Thursday, June 28, 2012

Fairfax chairman Roger Corbett closes boardroom door on Gina Rinehart

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Mrs Rinehart has not withdrawn her threat to dump all or part of her 18.67 percent stake in Fairfax if her demands for three board seats and editorial sway are not met.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

9 comments:

  1. "Gina Rinehart's showdown with the Fairfax Media board has the potential to further damage the company.." as "[big institutional investors] 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."
    One would think that big institutional investors should be happy to know that the survival strategy of the main Fairfax mastheads includes sticking by their 'trademark' editorial independence; that the underpinnings of Fairfax are still strong.

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  2. So the person who has less than 0.004% of Fraifax shares, and consequently has very limited interest in the company wants to keep away a person who owns almost 20% of the company and consequently has enormous interest in the company?! This is some democracy in a publicly listed company. Roger Corbett can afford to play games. He's got nothing, or very little, to lose. It is the shareholders, including Gina Rinehart, that are going to lose. It is obvious that he is a stubborn and capricious man, who would rather destroy the company than admit his failures,

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    1. It's not clear that she has any significant "interest" in Fairfax. OK she owns lots of shares, but it is just petty cash to her. With $28B in her pocket, if she was really "interested" she could buy the whole box and dice without blinking.

      What she is interested in is buying a megaphone to help her achieve her real "interest" - making lots lots more money.

      There is certainly no evidence at all that she would run the company in a way to serve the interests of other shareholders - look at the way she runs her family trust.

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    2. I suggest she has very little to loose. She doesn't appear to have much else in her life, she appears to be at odds with most of her family, appears not to look after her health. Seriously, she should be looking at the fundamentals of her own life instead of upending other companies. She doesn't need the money, but she wants the power, 'cause there's not much else going on for her.

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  3. I would rather pay $3.00 for a fair-facts paper 100% free of editorial interference , than pay 5 cents for Gina Rineharts "Miners daily"

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  4. With great reluctance I sold my FXJ shares last week at a massive loss. I made this painful decision after so much board and management incompetance because I can only see further share price falls ahead. There is no doubt that Rinehart's antics are already destablisng the company. Her interests are not aligned with the interests of ordinary shareholders. There will be a flight of readers and advertisers if takes seats on the board. She has the option of calling for an extraordinary general meeting to test her support or launching a formal takeover bid. Instead she and her mouthpieces are trying to intimidate the Fairfax board and wreck the investment of other shareholders. She knew about the charter of editorial independence before she bought her shares. The last thing the Fairfax board needs is another member without media experience. The performance of Channel 10 since she went onto its board does not inspire confidence. With the small change left from my 'investment' I took out a sub for Crikey.

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    Replies
    1. Share markets have a habit of biting some people,generaly the ones that are not in the Know.

      Great wealth can be made on the stock market as well,it is just another gambling institution,winners and losers.

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  5. "There is no doubt that Rinehart's antics are already destablisng the company. Her interests are not aligned with the interests of ordinary shareholders."

    Seriously !
    The company is virtually broke ! Share price has fallen from $5 to 50c and is desperate need of some investment !
    Her interests are not aligned with those of "ordinary" shareholders ? That's right she makes lots of money ! Ordinary shareholders hate that !

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  6. Won't buy a share till they tramp the chairman

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