Press war down under
Fairfax Limited, one of Australia‚Äôs largest media conglomerates, is at war with its largest individual shareholder, the world‚Äôs richest woman.
The soap-worthy drama began on June 18, when Fairfax‚ÄĒwhich publishes¬†The Sydney Morning Herald,¬†The Age, and other leading newspapers‚ÄĒannounced that it would cut 1,900 jobs (about 20 percent of its work force) over three years, shut down two printing plants, and reduce all of its broadsheet newspapers to tabloid formats.
On the same day, mining magnate Gina Rinehart, already Fairfax‚Äôs largest shareholder, increased her stake in the company from 12.6 to 18.7 percent, prompting some to¬†suggest that the $87 million share purchase had ‚Äúexpedited‚ÄĚ the restructuring.
Her involvement soon began to look more like a hostile takeover than a well-intentioned effort to stabilize the financially troubled company. Many feared she was making a grab for editorial control that would allow her to push a free-market, anti-regulatory agenda on a large slice of the Australia‚Äôs media market.
Indeed, a day after the restructuring announcement,¬†The Sydney Morning Herald reported that Rinehart was also seeking three seats on Fairfax‚Äôs board of directors. According to its¬†article:
She or her representatives are also believed to have told the Fairfax board that as a major shareholder she and her representatives should not be restricted when it comes to editorial matters – including the hiring and firing of editors.
Her demands are in conflict with Fairfax board protocol that directors not interfere with the editorial direction of the media group and a charter of editorial independence that has been honoured by the board since the early 1990s.
Rinehart, heiress to the privately held Hancock Prospecting mining company, which turned her into the¬†world‚Äôs richest woman in May, has been¬†unwilling to sign the company‚Äôs¬†Charter of Editorial Independence. On June 26, she threatened to dump her shares in Fairfax if her demand weren‚Äôt met, a move that would endanger the company‚Äôs viability.
In a¬†written statement to the Australian Broadcasting Corporation, Hancock said it hoped that Fairfax‚Äôs board would view Rinehart ‚Äúas a successful business person and a necessary ‚Äėwhite knight‚Äô with mutual interest‚ÄĚ in the company, whose share price¬†hit an all-time low this week. However, the letter added that ‚Äúunless director positions are offered without unsuitable conditions,‚ÄĚ Rinehart would ‚Äúbe unable to assist‚ÄĚ Fairfax and that Hancock would consider selling its shares and repurchasing them at a later time (ostensibly at bargain prices).
The next day, Hancock‚Äôs chief development officer released a¬†statement to the media suggesting it might accept some form of charter of independence, adding that Fairfax ‚Äúhas an abysmal track record‚ÄĚ and that Rinehart and Hancock‚Äôs intention was to making to make the media company ‚Äúsustainable.‚ÄĚ
Hours later, Fairfax¬†rebuffed Rinehart‚Äôs bid to join its board of directors, however, citing her failure to agree to the charter.
‚ÄúThe company has received tens of thousands of emails and other correspondence from share holders, our readers and others making it clear that they support Fairfax‚Äôs long-standing position on editorial independence,‚ÄĚ its chairman, Roger Corbett, said in a prepared statement.
The salvos intensified on June 22, when Rinehart issued an¬†open letter to Corbett insisting that their most profound disagreement was not over the charter, but ‚Äúhow to save a business that is reportedly in danger of dying.‚ÄĚ She then gave Corbett an ultimatum, challenging him to improve Fairfax‚Äôs share price by the company‚Äôs annual general meeting in November or resign.
Fairfax fired back right away. ‚ÄúIf Mrs. Rinehart wants control of Fairfax Media she must make a bid,‚ÄĚ it said in a statement, adding:
Mrs Rinehart‚Äôs letter today has once and for all unmasked her motives for her continual attacks on the company and its board. Our readers are telling us that if Mrs Rinehart succeeds in this personal crusade they will abandon us. We have tens of thousands of letters and emails of support.
Rinehart‚Äôs motives are indeed suspect. The¬†written comments that Hancock submitted to the Australian Broadcasting Corporation‚Äôs¬†Four Corners news program, which ran a¬†long expos√© about her on June 25, suggested the mining mogul is particularly interested in pushing climate-change denial via the press.
Rinehart feels that Australia‚Äôs carbon tax, which is¬†due to go into effect on July 1, would negatively impact Australians and that ‚Äúshe remains concerned by the lack of understanding in the media on this issue,‚ÄĚ it said in Hancock‚Äôs statement to¬†Four Corners. It continued:
To lessen the fear the media have caused over these issues, Mrs Rinehart suggests that the media should also permit to be published that climate change has been occurring naturally since the earth began, not just the views of the climate extremists. It is a fact that there have been ice ages, then periods of global warming to end the ice ages for thousands of years, and these have occurred naturally, including due to the earth‚Äôs orbit, and not due to mankind at all.
‚ÄúMs Rinehart never gives interviews,‚ÄĚ¬†The Independent in the UK¬†noted earlier in the week. ‚ÄúBut her values – pro-free market, cheap foreign labour and tax concessions for mining, and anti-government regulation, red tape and climate change science – are well known.‚ÄĚ
Mocking Hancock‚Äôs ‚Äúwhite knight‚ÄĚ characterization of Rinehart earlier in the week,¬†The Economist argued that she is actually a ‚Äúblack knight ‚Ä¶ stalking Fairfax at its most vulnerable moment.‚ÄĚ
Rinehart has the support of Australia‚Äôs most famous media mogul, Rupert Murdoch, however, who owns the rival conglomerate, News Limited. ‚ÄúUnderstand lefties worried by Gina R. But is she, or any other single person, to be banned from buying or starting a newspaper? Think anew,‚ÄĚ he wrote in a¬†tweet on Sunday.
A day later,¬†according to The Australian (which is published by News Limited), Murdoch told Bloomberg that it would be ‚Äúa nightmare‚ÄĚ if Fairfax closed because it would leave his company in a monopoly situation, though a Fairfax spokesman said, ‚ÄúThere‚Äôs no chance of that happening.‚ÄĚ
Whatever the outcome, Fairfax‚Äôs restructuring plan has already taken a toll. The¬†Sydney Morning Herald‚Äôs publisher and editor in chief, Peter Fray, and its first female editor, Amanda Wilson, as well as¬†The Age‚Äôs editor in chief, Paul Ramadge,¬†announced June 25 that they are leaving the company. And the war between Rinehart and Fairfax is not over. In fact, this week‚Äôs battles are probably only a preview of the upheaval to come.