the position in favour of News stalwart Tom Mockridge. Both men were moved to positions in Europe and Australia almost as soon as the Wellington newspaper merger was finalised, in effect bringing to an end the old chapter in INL's history.
With the INL book now apparently about to close for good, the question remains of how the local operation can be made over yet again to substantially increase its profitability and realise untapped synergies between the two groups, even while squeezing better yields from a market tight on advertising and red-hot in the competition for readers.
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