John Fairfax Holdings Limited
ACN 008 663 161

CNBC ASIA AFR MARKET WRAP 8.23PM, 18TH JANUARY, 2000 - Fairfax says it feels under no pressure to merge with a large telecommunications or internet company.

PRESENTER:

The convergence of traditional media and the Internet has been taking the Australian market by storm since the AOL Time Warner deal last week, and as we mentioned, John Fairfax today confirmed that it was in talks with Telstra.

Earlier, I spoke with Fred Hilmer, CEO of John Fairfax, and started by asking him what his first reaction was to the mega media merger in the US.

FRED HILMER - JOHN FAIRFAX:

What that deal signifies is the value of content, and we’re a company with content. That’s why we have the value we have, and this deal I think again just shows that content is very valuable.

PRESENTER:

Does this deal put more pressure on Fairfax to do these sorts of deals, mergers or alliances?

HILMER:

Not necessarily. I think it’s saying to us that what we’re doing in continuing to build content that is suitable for various forms, suitable for the Internet; suitable, we expect, for digital; suitable, as a program like this shows, for television, as we take content and take it into those forms, that we’re doing the right thing.

PRESENTER:

So Fairfax can stand alone without a help of a telco or another Internet company, for example?

HILMER:

Well, I think we have a lot of options as a company, and part of my job is to pursue options and evaluate options and not speculate on them.

PRESENTER:

(Laughs) News Corporation: it has said that at current prices that it’s not interested in doing a deal with a telco or an Internet company. With Fairfax where it is at the moment, is it at the crossroads?

HILMER:

No, I think our business is going along very well. Our traditional businesses are performing well in what’s been a very buoyant market, or series of markets. Our new business ventures in F2 and our success in getting a digital policy up that we believe gives us room to move are creating a lot of options for us, and I don’t believe we’re required to do anything.

PRESENTER:

I believe that there has been a lot of deals brought to you. How do you go through those deals to see if they are worthwhile for Fairfax going forward?

HILMER:

This is an industry where I think since I’ve been there, which is some time, over a year now, there are always people talking to people, and people come and talk to us and we talk to people. How do we look at those deals? We tend to look at them in terms of whether they’re going to add value to our shareholders and whether they’re going to make us a stronger and better company.

And you know, when we see opportunities to move ahead, as we did with buying strategic publishing, then we’ll go ahead and do that; when we see opportunities to form relationships as we did in the auction space on line, with the deal with classified ventures, we’ll do it; and when we don’t see the value will be created, then we won’t do it.

PRESENTER:

So the one big hit deal isn’t really a necessity for Fairfax?

HILMER:

Yeah, I think there are relatively few businesses that are defined by big hits. I think, you know, the reality when you look backwards over businesses is that the great businesses - businesses like, say, Westfield, where I’ve been associated - are a succession of steady moves over time, and when you look backwards you say, boy, didn’t that happen quickly, but quickly is often years.

And you know, I believe that the key for us is to know where we’re going as a content company and to move steadily in that direction, and that’s to me the best path. And that doesn’t say we don’t look at things. Everybody looks at everything, but you know, I don’t go to bed each night hoping that when I wake up someone will wave a wand over the company and it will be transformed through some mega deal. I think the transformation’s up to us to do through improving the quality of the content, making it attractive on various forms of distribution; doing a better job with advertisers; doing a better job with managing our costs.

PRESENTER:

So Fairfax isn’t under pressure to do some sort of a deal?

HILMER:

Well, I don’t believe we are. I certainly personally don’t feel under any pressure.

PRESENTER:

To the traditional businesses, what do you think is the role of newspapers, going forward. Of course they were as dead as a dodo five years ago, supposedly, but they’ve come back strong.

HILMER:

I have great faith in the newspaper. The newspaper fills a particular slot in a cycle of a person’s day, and it fills the morning slot. Newspaper’s not a night time product, it’s not a through the day product, it’s a morning product, it’s a start the day product, and it’s an attractive product because it’s very portable, it’s very flexible, it’s very convenient as a product.

There’s a wonderful cartoon, I think, in one of our papers where someone said, imagine you had this product where you could scan all the things that were happening and see an array of the best ads and find out what’s going on, it’s was completely portable, it could be broken up into parts, it could be read by a number of people, it could be copied easily. Imagine a product like that. And someone said, I’ve got one, it’s a newspaper.

PRESENTER:

(Laughs) And that was Fred Hilmer, CEO of John Fairfax Holdings.

END OF SEGMENT

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