The world's richest woman and Fairfax in a flurry of heated exchanges yesterday afternoon.
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 is the Gina Rinehart vs Fairfax Media dispute about and why should investors care?
The dispute is a public battle between major Fairfax shareholder Gina Rinehart (owner of an 18.67% stake) and Fairfax’s board over the company’s strategy, performance and potential control. Rinehart has issued ultimata about share-price and circulation targets and criticised the pace of Fairfax’s restructure. Investors should care because the conflict could affect corporate governance, takeover dynamics, strategic direction and short‑term share‑price volatility.
How much of Fairfax Media does Gina Rinehart own?
According to the article, Gina Rinehart owns 18.67% of Fairfax Media.
What specific demands did Gina Rinehart make of Fairfax’s chairman?
Rinehart asked chairman Roger Corbett to agree to a 'performance milestone' including returning Fairfax’s share price to $87 and reversing a five‑year decline in paid circulation and revenue. She said he should resign if he failed to achieve the goals by November and asked that he tender his resignation at the 2012 AGM if circulation and revenue hadn’t reversed prior to that meeting.
How did Fairfax Media respond to Rinehart’s ultimatum?
Fairfax rejected the ultimatum and said that if Rinehart wanted control she must make a formal takeover bid. The company also argued the dispute involves editorial independence and accused Rinehart of seeking control without paying a premium. Fairfax highlighted broader industry pressures and compared recent stock declines across media peers while pointing out its own overall readership growth.
Has anyone defended Rinehart’s position in this row?
Yes. John Klepec, a key executive for Mrs Rinehart, said she has repeatedly advised she would not use Fairfax publications to promote private interests and argued it is incorrect to characterise her campaign as a 'personal crusade.' He also said Rinehart had 'never sought control' of Fairfax.
What has been the market reaction to the board stoush so far?
On the day covered by the article Fairfax shares closed 1.5% higher at $55.50. The article also notes broader media stock weakness: since Rinehart joined the TEN board that stock was down 63.4%, Fairfax was down 60.6%, Seven West Media down 73.3% and APN down 64.7%—illustrating sector headwinds that investors should factor in.
Is editorial independence at Fairfax the main issue in this fight?
Fairfax says editorial independence is central and has warned readers might abandon mastheads if Rinehart gained influence. Rinehart and her team dispute that, saying their main focus is on how to save the business and reverse declines in circulation and revenue. The article presents both positions without resolving the dispute.
What are the potential business risks for Fairfax mentioned in the article?
Rinehart expressed concern about Fairfax’s survival, the impact of a sprawling three‑year restructure, and about roughly 1,900 potential job losses that could demoralise staff and derail recovery efforts. Fairfax counters that while print circulation has declined, overall readership across platforms is at record levels and metro readership is up 26% over five years.
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