Fairfax Media has lost its CEO and a major shareholder from the board in the past months as the Rural Press push is pushed out of the company, leaving a vacuum.
CEO Brian McCarthy resigned from the company, effective immediately yesterday and left immediately, according to a statement issued early yesterday afternoon.
The shares closed down 3c at $1.41, meaning his departure cut the company’s value by $70 million, which is better than the shares rising on the news and the company adding value after the departure.
At the recent AGM last month, John B Fairfax, the largest shareholder and former chairman of Rural Press, retired from the board, meaning Mr McCarthy had lost his major supporter.
Two weeks after the AGM, Mr McCarthy led a big investor briefing day where he revealed the company’s plans for its growing online business and the declining papers in Sydney and Melbourne and some other areas.
The plan was to merge the Australian newspapers (Sydney Morning Herald, Age in Melbourne and other titles, but not the Australian Financial Review), with the Australian internet business, especially the main one, SMH.com.au. The rapidly growing trade Me business in New Zealand, an online sales and growing social media site, was not included.
The strategy didn’t go down well with analysts and some investors because there were a number of senior management positions to be filled in the new structure,
Some analysts suggested the changes were a blunt way to resolve a management argument between Mr McCarthy and Jack Matthews, the company’s head of its Australian digital businesses.
He didn’t have a place in the company after the changes were announced. It is not known what he is doing, but he is understood to be still at Fairfax.
But Mr McCarthy isn’t.
Now his replacement is Greg Hywood, who joined the Fairfax board earlier this year and who will be acting chief executive, until a new one is found.
The best bet from the market yesterday is that Mr Hywood will be the new CEO.
It is understood that Mr McCarthy was asked to stay on at the company for a further three- to five-year period, but was unwilling to do so and that put him in a position where he resigned (which sounds like they wanted to be rid of him).
He left after serving two years as head of Fairfax Media and more than 32 years with Rural Press.
Fairfax and Rural Press merged in April 2007 and Mr McCarthy became CEO in the wake of the ousting of former chief executive David Kirk.
Mr Hywood has been publisher and editor-in-chief of each of The Australian Financial Review, The Sydney Morning Herald/Sun-Herald and The Age.
He started as a journalist on the AFR.
In the statement, Fairfax chairman Roger Corbett thanked Mr McCarthy for his "significant contribution" and said the board initiated talks with him about the "commitment and energy" required to drive the business over the next three to five years, "and most importantly the implementation of the recently announced strategic plan".
"Brian did not believe he could make a commitment for the next three to five years," Mr Corbett said.
"We agreed that now, at the beginning of the implementation of the plan, it was the appropriate time for the leadership change."
