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Panpa Bulletin : February 2007
The truth behind the head PANPA Bulletin February 2007 COVER STORY 20 A structural shift The organisational structure I inherited in 1998 was the corporate equivalent of a large but dysfunctional extended family. The publishers of the major mastheads openly competed and refused to cooper- ate with their sister publications. Advertising sales were completely decentralised, major and minor mastheads reported directly to me and the internet was lumped in with overall corporate strategy. The structure made it impossible to man- age and control costs and resulted in a poor focus on proft and loss. The structure might have been great for independent journalism, but in my view it had the poten- tial to destroy the company. In early 1999, soon after taking over, I tried to tidy the mess and reduce the number of people reporting directly to me from eighteen to twelve. I created a group operations division and hired Peter Graham, who had been chief executive of Pacifc Power during my time as chair, to run it. This brought publish- ing services, printing, pre-press, national distribution, IT, purchasing, transport and facilities management under central man- agement, providing signifcant cost savings and administrative advantages. It took eighteen months to pull together but was well worth the effort. At the same time, I streamlined the publisher structure. The Australian Financial Review and busi- ness magazines were brought together to form Fairfax Business Media. I also formed a magazines cross-mast- head group and put the internet into a separate operating division called f2. In ad- dition, regional newspapers were taken on by Alan Revell, publisher of The Sun-Herald. The main publishing silos at The Herald and The Age remained intact. In the early days I tried to keep the exist- ing senior staff in place and promote talent from within the organisation, but few of the publishers had the necessary business skills. I also found it diffcult to keep an ongoing dialogue with The Age in Melbourne during these crucial early years. So in 2002 I streamlined the structure again. I swapped around the publishers of The Age and The Herald, moved The Sun- Herald into the newly named Herald group and created a commercial division under Nigel Dews comprising the internet and metropolitan print classifeds. However, the issue of cooperation in edi- torial display advertising between The Age and The Sydney Morning Herald remained, so a year later I made the controversial decision to adopt a functional structure for the metros. Instead of a publisher in each city I had an editor-in-chief at both papers reporting to a central editor-in-chief. Likewise, I ensured that advertising and marketing in both papers was controlled by a single commercial director. I realised this was not optimal and that it might result in losing local focus, but I saw it as the only way to signifcantly improve journalism, ad- vertising sales, marketing and cost control at the two papers while also enabling new printing capacity. Mark Scott was appointed editor-in-chief of The Herald, The Sun-Herald and The Age, while Alan Revell was appointed commer- cial director. Major gains in effciency were made, and the structure also helped in the start-up phase of the new printing plants in Melbourne. However, it was an imperfect ar- rangement, so in 2005 I reverted to installing local managers accountable for proft and loss at each paper, albeit suited to manag- ing directors with a business focus, rather than publishers with editor-in-chief roles. After the New Zealand acquisition of INL, Fairfax considered a number of structural options that would serve the growing or-
November December 2006