THE HARRINGTON FAMILY BACKGROUND - CASE STUDY

THE HARRINGTON FAMILY BACKGROUND.

The Harringtons have been in the newspaper-publishing field for three generations. Named after the grandfather, Kevin Harrington, the newspaper had been the finest of its kind with a strong focus on quality journalism and a fierce and loyal regional focus. Somehow, the paper’s owners and its editorial staff had managed to walk the fine line between pleasing local Melbourne readers as well as a significant broader Australian readership.
The Harringtons chose to list their paper THE STANDARD on the ASX in 1999, believing it to be the best time to take advantage of prevailing market conditions and the hysteria that was the lead-up to the new millennium. Despite warnings of ‘the millennium bug’ the Harringtons listed anyway and had a successful launch. As part of the listing, the Harringtons retained a controlling share of the stock and seats on the board – the family reputation was tied to the success of THE STANDARD, and after all, the Harringtons were not about to let others destroy all their hard work.

The Harringtons are a traditional and proud family and they have followed the tradition of passing the responsibilities of running the newspaper from father to son across each of the generations. This system seems to have served the family well with the family’s reputation, power, status and wealth steadily increasing across all generations.

It wasn’t always easy, though. The original Harrington, Kevin, had to walk a fine line between appeasing the local population and the government of the day. To do that, he spent considerable time gaining favour with the business community and by providing ‘favours’ whenever possible. Although this is not openly discussed, it is well known among the family members and it is regarded as ‘family legend’. The daring (and sometimes unethical) dealings of Kevin Harrington were what the newspaper was founded upon, and that culture still exists in the top management team to this day.

The current generation of Harringtons is the most diverse of all the generations. Consisting of five daughters and one son, for a while there it seemed that the third generation may have to hand over control of the paper to a professional manager (giving responsibility to one of the daughters was out of the question). However, eventually a son was born and in time he took up his right as CEO of the THE STANDARD. Meanwhile, the daughters all attended prestigious schools and universities and forged successful careers of their own. The eldest daughter, Alana, attended the prestigious Columbia University in the USA and is known in Australian circles as being incredibly shrewd and a fierce competitor in the digital media space where she is the CEO of her own internet company. Despite this fragmentation of the family in the most recent generation, the Harringtons are generally regarded as a fiercely loyal family and they have been known to use their wealth and status to ensure their continued success.

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Recently, though, THE STANDARD has been suffering from poor performance. This poor performance seems to be in line with the general trend for the newspaper industry – everyone is doing badly – but this proud, family dominated newspaper and the people that run it are finding the current situation particularly embarrassing. A combination of external shocks (GFC, etc.) and some bad decisions have combined to keep the stock price falling. In fact, the share price today is about 50% of what it was just after listing. It has not been a good ten years....

The Harringtons have always been careful with how they manage their business. They have always paid close attention to expenses within the firm, but at the same time they recognise that they need to pay their staff well. However, with the slow decline of the business over the past ten years, the response of the top management team has been to more tightly control expenses. This tightening of control was initially seen as a positive step and market analysts (including RMIT:ANALYSIS) praised the firm decision taken by management as the right thing to do. However, this didn’t seem to be providing the desired results, and, over time, each of the analysts downgraded their expectations and recommendations for the company.
The most recent RMIT:ANALYSIS report downgraded the company from a “BUY” recommendation to a “HOLD” recommendation. This is very serious and a cause for significant embarrassment for the Harrington family and a situation not to be taken lightly. Looking forward, it is clear that some changes need to be made. Whatever is decided, there are a few things that must be achieved:
 The company MUST continue to trade at a profit.
 Failure is NOT an option.
 Neither is selling.
Whatever the course of action, it MUST NOT cause further embarrassment for the Harrington family. Indeed, the reputation and status of the family is paramount and everything must be done to return the family to its rightful place in Australian society.

INDUSTRY DYNAMICS: Worldwide, newspapers are in decline. Newspapers are closing their doors in Europe, the Americas, Asia and Africa. Those that continue to operate are much smaller, focused publications. A few large syndicated publishers control most of the press, particularly in places such as the USA, Canada, the UK, and Australia. The threat of online substitution faces all newspapers. There appear to be two main business models evolving in response to the online distribution of News: Paid Online Subscriptions (POS) and Free Online Access (FOA). Rupert Murdoch, one of the world’s Great Media Barons, has gone on the record to say that “the days of free are over” and that his papers will be more vigorously pursuing the POS strategy. With such industry influence, he may be able to single-handedly shape the industry dynamics into the foreseeable future maintaining a pay-per-view/subscription business model that, no doubt, other newspapers will be glad to follow. However, against even Rupert’s considerable media might, companies such as Google, MSN, CNN and other news aggregators are busily building business models that cross-subsidize other income streams (e.g. targeted online advertising; tight integration with social networks). These 24/7, always on, business models are appreciated (particularly in developed countries)
by a savvy, increasingly affluent, media aware, mobile readership and the companies that wish to reach them through direct marketing techniques.
SCENARIO
In an effort to create a future for the family business, The Harringtons have hired your company to investigate a range of strategic choices the company must now face. Your role is to:
 Determine the mission, vision and objectives for the company
 Undertake both and internal and external analysis to determine the contextual factors shaping the company
 Identify the generic strategy relevant to taking the company forward
 Identify the key strategic choices that you believe will create future success at Harringtons.