The Global Mail has ceased operations.

Breaking: News And Hearts At The Herald

Inside the oldest continuously published newspaper in the southern hemisphere, a lone internet terminal in the early 1990s was regarded as a novelty, not as the time bomb it turned out to be.

When the editors of Australia's oldest newspaper gather late in the afternoons in a long, narrow, harbourside conference room to plan the next morning's front page, the best of their efforts to frame news and calamity for The Sydney Morning Herald stare from the walls: the news of Steve Jobs's death is marked by a front page with him peering out from an iPad; another declares flooded Brisbane the drowned city; a third shows an Asian hurricane's far-off destruction.

Editors find inspiration in bad news, but this week, as calamity heaped itself at their own front door, they struggled. Shortly after 9am last Monday morning an email had zipped around Fairfax Media, owners of the Herald, inviting staff to an address by the chief executive, Greg Hywood. His news would stun; 1,900 staff would be shown the door. Printing presses would be shut down. Journalists, already wearied by waves of layoffs, would be culled again. By early evening, Gina Rinehart, a West Australian mining billionaire and the world's wealthiest woman, had secured almost 20 per cent of the newspaper publisher and was demanding three seats on the coveted Fairfax board, including the deputy chair.

The next morning Rinehart made the front page — along with the Fairfax layoffs — but she was overshadowed by Wilson’s choice as the lead story: an update on the Euro crisis.

As Fairfax's executives and some board members struggled on a floor above with how to respond to Rinehart's demands amid her refusal to renounce interference in the newspaper's editorial affairs, the Herald's editors concerned themselves with where to put her.

Did Gina Rinehart compel "splash" treatment on their front page? Some of the editors forcefully argued that Rinehart's push for control of the newspapers in the Fairfax group — which include not only the country's oldest broadsheets in Sydney and Melbourne but also the prestigious Financial Review business daily — most certainly was the day's biggest story and justified the greatest prominence on the Herald's front page. But Amanda Wilson, the first woman to serve as the Herald's editor, was unmoved. Wilson, who can oscillate between an airy charm and a brusque aloofness, declared that Rinehart's battle for control of Fairfax was less important to the Herald's readers than it was to the paper's staff. The next morning Rinehart made the front page — along with the Fairfax layoffs — but she was overshadowed by Wilson's choice as the lead story: an update on the Euro crisis.

It seemed a questionable decision and by Wednesday the Herald had decided that Gina Rinehart was indeed their biggest story.

Founded in 1831, The Sydney Morning Herald is an old newspaper in a young country. It is, as the Herald's historian, Gavin Souter, has written, one of the few surviving links with Australia's first half-century of white settlement, when convicts were still being tied to flogging triangles and the infamous Tank Stream sewers flowed into Sydney Harbour.

The newspaper's first motto 'Sworn to no Master, of no Sect am I' would, however, be barely recalled today at Fairfax's low-rise, modern headquarters, where a click culture increasingly rules as the publisher, under Hywood, moves ever hastily to a digital-first publishing strategy, reflecting the world's tumbling demand for newspapers and the ascent of computers, smart phones and tablets.

Yet the old motto's sentiments do live on inside The Sydney Morning Herald. Older, well-respected hands on the paper, such as the journalists David Marr, Kate McClymont, Anne Davies, Ross Gittins and Matthew Moore, are fierce defenders of the Herald's editorial independence and the collegiate way its editors operate, where hard argument and dissent are tolerated daily in deciding the next edition's news priorities.

It was, of course, far easier for the Herald to live by the old motto in its many decades of lush profits — sustained by acres of classified and display advertising. Money was power and the Herald's largesse was legendary. Its teams of reporters and photographers arrived in Suva aboard a chartered Lear Jet when Fiji's military staged a coup in early 1987.

<p>Photo by Mike Bowers</p>

Photo by Mike Bowers

SMH Publisher and Editor-in-Chief Peter Fray outside Fairfax HQ.

That was also the year that marked the beginning of the Fairfax publishing empire's great fall; Warwick Fairfax, then 26 years old, embarked on an ill-fated strategy to privatise his family's publishing house. The world's share markets crashed and the Fairfax family lost the company — and The Sydney Morning Herald lost its more than 150 years of supervision by a benign family of owners dedicated to publishing and principle. A succession of ownership regimes and managers would follow, most notably the Anglo-Canadian grandee publisher Conrad Black, who was to later end up behind bars in the United States for fraud but who, while at Fairfax, launched an all-out assault on a journalists' culture he thought too far Left, too powerful and too entitled.

Black made some inroads but strong editors inside Fairfax, notably the hardened, mercurial John Alexander — later to run much of the Packer empire in Australia — were able to maintain the Herald's independence and, whilst the cash from advertising still flowed, the Herald's enormous editorial budget.

When Alexander was editor-in-chief of the Herald, journalists were routinely dispatched across Australia and around the world. One was sent to America to research monorails when Sydney began planning its own. This reporter was sent off to Papua New Guinea on a slow Friday to write what was described as an update on that country's state. And again, later, to cover a Port Moresby bank heist. A fabulous end-of-year lunch at an upmarket restaurant awaited the scores of Herald reporters who'd pleased Alexander. Those who didn't were, pointedly, left at their desks.

Alexander revelled in his notoriety for offending the politically correct — of whom there were legions — on the Herald. Once at a news conference when the news editor suggested that there was a good story arising out of research that suggested women's brains shrank during pregnancy, Alexander shot back: "Dare I ask how big they are to start with?"

Its teams of reporters and photographers arrived in Suva aboard a chartered Lear Jet when Fiji’s military staged a coup in early 1987.

It was at the height of this rollicking period on The Sydney Morning Herald that on a day in the early 1990s a lone computer terminal — different from the banks of Atex screens in use — appeared in an out-of-the-way corner of the newsroom. Bob Beale, then the paper's prolific science writer, had learned of the internet through his academic contacts, who urged Beale to obtain an email address. It took Beale a full six months to persuade the Herald's technology chiefs — concerned about the integrity of the Herald's notably moody electronic editorial system — to agree. Beale was almost the lone user of the quarantined, internet-connected terminal until one night in 1994 when he was asked to write a quick background piece on Asperger's syndrome. Beale turned to his internet terminal, and the story he produced in around 20 minutes drew the attention of his editors because of its depth and its fast turn-around. Soon there were queues to use Beale's internet terminal.

If those journalists on the Herald alert to the power of the internet could see its potential, their managers were less enthusiastic. Soon after Beale's experience, Tony Sarno, the paper's then computer editor, backed by an editor, Liz Sterel, tried to convince the paper's chiefs to allow the uploading of the Herald's computer articles to the internet. They were warned off and instructed that their task was to grow the circulation of hard copies of the paper. Sarno and Sterel however persisted in secret, and once they had the first of Sarno's articles uploaded to the internet — using Sarno's battered laptop — they asked John Alexander to take a look.

Sterel recalls that her editor-in-chief stood arms crossed and skeptical as they switched on Sarno's computer. When the screen came to life and Alexander saw the first of The Sydney Morning Herald on the internet, he declared "Good job. Carry on."

While Alexander's conversion that day to the worth of the internet was welcomed, nobody could really foresee back then — in the mid 1990s — just how ruinous the internet would prove for newspapers.

<p>Photo by Ella Rubeli</p>

Photo by Ella Rubeli

Despite the paper's later intensive and expensive efforts to ring-fence its advertising into its own online specialist websites, including those for property, jobs and cars, the Herald and Fairfax struggled mightily to keep advertising dollars leaching away to competitor sites. And, like many newspaper publishers, Fairfax would become crunched in a vortex of plunging advertising while, at the same time, readers moved away from buying newspapers to instead consuming news online through computers, smart phones and, latterly, tablets.

The Sydney Morning Herald has been living in a declining state of resources for the past decade. Ten years ago, the paper — together with its Sunday edition, The Sun Herald — had a combined staff of about 600. Today that is reduced to about 280. Up until last year the wages of its most senior staff, now paid around $130,000, had been frozen nearly a decade.

Dedicated reporters no longer cover what were once core beats on The Sydney Morning Herald — industrial relations and religious affairs are but two examples. Other staff are routinely pulled off their beats to plug gaps elsewhere. Editors complain that whereas in John Alexander's day the paper routinely assigned about one-third more stories than it could publish, now there is a constant scramble to provide the barest of coverage on some days.

So curtailed is the paper's travel budget that many assignments are paid for by outside bodies that benefit from the coverage. According to Herald staff, a recent outback assignment to cover the impact of feral animals was paid for by an environmental advocacy group, and a number of international aid organisations picked up the bill for a senior reporter and photographer's trip last month to west Africa, something noted at the end of the story when it was published.

Conrad Black, who was to later end up behind bars in America for fraud, while at Fairfax, launched an all-out assault on a journalists’ culture he though too far Left, too powerful and too entitled.

Greg Hywood, Fairfax's CEO, could not be comfortable with the reliance on free travel and accommodation for travelling staff. In 1998, when he succeeded John Alexander as the Herald's editor-in-chief, one of Hywood's early moves was to order a review of freebies offered to Herald staff. The next year he offended more than a few editors when he ordered that all gifts accepted or declined by the newspaper's staff over one week be declared so that the Herald could publish a story that outed the extent of gift-taking on the paper. When the story was published in the Herald, Hywood said that in an ideal world he would prefer that there were no such influences. "I would rather see opinions shaped by force of argument."

The anxiety about the paper's future has been real for a long period. In August 2011, staff on the Herald were told to gather one morning for an announcement at the news desk. Many went in dread, fearing they were about to hear the paper was closing. Instead they learned that the Herald's celebrated police reporter, Les Kennedy, who had been battling cancer, had died.

Even when Hywood made his announcement on Monday that staff were to be culled again, printing presses shut down and foreign bureaus placed under review, some staff confessed to great relief. They had expected an announcement — long rumoured — that the Herald would cease publishing Monday to Friday.

For all of the adversity, however, The Sydney Morning Herald has been able to maintain leadership in Australian journalism. Kate McClymont and the former Herald Canberra journalist, Mark Davis, uncovered the Craig Thomson affair, which still threatens to bring down the Gillard Government. The newspaper's political commentator, Peter Hartcher, is regarded as the country's best in print and the paper's long-serving economics editor, Ross Gittins, carries an influence unequalled elsewhere. David Marr's elegant, opinionated writing continues to distinguish the paper.

When the screen came to life and Alexander saw the first of The Sydney Morning Herald on the internet, he declared “Good job. Carry on.”

Under the coming round of cuts, The Sydney Morning Herald stands to lose another 70 editorial staff. In the eyes of many who remain, the number is more than the paper can possibly bear.

Journalists Ross Gittins, David Marr and Kate McClymont appeared at the front of Fairfax's headquarters on June 19 to argue against the entry of Gina Rinehart onto the company's board without guarantees, by her signing a charter of editorial independence, that she will not interfere with the paper's editorial content.

Gittins was asked if The Sydney Morning Herald would survive the fresh staff cuts. He said: "I think it can remain viable," he said. "I think that it would be a different paper and probably a different news organisation and perhaps not as good as it was, but we do have to cut our cloth to fit what the commercial situation allows."

It seemed a realistic assessment from a hard head.

<p>Photo by Mike Bowers</p>

Photo by Mike Bowers

Fairfax Journalists Neil Chenoweth and David Marr address the media.

For now, however, Gina Rinehart's intentions for Fairfax and The Sydney Morning Herald overshadow much of what has been announced this week, if only because they are so unclear.

Does she wish to make an investment in the paper's future or is she, as Australia's Treasurer, Wayne Swan, suggests, out to buy influence?

David Marr is one Herald writer who believes she cannot have both.

"As we understand, she is asking for the personal right to be able to intervene directly in editorial matters on these papers," Marr said.

"If it were to happen, then it would be known publicly that she could speak directly through the Fairfax papers. That would not be good for the Fairfax papers. It would not be good for the brand. That would surely be clear to anybody who understands what Fairfax has stood for in the past," said Marr.

In an exquisite piece of timing, the Herald on June 23 will begin running excerpts from its business writer Adele Ferguson's long-anticipated, unauthorised book on Gina Rinehart. The Herald's arrangement to publish the excerpts was made well before Rinehart upped her stake in Fairfax. Insiders say the book's revelations and style will make it a bestseller. So will the timing. It might be the Herald's last chance to publish something its new majority owner doesn't like.

Bernard Lagan was a journalist with The Sydney Morning Herald from 1987 - 2001, when he was dismissed after hacking into the corporate email accounts of then Fairfax CEO Fred Hilmer and others. He was a member of the journalists' union house committee and a member of the lobby group Friends of Fairfax.

Read Mike Seccombe on Fairfax, and Ellen Fanning on the newspaper Lang Hancock owned in Perth.

7 comments on this story
by Ian

This story seemed to be going well until I got to the bit about the SMH "has been able to maintain leadership in Australian journalism. Kate McClymont and the former Herald Canberra journalist, Mark Davis, uncovered the Craig Thomson affair, which still threatens to bring down the Gillard Government." This is such a perfect example of the delusional groupthink eating away at Australian journalism that it can't pass without comment.

It is not just that advertising is falling. Readership is also falling because there is an undeclared boycott going on by readers who are not prepared to pay for propaganda. This will leave both Murdoch and Fairfax papers competing for the knucklehead market. Until now they seemed to believe they could manufacture knuckleheads by feeding average readers a nonstop stream of untruth. A better analysis of this crisis would indicate that in the end a sizable proportion of the readership would prefer spending time to find and filter news via the internet than spend money for propaganda.
Who exactly thought it would be a good business model to alienate approximately 50% of the readership? And why would anyone want to advertise in a publication that increasingly lies unread? One answer is the journalists themselves whose complete lack of self criticism during this week has demonstrated that they still don't get it.

June 22, 2012 @ 9:11am
by Mandy

precisely the kinds of stories that should be in the SMH. Great story Bernard!

June 22, 2012 @ 2:21pm
by Ben

The concept of editorial independence is woolly at the best of times, but meaningless when the share price has sunk to 60c. So says ex editor-in-chief of the Age Michael Gawenda.
Fairfax editorial position is pro-environmentalist, pro-feminist and anti-American. Some of its journalists, particularly environmental journalists, are target-journalists. They act as judge and jury and once found guilty, the hapless victim, be it an individual, a company, or a resource industry, is repeatedly attacked with unsubstantiated scribblings and opinion pieces. In this process truth inevitably suffers and, eventually, so does the readership. So says Graham Richardson

June 22, 2012 @ 6:39pm
by C Lee

Opinions are cheap
Truth is expensive

I think if Gina gets her way and wins the battle by infiltrating into the inner sanctum of Fairfax, it will leave an opening in the market for a new organisation to carry on in the tradition of the old fairfax.

Ultimately though, hard hitting journalism which cuts to the truth of the matter and running a highly profitable business are mutually exclusive. It's way too expensive, and not enough reward, to do the kind of journalism that we're used to seeing from the ABC or BBC.

The solution is more publicly funded journalism, with all the controversies that entail it. But my preferred option is a benevolent owner with deep pockets but with a conviction for the truth and sense of duty to providing a pillar of democracy. A bit like how Nobel created the Nobel prize through his immense wealth.

I believe this will happen one day. I know if I was to become a billionaire, I would dedicate my wealth to this cause.

June 25, 2012 @ 10:42am
Show previous 4 comments
by mdfe

Same as Ian, I also got to this part

"has been able to maintain leadership in Australian journalism. Kate McClymont and the former Herald Canberra journalist, Mark Davis, uncovered the Craig Thomson affair, which still threatens to bring down the Gillard Government."

and realise how 'One sided' & UN investigate Australian journalism still is.

June 25, 2012 @ 1:59pm
by Peter

Not so long ago I saw a hilarious bumper sticker that said: "Is it true, or did you read it in the Telegraph?" Now, sadly, you could justifiably substitute "Sydney Morning Herald" for "Telegraph". The Fairfax executives don't seem to understand that they've trashed the paper's quality to such an extent that few people would be bothered peeping behind the paywall. A large proportion of the "news" in the Herald is just somebody marketing something. Often there'll be a gushing piece about a film that's elsewhere been savagely bucketed by the Herald's own film reviewers. Reporting on a lone canoeist, the Herald would say: "He's going left! He's going right! He's going left! He's going right!" The paper still has Ross Gittens and the terrific Ian Verrender and Michael West but as far as I can tell the only staff writer who isn't working on business stories is Paul Sheehan, who must be kept in a cage and fed handfuls of amphetamines to keep him awake and pompously fulminating. When he needs a sleep perhaps they read him Gerard Henderson's column, the one they've reprinted every week for about a hundred years. If the government is concerned about Gina why doesn't it set up a newspaper that uses the ABC's news resources? Make it truly independent and fund it properly.

June 25, 2012 @ 4:23pm
by Fairfaxed

Lagan was fired from Fairfax for his practices with email but it wasn't just hilmers. Not at all.

December 1, 2012 @ 10:24am
Type a keyword to search for a story or journalist