UPDATED! 30 June 2012: Mining billionaire Gina Rinehart has asked the chairman of Fairfax Media to resign if he cannot reverse falling circulation and revenue at the company’s newspapers.
Ms Rinehart’s refusal to sign the company’s charter of independence raised concerns she would interfere with the editorial independence of Fairfax’s flagship newspapers, the Sydney Morning Herald and The Age.
As mining magnate Gina Rinehart chases down editorial influence at Fairfax Media, along with three boardroom seats, Fairfax Newspapers must be wondering wtf is coming next, the embattled publisher is facing a boardroom shake up that has the once behemoth publisher quaking.
In a statement to the stock exchange, Mrs Rinehart’s company, Hancock Prospecting, confirmed she had raised her 12.6 per cent stake in the media company to 18.7 per cent of Fairfax shares in two separate raids last week. The confirmation came shortly after Fairfax announced it would slash 1,900 jobs as it deals with the rise of digital media and a slump in print readership.
Fairfax said today it would close two printing plants, move its Sydney Morning Herald and The Age newspapers to tabloid format and introduce digital subscriptions for those two mastheads ::::
Mrs Rinehart was already the majority Fairfax shareholder before last week’s acquisitions. 2 per cent of the media company’s shares were bought in one transaction on June 14, sparking intense speculation Mrs Rinehart was behind the purchase.
The following day, nearly 70 million shares were purchased in one transaction after the market closed.
Under the Corporations Act, Ms Rinehart cannot hold more than 20 per cent of the company’s shares without first making a takeover bid. Before last week’s purchases, Mrs Rinehart had lobbied unsuccessfully for two seats on the Fairfax board.
Fairfax chairman Roger Corbett is reportedly due to meet institutional shareholders this week to discuss a range of issues including Mrs Rinehart’s request for a board position. Last month, the company appointed former Ernst and Young chief executive James Millar to fill a vacancy on the board despite Mrs Rinehart’s requests.
Now the third largest holder of Fairfax, Ms Rinehart is warning that the Sydney Morning Herald and The Age in Melbourne could be closed if the restructure announced on Monday fails to turn the trouble media company around.
ABC.net.au reported that funds management specialist Allan Gray – holding a 9 per cent stake – says Fairfax might be forced to sacrifice its metropolitan mastheads to focus on the more profitable rural publishing and digital businesses.
Allan Gray’s managing director, Dr Simon Marais, said The Age and The Sydney Morning Herald were in real jeopardy as Fairfax faces hard truths.
“I think the reason you buy Fairfax is not for the metro papers. They’ve got lots of other assets. And I think the other assets are probably worth more than the current share price,” Mr Marais said. “What the market’s effectively saying is the metro papers are already worth less than nothing. They’re a liability. But if that continues you’ll probably just shut them down at some point. I think that’s a real possibility.”
Dr Marais identified businesses outside of Fairfax’s traditional publishing as worth saving such as Trade Me, Domain.com and Stayz.com, which he believes can stand alone. He made no apologies for taking a brutal approach to Fairfax’s future given Monday’s restructure, which will axe 1,900 jobs, close printing presses and convert The Age and SMH to tabloid formats.
And he signalled that concerns about media diversity in Australia were an important but side issue for investors.
“I think over time if you don’t have a good product you won’t be able to sell it. But I think at some point it’s unfair to expect a small portion of investors, mainly super funds, to pay for media diversity,” Dr Marais said.
“I think the reality to people must be if you stop buying papers you won’t have those papers.”
Dr Marais said he was “neutral” about Mrs Rinehart’s bid for three boardroom seats and the right to intervene on editorial matters.
“You never have a right to a boardroom seat. But I think all other things being equal, it’s better to have somebody with a lot of shares being a director than somebody that has no shares,” Dr Marais said.
“I think if she say says the board is being deficient or inefficient, and it’s probably a reasonable thing to make, then I think one should listen to her.”
But Dr Marais signalled he was concerned that Mrs Rinehart’s bid for editorial sway could be damaging to the product.
“I think if you don’t have an independent newspaper it’s unlikely that people will buy it after a while so you could damage the value of it.
“But I think on the other hand she does make a fair point in saying she thinks a lot of the journalism and the articles we see are nice to have but they’re not generating revenue and they should be culled. And we would agree with her on that stance.”
Fairfax Media has been briefing a range of institutional investors about the restructure and its importance to the future of the company.
Rinehart Increases Stake in Ten, Threatening to Abandon Fairfax
UPDATED! 26 June 2012: Billionaire mining magnate Gina Rinehart has increased her stake in Network Ten and is threatening to abandon Fairfax if she does not get seats on the board. Last night, she told the ABC’s Four Corners program she would consider walking away from the troubled media company if board seats are not made available to her “without unsuitable conditions”.
The ultimatum came ahead of her decision to raise her stake in Network Ten a short time ago, acquiring another 39 million shares at a cost of nearly $20 million. This morning Network Ten has confirmed she now holds almost 144 million shares in the company.
Ms Rinehart owns almost 19 per cent of Fairfax, and has demanded three board seats in return, as well as concessions on editorial independence.
The implicit threat to withdraw her self-proclaimed “white knight” status and dump Fairfax stock could drive the company’s share price lower after yesterday’s record low of 55.5 cents a share.
In a statement to ABC’s Four Corners television program on behalf of Ms Rinehart’s company Hancock Prospecting says the company had hoped Ms Rinehart would be viewed as a saviour to the ailing media empire.
“Fairfax’s largest three mastheads have been declining in circulation for five years, a long time,” the statement said. ”Fairfax’s share price has also declined significantly, some approximately 90 per cent”.
The statement says unless demands are met, the company may sell its interest in Fairfax and consider repurchasing at another time. Ms Rinehart was already the largest Fairfax shareholder before her latest acquisitions, and has previously lobbied unsuccessfully for two seats on the Fairfax board.
According to a source close to the Fairfax board, editorial independence is not up for negotiation. ”The board will not be bullied. They are absolutely resolute. This is unacceptable. It’s outrageous,” the source said.
Fairfax Media House Committees wrote to Ms Rinehart 18 days ago asking for assurances that she uphold the principles in the company’s charter of independence.
Senior journalist David Marr says he has been assured Ms Rinehart cannot take a seat on the board without agreeing to the charter, but if she did there would be grave consequences.
“If it were to happen, then it would be known publicly that she could speak directly through the Fairfax papers,” Mr Marr said. ”That would not be good for the Fairfax papers, that would not be good for the brand. That would surely be clear to anybody who understands what Fairfax has stood for in the past.”
The media union also wants an assurance from Ms Rinehart that she will support the charter and agree to uphold it if she joins the Fairfax board. Committee spokesman and The Age journalist Ray Cassin says journalists want an assurance that the newspaper’s history of independence will continue.
Mr Cassin said the paper has always put the story before its owners’ interests.
“The Age has been engaged in investigate reporting of the so-called securency affair involving bribery by agents of the Reserve Bank. The chairman of the Fairfax board was also a member of the Reserve Bank board and yet those investigations and the associated reporting went ahead,” he said.
As the Fairfax board digs in for a fight, Communications Minister Senator Stephen Conroy this morning said while Ms Rinehart was entitled to board representation, she cannot ignore or breach the company’s charter of editorial independence.
The Fairfax upheaval continued today with three newspaper editors resigning in one day, two from the Sydney Morning Herald and one at the Age. The news broke just before midday yesterday, first the editor of the Age newspaper, Paul Ramadge, quit. Within an hour the editor of the Sydney Morning Herald, Amanda Wilson, and the publisher of the Herald, Peter Fray, both announced that they too would be leaving Fairfax.
Fairfax Media released two statements announcing the departures as part of changes to the company’s editorial structure and praising the editors who represent more than four decades in the newspaper business.
It’s the latest play in the ongoing restructure of Fairfax Newspapers. Last week, Fairfax announced it was shedding 1,900 positions, closing its two printing presses and moving its two broadsheets to a tabloid format from next March.
Meanwhile the Sydney Morning Herald’s newly appointed editor-in-chief, Sean Aylmer, told ABC News that his appointment was bittersweet. But he described the demise of traditional published newspapers as overstated. Aylmer is confident his independence has been firewalled interference from Ms Rinehart.
Ms Rinehart is refusing to agree to a compromise that would see her sign Fairfax’s charter of editorial independence that would prevent her and other board members from interfering in the editorial direction of the company including the hiring and firing of editors.
Ms Rinehart has powerful allies. Long-time buddy and former Fairfax board member, John Singleton, has defended her bid to exert editorial sway at Fairfax.
“I think some editorial interference would have made the papers more reasonable in the past, don’t you?” he said.
Singleton also reckons that if Ms Rinehart ultimately takes over the company, she should have the right to hire and fire editors and senior editorial staff.
Sean Aylmer was appointed to a new role as editor-in-chief of the Sydney Morning Herald and the Sun-Herald, after the editors-in-chief of The Age and The Sydney Morning Herald newspapers yesterday announced their resignations.
Mr Aylmer, who will also become editor-in-chief of the online versions of both publications, says newspapers need to keep up with the digital world and a new newsroom structure will be rolled out.
“It’s kind of a new way of operating the newsroom and that’s incredibly exciting and there is huge opportunities out there if we can get that right,” Mr Aylmer said. ”Maybe to the external world it’ll be a bit different because it’s not normally how newsrooms operate. I think internally most people won’t be too surprised.”
The Age editor Paul Ramadge told staff this afternoon he was standing down.
His counterpart and publisher at The Sydney Morning Herald, Peter Fray, has also stepped down, as did Sydney Morning Herald editor Amanda Wilson. The resignations come after a tumultuous week for the media company, in which it announced a decision to axe 1,900 staff, close two major printing presses and downsize its flagship newspapers to tabloids.
The massive restructure coincided with the news mining magnate Gina Rinehart had increased her stake in the company to nearly 19 per cent. Her move sparked speculation she was aiming to exert editorial influence over the company’s media outlets.
Ms Rinehart was already the largest Fairfax shareholder before her latest acquisitions, and has previously lobbied unsuccessfully for two seats on the Fairfax board.
Mr Aylmer replaces Mr Fray as editor-in-chief, while Ms Wilson will be replaced by Darren Goodsir, with The Age expected to announce Mr Ramadge’s successor today. Mr Ramadge reportedly said he will leave the company with divided feelings, but the decision to go is not a sign that he disagrees with the cuts announced last week.
In a statement released by Fairfax Metro Media, Mr Ramadge said it had been an honour to edit The Age.
“I came to Melbourne 16 years ago because I had a deep affection for The Age and all it stood for,” Mr Ramadge said. ”I had to pinch myself when I became one of just 21 editors in The Age’s proud history. I mean it when I say I love the place. I am extremely proud of my colleagues. They champion public-interest, independent journalism. When we were challenged, by economic conditions or by those with narrow interests, we stood as one, resolute in our ethics and standards. These are extremely challenging times for the media. As I leave The Age I am convinced that our nation needs The Age more than ever. It is an essential guardian of truth and fairness.”
In the same statement, the CEO of Fairfax Media, Greg Hywood, said Mr Ramadge can be proud of his time at the helm of the newspaper.
“Paul has shown the way for The Age during a period of great upheaval in the industry. His unwavering commitment to investigative journalism and breaking news has set The Age apart during his tenure. He can feel proud,” Mr Hywood said.
Mr Ramadge has been the editor-in-chief of the paper since 2008, after holding many other senior positions within The Age.
Mr Fray said the decision to resign came after much soul searching. ”I have enjoyed a wonderful and rich journey in this company and after much soul searching decided that now is the time to step out and seek new challenges,” he said in a statement. ”I am especially proud of the investigative journalism work we’ve done, the many campaigns we’ve championed and, on the publishing side, the new products we’ve developed, such as the tablet, the compact business and sport and, most recently, the new Sun-Herald. I fully appreciate these are difficult and trying times in the media industry but I know that qualities embodied in The Age, the Herald and Canberra Times mastheads and their staff will continue to play a vital role in our society.”
Ms Wilson said in a statement her decision to quit as editor of the Sydney Morning Herald was not related to recent turmoil at the troubled company.
“The past 18 months as editor have been the most rewarding of my four decades as a journalist,” Ms Wilson said. ”It has been a complete privilege to be able to lead this fabulous team of talented, committed, passionate professionals whose journalism is second to none. I am proud to have been part of such a vibrant newsroom where journalistic integrity and independence is paramount. The skills and values of the Herald’s journalists have made it one of the top newspapers in Australia, one of the most respected media brands and has lifted the news website to the country’s number one.”
Ms Wilson said despite the challenges the company was facing she was positive about the future of the Sydney Morning Herald.
“I am handing over the reins as the Herald begins to implement a newsroom restructure that will see the most profound change in the way it operates. It is a time of enormous challenge for the Herald, which editorial staff are facing with typical determination to succeed,” Ms Wilson said. ”Transition on this scale is never easy, but the newsroom is more than half way there – our accomplishments with the tablet app and the website have already been recognised. I leave the Herald well prepared to continue kicking goals.”
Fairfax Metro Media editorial director Gary Linnell says the company is farewelling champions of the profession.
But The Age’s former editor-in-chief, Andrew Jaspan, says Fairfax is trying to cut costs before the end of the financial year, and he believes Mr Fray has been treated in a particularly shoddy way.
“He is an extremely exceptional journalist. And he’s lost as are two other very experienced journalists,” Mr Jaspan said. “This is a cavalier way to handle some of your most experienced and loyal members of staff. To just throw them out because you’ve decided to take the business and the papers in a different direction.”
Andrew Holden Appointed Age Editor
UPDATED! 26 June 2012: Andrew Holden has been appointed as editor-in-chief of Fairfax’s The Age newspaper. He replaces Paul Ramadge, who stepped down from the role yesterday afternoon along with Sydney Morning Herald publisher Peter Fray and editor Amanda Wilson.
Mr Holden currently edits New Zealand paper The Press, and will return to Melbourne to take the reins at The Age. He has previously worked for The Age and also managed editorial production for Fairfax’s Australian newspapers during the 2000 Sydney Olympics.
Mr Holden says he is excited about returning to The Age. ”There are many challenges facing our industry, but the fact that The Age has such depth of quality means it will be able to deliver the journalism its readers expect,” Mr Holden said in a statement.
The editorial director of Metro media, Garry Linnell, says Mr Holden’s coverage of the 2011 Christchurch earthquake attracted worldwide acclaim.
“It wasn’t just the exemplary manner in which he guided and cared for his staff at a time of crisis,” Mr Linnell said in a statement. ”It was also the way he led the Christchurch community, informing them of the situation and keeping a cool, calm voice when others might have trembled. He’s an engaging, intelligent and mature journalist who will champion Melbourne, champion The Age and continue the masthead’s long-running and trusted relationship with the people of Victoria.”
He will be joined at the head of the newsroom by The Age veteran Steve Foley, who has been appointed as newspaper’s Melbourne news director. Mr Linnell says Mr Foley has long been a believer in newsroom transformation.
“He has a zeal for journalism and storytelling coupled with a great flair for design. He is also a genuine newsroom leader and mentor to many staff,” Mr Linnell said.
Sean Aylmer was appointed as Mr Ramadge’s replacement at the Sydney Morning Herald yesterday, and says he is positive about Fairfax’s future despite its tumultuous week.
The troubled media company has recently announced a decision to axe 1,900 staff, close two major printing presses and downsize its flagship newspapers to tabloids. As well as an uncertain marketplace, Fairfax is also grappling with the implications of having mining magnate Gina Rinehart as its largest shareholder. On the back of major purchases Ms Rinehart owns almost 19 per cent of Fairfax, and has demanded three board seats in return, as well as concessions on editorial independence.
Ms Rineharts’ previous attempts to gain two seats on the board have been rebuffed, but the mining magnate has threatened to withdraw her self-proclaimed “white knight” status and dump Fairfax stock if her demands are not met. Ms Rinehart is refusing to agree to attempts by the board to get her ratify Fairfax’s charter of editorial independence in writing.
The appointments come into effect next week.
UPDATED! 27 June 2012: Despite Fairfax’s plans to cut 1,900 staff and its largest shareholder threatening to walk away from the company, the new editor-in-chief at the Sydney Morning Herald is positive about the media organisation’s future. Sean Aylmer has told ABC’s AM program that he thinks the death of traditional published newspapers has been overstated and he is confident his independence will be firewalled from any interference by Gina Rinehart or any other big investor.
Mr Aylmer, who was appointed to the role yesterday, says newspaper practises need to change, but denies he has been brought on board to manage the newspaper’s exit from the print market.
“The change in journalism and in media has come upon us so quickly – we’ve always been aware of it, but it’s just really hit us hard in the last few months even,” Mr Aylmer said. ”And as a result we have to change with it and I don’t think anyone thinks that the old model works any more. So what this is all about really is ensuring that in six months and 12 months and two years we have this vibrant newsroom that is the best media outlet in Sydney, simple as that.”
Mr Aylmer says he is hopeful the move to a tabloid format will halt the drop in sales, and possibly even boost circulation.
“Everyone talks about print in decline – I don’t totally buy that. I actually think that print doesn’t have to decline, and particularly if we change The Sydney Morning Herald,” Mr Aylmer said. ”You catch the train to work, you can read it in a compact size as opposed to the big broadsheet – that actually might gain us sales and that’s certainly the way I’m thinking, I’m not think of it in decline in any way. My job is not to close anything, my job is to grow them [papers]. At least stabilise them to begin with, and with a bit of luck, grow them.”
Despite the streamlined newsrooms, Mr Aylmer is confident both Fairfax outlets can maintain the local focus that has been key to their success.
“If we don’t keep The Sydney Morning Herald part of Sydney and The Age part of Melbourne, we’re dead in the water,” he said. As well as an uncertain marketplace, Fairfax is also grappling with the implications of having Ms Rinehart as its largest shareholder.
On the back of major purchases Ms Rinehart owns almost 19 per cent of Fairfax, and has demanded three board seats in return, as well as concessions on editorial independence.
Her previous attempts to gain two seats on the board have been rebuffed, but the mining magnate has threatened to withdraw her self-proclaimed “white knight” status and dump Fairfax stock if her demands are not met.
Ms Rinehart is refusing to agree to attempts by the board to get her ratify Fairfax’s charter of editorial independence in writing, but Mr Aylmer says he is confident his independence has been firewalled against interference.
“People talk about it in the newsroom, it floats around, but in actually what we do, it has no impact whatsoever,” Mr Aylmer said. “We have discussed it, but we see it as a sort of third-party thing happening out there in CEO land as opposed to anything that actually impacts us in the office.
“I have total confidence in Greg and Roger Corbett and the board in terms of editorial independence and as we stand now, in my time at Fairfax, no-one has ever put pressure on me and I don’t think anyone ever will put pressure on me.”
The new editor-in-chief says he is confident Ms Rinehart will see the value in Fairfax outlets remaining independent.
“If we have a change in ownership, I have great confidence in our board and in our CEO in terms of allowing new owners, different owners, to come on board,” Mr Aylmer said.”If that’s what happens and I’m pretty confident that those new owners, whoever they are, will actually abide by where the real value in The Sydney Morning Herald and The Age is. And that’s in its credibility, its quality journalism and its credibility.”
Fairfax Staff To Find Out Who Stays, Who Goes, Today
Staff at Fairfax Media, including the Sydney Morning Herald and Melbourne’s The Age, will be told today how the company plans to overhaul its newsrooms to survive in the digital age. A round of voluntary redundancies at Fairfax’s masthead newspapers will start in July, as part of a major restructure.
Fairfax has replaced the editorial bosses of its flagship newspapers and 150 editorial staff are expected to be made redundant, with up to 70 jobs going at The Age and up to 70 roles axed at the Sydney Morning Herald.
Last week, Fairfax announced that 1,900 jobs would go over three years as it restructures to survive in a digital world.
The Media, Entertainment and Arts Alliance told Fairfax union members in a bulletin that a round of voluntary redundancies will start in mid July and remain open for up to four weeks.
The note says Fairfax is working on suitability criteria to decide who will get a redundancy, and the union will be consulted.
Union members at Fairfax will hold national stop-work meetings on Thursday after the restructure plans are outlined to staff today.
An unnamed staff member at Melbourne’s The Age newspaper has - according to reports – told the ABC that Mr Holden had made a good impression and his appointment was viewed positively.
Another unnamed Fairfax staffer said that Mr Holden “held people together at a difficult time” during the February 2011 earthquakes in Christchurch when The Press’s building was destroyed and a staff member was killed.
The appointment of Saturday Age editor Steve Foley as Melbourne news director was described as a “surprise choice.”
The Age staff member said that employees were very stressed and worried about their future.
“There is a great deal of unease,” the Age employee said. ”Everyone feels as if the whole paper is falling apart.”
Mr Holden has told the ABC’s PM program that he can make difficult choices when it comes to sacking staff.
“If that has to be done. I’ve had to do it in New Zealand. We had to make some hard choices in the Press newsroom.”
“So the secret in all those things is that you do it with honesty and dignity. They may not like it. It’s hugely confronting to them if they are about to lose their job,” he said.
Meanwhile, the media union says 70 staff in digital media at News Limited have been made redundant.
News Limited has confirmed that 17 jobs have been axed at two Gold Coast newspapers.
Sub-editing jobs will also go from papers in Cairns and Townsville.
News Limited is also restructuring its news operations amid dwindling readers and advertising income from newspapers in the age of the internet.
Fairfax Slots Digital Up-front
As Australian Prime Minister Julia Gillard would say, Moving Forward, Fairfax Media will employ a digital first strategy as it unveils details of the overhaul of its newsrooms. The once mighty media behemoth will move to 24-hour, seven-day-a-week newsrooms at its flagship newspapers, filing for online and mobile platforms as well as print editions.
The changes come on top of mass redundancies at Fairfax papers, a controversial bid for board seats by mining magnate Gina Rinehart, new editors at both capital city mastheads and a plummeting share price.
Garry Linnell, editorial director at Fairfax Metro Media, says the plans will help the news organisation compete.
“We are going to have a group of first responders, they are called newsbreakers,” Mr Linnell said. ”Every newsroom has them. We have them now. We are always going to have them in the future. We are going to have teams of reporters working across topics. We’re not primarily changing the way and manner in which our journalists work, we are just ensuring we are smarter and more efficient at what we do.”
Mr Linnell says the changes will get rid of duplication in news gathering. ”The new working model that we’ve come up is actually a tribute to about 300 of our staff who’ve been working on this project for the last four months,” he said.
The head of the union house committee at The Age, Ben Schneiders, says staff believe change is overdue. ”We are broadly comfortable with the new approach,” Mr Schneiders said. ”It reflects where the audience is going.”
But Mr Schneiders said there was a degree of alarm about the level of change at The Age. ”I think there’s some obvious merit in us embracing the future in the way that we report, in the way that we work, but, it’s got to be a way that maintains quality and independent journalism,” Mr Schneiders said. ”And the question around resources is critical to that. Can we do it with a lot less staff? And that’s one that is unanswered.”
As part of the restructure, a round of voluntary redundancies at Fairfax’s masthead newspapers will start in July. Around 150 editorial staff are expected to be made redundant, with up to 70 jobs going at The Age and up to 70 roles axed at the Sydney Morning Herald.
After the restructure was flagged, three top editors at the Sydney Morning Herald and The Age quit. Newcastle Herald editor Roger Brock has today followed suit, after 35 years in the industry. He will be replaced by his deputy Chad Watson.
Greg Hywood Defends Fairfax Boards Right to Hire and Fire Editors
UPDATED! 27 June 2012: ABC.net.au’s Business Editor, Peter Ryan has interviewed Fairfax CEO Greg Hywood, who has defended the right of the board to hire and fire editors, but says individual directors or major shareholders should not be able to tell journalists or editors what they should write. Mr Hywood’s comments on boardroom decisions and editorial independence come as Fairfax Media staff learn the details of the company’s restructure, which will see 1,900 jobs axed, printing presses close, and The Age and Sydney Morning Herald converted to tabloid formats.
The Fairfax boss also confirmed he had “a terrific meeting” with mining magnate Gina Rinehart who, as the single biggest shareholder, is so far refusing to honour Fairfax’s charter of editorial independence.
“I mean she asked very pertinent questions about the company. We gave her a briefing about the company. It was an admirable meeting. It was a good meeting,” Mr Hywood told AM.
However, Mr Hywood said he had no discussion with Mrs Rinehart about her bid for seats on the Fairfax board or a say in the company’s editorial direction.
“We didn’t discuss any of those issues. I mean, whether or not Mrs Rinehart comes onto the board or not is a board issue and, you know, we’ll leave it at that,” Mr Hywood said.
But the embattled publishing boss has this message for staff or Australians concerned about Fairfax’s future under any new ownership.
“There’s been a lot of speculation around editorial independence in relation to Fairfax. That will always stay. That is the core of this company.”
At the same time, Mr Hywood defended Mrs Rinehart’s right to be a vocal investor in Fairfax Media.
“Oh look, I think she’s interested in journalism. She’s interested in, you know, the future of Australia. She has her own opinions about that and she’s entirely entitled to them. So I don’t think there’s anything controversial in that at all.”
But Mr Hywood clarified the role of boardroom deliberations at Fairfax Media and the hypothetical scenario of how Mrs Rinehart’s opinions would be managed if she secured one or more board seats.
“Look, she’s our major shareholder. As I said, whether or not she joins the board is up to the board. And if you’re a board member editorial discussions are always held within board meetings.
“What doesn’t happen is it doesn’t translate into board members telling journalists what they should or shouldn’t write.
“And that’s our practice. The board is pre-eminent. The board operates collectively. No individual director can determine what the board does or doesn’t do.
“And certainly, if someone buys the entire company and has more than 51 per cent of the company that’s a different issue.”
Mr Hywood refused to speculate on the scenario of Mrs Rinehart joining the board or the outlook for his role as chief executive if the mining magnate makes a full takeover bid.
“That’s entirely speculative and hypothetical,” Mr Hywood he told AM.
Fairfax Media shares were 2.2 per cent higher in late morning trade after hitting an intraday low of 53.5 cents yesterday.
Fairfax Media Tells Rinehart It’is Unable to Extend Invitation
UPDATED! 28 June 2012: Fairfax Media has told billionaire mining magnate Gina Rinehart that it is unable to extend an invitation for her to join its board. In a statement, chairman Roger Corbett said it was unable to reach agreement with Ms Rinehart over board positions at the media company.
He said he regretted an agreement could not be made but hoped it might be possible in the future.
Ms Rinehart has mounted a high-profile campaign to win seats on the Fairfax board after a large acquisition of shares earlier this month left her with 18.7 per cent of the company.
Her refusal to sign the company’s charter of independence has raised concerns she would interfere with the editorial independence of Fairfax’s flagship newspapers, the Sydney Morning Herald and The Age.
Mr Corbett said Fairfax had received tens of thousands of emails and other correspondence from shareholders and readers making it clear they supported the company’s position on editorial independence.
Ms Rinehart is Fairfax’s biggest single shareholder.
UPDATED! 29 June 2012: Gina Rinehart’s showdown with the Fairfax Media board has the potential to further damage the company as it rolls out a painful editorial restructure at the Sydney Morning Herald and The Age.
By closing the boardroom door on Mrs Rinehart – for now at least – Fairfax chairman Roger Corbett is sending the message that the definition of editorial independence has to be a collective view rather than one tailored to the interests of individual powerful directors or investors.
Sources within the company say the Fairfax board remains concerned that Mrs Rinehart made no acknowledgment of the existing charter and certaintly does not accept the charter is binding on the board.
Other big institutional investors are also known to have expressed concerns that a single board member blessed with special powers would set a dangerous precedent.
But some observers believe the issue of independence is just one part of Fairfax Media, and Mrs Rinehart’s exclusion on the basis of the charter ignores other experience she could bring to the board.
Media analyst Roger Colman of CCZ Equities told ABC’s AM program that the current damaging game of boardroom poker needs to be decided by shareholders at the next annual general meeting.
“The board is backing the wrong horse in respect to that charter of editorial independence at metro markets,” Mr Colman said.
“I think Gina should put it to the test at the next AGM and just see if she has the backing.
“She’ll find out what the shortfall is, and if she’s got to buy more stock progressively over the next year-and-a-half to two years, she should go for it. It’s no different to Tony Abbott asking for an election against Julia Gillard. I mean, go to the people.This dispute has got to be settled in a single numerate count of shareholders votes.” Mr Colman said.
Ms Rinehart has not withdrawn her threat to dump all or part of her 18.67 per cent stake in Fairfax if her demands for three board seats and editorial sway are not met.
There are concerns that any backlash could further undermine the Fairfax share price, which hit a record low of 53.5 cents a share earlier this week.
But other big institutional investors might also be buyers.
They could well be concerned that their investments could be harmed if any erosion of editorial independence gets in the way of the survival strategy currently under way at The Age and Sydney Morning Herald.
Gina Rinehart Asks Fairfax Chairman To Step Down
UPDATED! 30 June 2012: Mining billionaire Gina Rinehart has asked the chairman of Fairfax Media to resign if he cannot reverse falling circulation and revenue at the company’s newspapers. In an open letter to Roger Corbett, Ms Rinehart asked him to step down by November if a number of performance milestones had not been met.
Ms Rinehart is the largest single Fairfax investor with nearly 19 per cent of the company’s shares. In her letter to Mr Corbett, Ms Rinehart said the performance of Fairfax Media over the past five years had been distressing for shareholders.
She called for the Fairfax share price to rise from current levels of 55 cents to 87 cents before November’s annual general meeting. ”Shareholders should at the very least be advised what the loss target is, and be assured that should you not meet that target, there would be light at the end of tunnel,” the letter said.
“And, if the five-year decline in paid circulation and in revenue of Fairfax mastheads do not reverse prior to the 2012 AGM, we ask that you tender your resignation at that meeting.”
Ms Rinehart has mounted a high-profile campaign to win seats on the Fairfax board after a large acquisition of shares earlier this month left her with 18.7 per cent of the company.
This week, Mr Corbett told the world’s richest woman that Fairfax was unable to extend an invitation for her to join its board.
Ms Rinehart’s refusal to sign the company’s charter of independence raised concerns she would interfere with the editorial independence of Fairfax’s flagship newspapers, the Sydney Morning Herald and The Age.
“Where we have differed most profoundly is not over the charter of editorial independence, contrary to much Fairfax reporting, but how to save a business that is reportedly in danger of dying,” Ms Rinehart said in the letter.
“What is at stake is the survival of Fairfax Media, so it is not time for smoke screens to divert attention.”
In response, Fairfax said in a statement that the dispute was about editorial control despite Ms Rinehart’s assertions to the contrary.
“It is also about her obtaining control of the company and not paying a premium,” the statement said.
“If Ms Rinehart wants control of Fairfax Media she must make a bid.
“Ms Rinehart’s letter today has once and for all unmasked her motives for her continual attacks on the company and its board.
Rinehart Sells Partial Stake in Fairfax
UPDATE! 5 July 2012: Our favourite Mining billionaire Gina Rinehart has sold part of her stake in Fairfax Media. Market data from Thomson Reuters reveals a block of 86.5 million shares equalling 3.7 per cent of Fairfax was sold at 58 cents a share, making the total trade worth just over $50 million.
She remains the single largest shareholder of the company with about 15 per cent. Fairfax shares closed 0.9 per cent higher today at 58.5 cents.
Mrs Rinehart’s private company, Hancock Prospecting, issued a statement and said the shares were sold to “a major Australian fund manager”, which the ABC has confirmed is Perpetual.
“We continue to monitor the performance of our investment in Fairfax noting that the shares are trading at record or near-record lows, which is an independent assessment of the chairman’s performance,” the statement said.
Hancock Prospecting says the chief reason for the sale was to reduce its stake to 15 per cent to avoid potential problems associated with directors’ insurance.
“We also deny unsubstantiated rumours spread by others that we are about to make an offer for the company, when we have previously stated we are not seeking control of Fairfax, just the appointment of two directors plus an independent out of up to 12 directors on the board.”
In recent weeks, Mrs Rinehart has mounted a high-profile campaign to win three seats on the Fairfax board after a large acquisition of shares last month left her with an 18.7 per cent stake in the company.
But the publisher’s chairman Roger Corbett told her Fairfax was unable to extend an invitation for her to join its board. He said Mrs Rinehart’s refusal to sign the company’s charter of independence raised concerns she would interfere with the editorial independence of Fairfax’s flagship newspapers, the Sydney Morning Herald and The Age.
Late last month Mrs Rinehart bought $20 million of new shares in Network Ten to maintain her share of the broadcaster at 10.6 per cent, and threatened to abandon Fairfax if she did not get any seats on the board.
She called on Mr Corbett to resign if he could not reverse falling circulation and revenue at Fairfax’s newspapers. Mrs Rinehart kept up the pressure on the chairman in the statement issued after Thursday’s share sell-off.
“We again urge the chairman to tell concerned shareholders that he will accept proposed milestones regarding his performance in the interests of Fairfax and its shareholders, or propose other reasonable (key performance indicators) to meet for the continuance of his chairmanship past the AGM in November.”
Fairfax’s share price has been struggling recently with the turmoil over Mrs Rinehart and the announcement of a major operational restructure. The company says 1,900 jobs will go over three years and there will be changes in key roles at its newspapers as it restructures to survive in a digital world. However, Perpetual says it sees value in the stock, and that is the sole reason for today’s purchase.
“We haven’t owned the stock for quite a while and, at these prices, it looks like reasonable value,” Perpetual fund manager Charlie Lanchester told the ABC.net.au. Interestingly, Perpetual is the largest shareholder in Mrs Rinehart’s other media play, Network Ten, holding an 11.9 per cent stake.
In comments to The Australian newspaper, Mr Lanchester indicated Perpetual would support Mrs Rinehart’s push for a board seat.
“Our readers are telling us that if Ms Rinehart succeeds in this personal crusade, they will abandon us.”
Rinehart Offered Olive Branch via Buddy Jack Cowin
UPDATE! 19 July 2012: Jack Cowin has been appointed to the Fairfax board as an independent director, effective immediately. Mr Cowin, the founder of Hungry Jack’s and other food businesses, is viewed as an ally of mining magnate Gina Rinehart, who has been pushing for two board seats after taking a substantial minority holding in the media company.
However, Fairfax’s chairman Roger Corbett, who has been the subject of personal attacks by Hancock Prospecting for the poor performance of the media company, says Mr Cowin’s appointment does not indicate Mrs Rinehart will get her board seats.
“Our discussions with Mr Cowin over recent months have made it clear that he has considerable value to add to the company,” Mr Corbett said in a statement. ”Neither Mr Cowin or Fairfax Media consider his appointment as being indicative or connected to the potential outcomes of the company’s inconclusive discussions with Hancock Prospecting Pty Ltd.”
Hancock Prospecting recently reduced its stake in Fairfax to 15 per cent, after building an 18.7 per cent stake in the company. Gina Rinehart’s private company has threatened to sell-off its Fairfax holding if it does not get two board seats, plus an independent director.
Morningstar media analyst Tim Montague-Jones says Mr Cowin’s appointment is a small win for Mrs Rinehart.
“It seems like a minor victory for Gina Rinehart, that she has effectively got one of her stated aims complete, that she does have Jack Cowin now on the board,” Montague-Jones observed. ”It’ll be interesting to see how successful she is in her second aim of getting a second board seat for herself.”
Fusion Strategy’s chief executive Steve Allen says Mr Cowin’s appointment is an olive branch to ease the tension between Mrs Rinehart and the Fairfax board.
“He probably would never have been offered this position had it not been for Gina Rinehart, his friendship and business relationship with her, and the fact that he was on her [Fairfax board] ticket,” Mr Allen said. ”That’s why I think it goes full circle, it’s kind of an olive branch. At least somebody that she trusts has got a voice in the room from this point onwards.”
Mr Cowin has some experience with media companies, having been a member of the Ten Network’s board since 1998.
Tim Montague-Jones says that raises a potential conflict of interest. ”What was a surprise was that the board of Fairfax didn’t ask Mr Cowin to give up his directorship at Channel Ten,” Montague-Jones said. ”So he’s a director of Channel Ten and also Fairfax, so there might be an issue there which may be a concern for some investors.”
Hancock Prospecting also owns a 10 per cent stake in Ten Network Holdings.
Speaking on ABC Melbourne Radio 774 about a month ago, Mr Cowin said a media company’s board does have a role in setting the editorial direction of the company.
“This is a business, this is not a public service,” Mr Cowin said. ”The purpose of a company is to try and make a profit, and if the editorial policy or the direction that the newspapers are being run in and driven in is not optimising the opportunity then it’s the role of the directors to try and change the direction of the ship.”
However, the ABC understands that Mr Cowin has signed-up to Fairfax’s charter of editorial independence as a condition of joining the board.
That is something Mrs Rinehart has so far declined to do, and one of the key reasons given by Roger Corbett for Hancock Prospecting being denied seats at the boardroom table.
Share market reaction has been muted, with Fairfax falling 0.5 per cent to 56.2 cents by 2:50pm (AEST) in a broader market up around 1.3 per cent.
audio source: abc