|Statement from Fairfax Media chairman Roger Corbett 27 June 2012|
Gina Rinehart's showdown with the Fairfax Media board has the potential to further damage the company as it rolls out a painful editorial restructure at the Sydney Morning Herald and The Age.
By closing the boardroom door on Gina Rinehart - for now at least - Fairfax chairman Roger Corbett is sending the message that the definition of editorial independence has to be a collective view rather than that one tailored to the interests of individual powerful directors or investors.
Listen to my analysis broadcast on this morning's edition of AM.
I understand the Fairfax board remains concerned that Mrs Rinehart made no acknowlegement of the existing charter and certaintly doesn't accept the charter is binding on the Board.
Other big instituational investors are also known to have expressed concerns that a single board member blessed with special powers would set a dangerous precedent.
But some observers believe the issue of independence is just one part of Fairfax Media and Mrs Rinehart exclusion on the basis of the charter ignores other experience she could bring to the Board.
The media analyst Roger Colman of CCZ Equities says the current damaging game of boardroom poker needs to be decided by shareholders at the next annual general meeting.
"The board is backing the wrong horse in respect to that charter of editorial independence at metro markets," Mr Colman said.
"I think Gina should put it to the test at the next AGM and just see if she has the backing. She'll find out what the shortfall is and if she's got to buy more stock progressively over the next year and a half to two years, she should go for it.
"It's no different to Tony Abbott asking for an election against Julia Gillard. I mean, go to the people.
"This dispute has got to be settled in a single numerate count of shareholders votes."
Mrs Rinehart has not withdrawn her threat to dump all or part of her 18.67 percent stake in Fairfax if her demands for three board seats and editorial sway are not met.
There are concerns that any backlash could further undermine the Fairfax share price which hit a record low of 53.5 cents a share earlier this week.
But other big institutional investors might also be buyers.
They could well be concerned that their investments could be harmed if any erosion of editorial independence gets in the way of the survival strategy currently under way at The Age and Sydney Morning Herald.
|Falling fortunes: Fairfax share price year to 28 June 2012. Source: Bloomberg|