Fairfax urged to beware boardroom influence
THE Telstra director Geoffrey Cousins has called on large shareholders in Fairfax Media to block Gina Rinehart from gaining a board seat.
THE Telstra director Geoffrey Cousins has called on large shareholders in Fairfax Media to block Gina Rinehart from gaining a board seat.He expressed concerns that the mining magnate might attempt to exert her influence over the editorial direction of its newspapers and radio stations.The former pay-TV boss called on Mrs Rinehart to "come out and explain" her motivations if she pushes for a board seat.Mrs Rinehart, Australia's richest woman, this week snared a 14 per cent stake in Fairfax, the owner of the Herald, The Age and 2UE, making her its single-biggest shareholder.The raid on Fairfax follows Mrs Rinehart last year gaining a board seat at Ten Network Holdings after she amassed a 10 per cent stake in the broadcaster.But Mr Cousins said Mrs Rinehart should not be allowed to exert her personal influence over Fairfax, including the editorial direction of its newspapers, if she gains a board seat."It is concerning that mining interests are seeking to control parts of the media in Australia. Quite clearly there are a lot of people in mining companies, and Gina Rinehart seems to be one, who don't like anybody placing any restrictions on their activities," Mr Cousins said.Calls to Mrs Rinehart's office were not returned yesterday.Mrs Rinehart and her representatives are believed to have not yet contacted Fairfax about the acquisition.The fund manager Peter Morgan believed Mrs Rinehart's motivation was based on diversifying her investments as much as seeking influence through the media."Being a betting man I think the risk-reward [for Fairfax] is weighted towards the reward," he said. "I'd rather be buying [Fairfax] than BHP at $40 in terms of the cycle."Mr Morgan said Mrs Rinehart's arrival was a "wake-up call" for Fairfax, but he believed its chairman, Roger Corbett, was strong enough to ensure that if she took a board seat, she would not impose undue influence.Peter Mansell, the former chairman of West Australian Newspapers, said it was not easy for directors to influence the day-to-day editorial policy of a newspaper. "In my many years on the board of The West Australian, never once did I see any attempt by anyone to influence editorial decisions," Mr Mansell said yesterday."There's no way we'd sit down at a board meeting and talk about the editor's business."Andrew Jaspan, a former editor of The Age, said any undue editorial influence would hurt the core business of Fairfax."The wheels of that business model will fall off if the mastheads simply become a propaganda sheet for the mining sector."Although he agreed that Mr Corbett was a strong chairman, Mr Cousins conceded that it was "pretty difficult" for independent directors to stand up against shareholders who had gained cornerstone stakes in companies."They are supposed to ignore those interests and simply look at the interests of all shareholders ... but it is pretty difficult in some circumstances," he said.Justin Diddams, an analyst with the investment bank Citigroup, said the latest developments highlighted how media assets were always in play."There's always a handful of wealthy individuals who covet the political influence that media assets can deliver, and Australia is no different in this regard," he said.