Fairfax Limited, one of Australia’s largest media conglomerates, is at war with its largest individual shareholder, the world’s richest woman.
The soap-worthy drama began on June 18, when Fairfax—which publishes The Sydney Morning Herald, The Age, and other leading newspapers—announced 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’s 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 “expedited” 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’s media market.
Indeed, a day after the restructuring announcement, The Sydney Morning Herald reported that Rinehart was also seeking three seats on Fairfax’s 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’s richest woman in May, has been unwilling to sign the company’s Charter of Editorial Independence. On Tuesday, she threatened to dump her shares in Fairfax if her demand weren’t met, a move that would endanger the company’s viability.
In a written statement to the Australian Broadcasting Corporation,, Hancock said it hoped that Fairfax’s board would view Rinehart “as a successful business person and a necessary ‘white knight’ with mutual interest” in the company, whose share price hit an all-time low this week. However, the letter added that “unless director positions are offered without unsuitable conditions,” Rinehart would “be unable to assist” Fairfax and that Hancock would consider selling its shares and repurchasing them at a later time (ostensibly at bargain prices).
The next day, Hancock’s chief development officer released a statement to the media suggesting it might accept some form of charter of independence, adding that Fairfax “has an abysmal track record” and that Rinehart and Hancock’s intention was to making to make the media company “sustainable.”
Hours later, Fairfax rebuffed Rinehart’s bid to join its board of directors, however, citing her failure to agree to the charter.
“The 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’s long-standing position on editorial independence,” its chairman, Roger Corbett, said in a prepared statement.
The salvos intensified on Friday, when Rinehart issued an open letter to Corbett insisting that their most profound disagreement was not over the charter, but “how to save a business that is reportedly in danger of dying.” She then gave Corbett an ultimatum, challenging him to improve Fairfax’s share price by the company’s annual general meeting in November or resign.
Fairfax fired back right away. “If Mrs. Rinehart wants control of Fairfax Media she must make a bid,” it said in a statement, adding:
Mrs Rinehart’s 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’s motives are indeed suspect. The written comments that Hancock submitted to the Australian Broadcasting Corporation’s Four Corners news program, which ran a long exposé about her on Monday, suggested the mining mogul is particularly interested in pushing climate-change denial via the press.