CNN INTERNATIONAL BIZ ASIA 10.45PM
4TH DECEMBER, 2002.
DISCUSSION ABOUT STRATEGIES FOR EXPANDING BUSINESS IN THE PRINT MEDIA INDUSTRY.
INTERVIEW WITH FRED HILMER, FAIRFAX.
PRESENTER:
Welcome to our Challenging CEO's segment. Today we're talking to Australian media
chief Fred Hilmer.
REPORTER:
It's one of Australia's oldest and most venerated media groups but despite a strong
economy, times have been tough for John Fairfax Holdings, publisher of The Sydney
Morning Herald, Melbourne Age, and Australian Financial Review, among others.
Weakness in the financial sector in Australia has resulted in what CEO Fred Hilmer
describes as the worst advertising conditions for two decades.
But the outlook is improving, which is good news for Hilmer, who has faced some
tough battles since becoming CEO in 1998. He came from an academic background as
dean of the Australian Graduate School of Management. That brought criticism that he
did not have the right media credentials for the job, and concerns since that
Fairfax has not been aggressive enough in it's expansion plans.
In Sydney recently, I asked Hilmer what his strategy was for growing the company.
FRED HILMER - FAIRFAX:
The essence of our strategy is strengthen the core business and drive it hard for
organic growth. Second part is to go where we have natural areas in which we can
expand, in geographies we'd know, with products we'd know. And you know, that might
take us into some acquisitions, but it certainly will take us into extending our
footprint where we think we can do it sensibly.
And then the third thing is to look offshore, and we've made some small moves in
business publishing, in magazines like MIS and Boss in Asia, and MIS in Europe. And
we're prepared to look at that as well.
REPORTER:
There's been a lot of criticism of Fairfax's failure to diversify, failure to expand.
HILMER:
I've never worried too much about that sort of criticism because I think, by and
large, if all people want you to do is acquire, you can acquire, but that's not what
we're here for. We're here to basically grow the value of the company, to earn
proper returns for our shareholders and you know, if growth through acquisition can
do that, then we'll do it.
But, if it can't - and as I said, if I look at the others in the industry who've
tried it, they haven't, and they're assets that we looked at and chose not to buy -
if that sort of growth path isn't there, then I think you do have to be strong and
resist because there's sort of a macho element -- you know, you should be buying
things and doing deals. But if you look at this again coldly, the history of the
deal doer is not a good one.
REPORTER:
What do you say when people say, print is a sunset industry?
HILMER:
People would have said that about radio, and I often tell our people the Sony story,
whereSony said, "Wire radio is a sunset industry, maybe we could make one a lot
smaller." And out of that came the Walkman and, you know, we got a resurgence of
radio. I think that whether something is a sunrise or a sunset industry is very
largely in the mind of the industry itself.
I think if we act like it's a declining industry, we milk it, we don't invest in new
printing presses, we don't invest in improving our product, we don't invest in
making over the product, we aren't prepared to take risks with the product, then,
you know, we'll milk the product and it will become a self-fulfilling prophecy.
REPORTER:
You spent many, many years a management consultant, now you're actually running a
company. How different is it?
HILMER:
Well, firstly, I had a lot of hands on experience managing organisations of
professional people, and I think journalists aren't that different, in many
respects, from consultants and academics. They're people whose direct work is what
they do. They're very loyal to their work, and they have to work within a business
environment, but they don't have a strong feeling for what that environment is.
So, I didn't find it a great difference, and I've been here so long now, I can't
remember what it was like before.
REPORTER:
There's been a lot of controversy recently about the decision to appoint three new
board members, none of whom have any media background. What was the rationale behindthat?
HILMER:
When you're in an industry that people make comments about, like, it's sunset, as
you just asked me, then the way to get out of that is with fresh thinking. I mean,
Sony got out of the radio hole by thinking freshly about radio. It wasn't the radio
people who thought about the Walkman, it was the non-radio people who thought about
the Walkman.
And if you look at computing, the big mainframe. It wasn't the mainframe manufacturer who thought about the mini, it was the non-mainframe manufacturer who
thought about the mini.
PRESENTER:
Talking there to Fred Hilmer, chief executive officer at John Fairfax Holdings, the
publisher in Australia.
END OF SEGMENT
