THE gloves have come off in the battle for control of Fairfax Media with major shareholder Gina Rinehart and the company exchanging increasingly personal salvos about their differences, and the future of the company.
In a flurry of heated exchanges yesterday afternoon, prompted by this week's Fairfax rejection of Mrs Rinehart's board tilt, the Perth-based mining magnate called on chairman Roger Corbett to agree to a "performance milestone" of returning the company's share price to 87? and reversing "the five-year decline in paid circulation and revenue". In a letter to Mr Corbett, she said he should resign if he failed to achieve the goals by November.
But Fairfax rejected the ultimatum. Instead, it called on her to launch a takeover for the company.
"If Mrs Rinehart wants control of Fairfax Media she must make a bid. Mrs Rinehart's letter today has once and for all unmasked her motives for her continual attacks on the company and its board," adding that the company's readers would abandon the group's mastheads "if Mrs Rinehart succeeds in this personal crusade".
Later in the evening, one of Mrs Rinehart key executives, John Klepec, took issue with the Fairfax response, saying: "Mrs Rinehart has repeatedly advised that she would not use the publications to promote her private interests only. It is hence incorrect for Fairfax to endeavour to allege that this has been a 'personal crusade'."
Mrs Rinehart had "never sought control of Fairfax," he added.
Earlier, Mrs Rinehart dismissed the board's assertion that editorial independence was the main sticking point. "Where we have differed most profoundly is not over the charter of editorial independence, contrary to much Fairfax reporting, but over how to save a business that is reportedly in danger of dying."
But the company owner of this newspaper disagreed: "Contrary to Mrs Rinehart's repeated assertions that this isn't about editorial control it is. It is also about her obtaining control of the company and not paying a premium."
Mrs Rinehart said the performance of Fairfax over the past five years had been "distressing for shareholders".
"The milestone we propose is that the Fairfax [average] . . . share price increase . . . to 87? per share prior to the AGM, which would represent only a 50 per cent loss from the commencement of your chairmanship in October 2009 . . . And if the five-year decline in paid circulation and in revenue of the Fairfax mastheads do not reverse prior to the 2012 AGM, we ask that you tender your resignation at that meeting."
Fairfax shares closed 1.5? higher at 55.5?.
But in reply, Fairfax noted Mrs Rinehart's record as a media investor. "All media stocks have been impacted by global structural and cyclical forces. It is worth noting that in the period since Mrs Rinehart has joined the TEN board its stock has traded 63.4 per cent down. In the same period Fairfax Media's stock price is down 60.6 per cent. Seven West Media is down 73.3 per cent and APN is down 64.7 per cent."
Frustrated at Mrs Rinehart's emphasis on newspaper circulation, the company underscored its audience across all platforms. "We have grown overall readership to the highest levels in the company's history. Our metro publications readership is up 26 per cent over the last five years."
Mrs Rinehart, owner of 18.67 per cent of Fairfax, said she was also concerned by the affects of the timing of the restructure and 1900 job losses, saying the "sprawling [three-year] time-frame can lead to staff demoralisation and a lack of focus on a strategy for recovery".
"What is at stake is the survival of Fairfax Media."
But Fairfax dismissed Mrs Rinehart's resistance of the board's governance principles, saying they were "in keeping with normal board practice".
Frequently Asked Questions about this Article…
What sparked the public shareholder dispute between Gina Rinehart and Fairfax Media?
The dispute flared after Fairfax rejected Gina Rinehart’s attempt to join the board. Rinehart then issued an ultimatum demanding a “performance milestone” — including a share price recovery and a reversal of a five‑year decline in paid circulation and revenue — and called on chairman Roger Corbett to resign if those goals weren’t met. Fairfax rejected the ultimatum and said she should launch a formal takeover bid if she wants control.
How much of Fairfax Media does Gina Rinehart own?
According to the article, Gina Rinehart owns 18.67% of Fairfax Media, making her a major shareholder whose demands drew a public response from the company.
What specific performance targets did Rinehart ask Fairfax’s chairman to meet?
Rinehart asked chairman Roger Corbett to restore Fairfax’s share price to 87 cents per share and to reverse the five‑year decline in paid circulation and revenue. She said he should resign if those targets weren’t met by November and asked that he tender his resignation at the 2012 AGM if the circulation and revenue trends hadn’t improved.
How did Fairfax Media respond to Rinehart’s ultimatum and criticisms?
Fairfax rejected the ultimatum, said Rinehart must make a takeover bid if she wants control, and accused her of revealing her motives. The company defended its governance and editorial independence, highlighted growth in total readership (including a 26% rise in metro readership over five years), and pointed out that media stocks broadly have been hit by global structural and cyclical forces.
Is this dispute about editorial independence or control of the company?
Both sides disagree. Rinehart says the dispute is about how to save a struggling business, not editorial control. Fairfax counters that editorial independence is at issue and also accuses Rinehart of seeking control without paying a premium. The article reports these conflicting claims without resolving them.
What did Rinehart’s representative John Klepec say about her intentions for Fairfax’s publications?
John Klepec, a key Rinehart executive, said Rinehart has repeatedly stated she would not use Fairfax’s publications to promote her private interests and described Fairfax’s suggestion that this is a “personal crusade” as incorrect. He also said Rinehart had never sought control of Fairfax.
How did Fairfax’s share price react during the exchange?
Fairfax shares closed 1.5% higher at 55.5 cents per share on the day the exchanges were reported, according to the article.
What concerns did Rinehart raise about Fairfax’s proposed restructure and job cuts?
Rinehart warned that the proposed three‑year restructure and the prospect of about 1,900 job losses could demoralise staff and undermine focus on a recovery strategy. She said the timing of the restructure risks the survival of Fairfax Media unless a clearer, faster strategy is implemented.
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